A Breakdown of Spotify's Annual Report

Spotify has just released its music economics report. Some interesting stats are worth knowing. We've looked at Spotify's business model in a previous article, and you can check it out here: Spotify Business Model.

But here, we want to look at the stats. Spotify's Annual Music Economics Report gives us insight into the music streaming industry as a whole.

Not only that, but a glimpse into the future is possible, too. We've rounded up some of the Music Trends for 2024, too, if you want to see what we are predicting.

Spotify is one of the largest audio content providers in the music industry, with a 30% market share in the music streaming business. Apple Music comes in second.

The Freemium model wasn't new. But, Spotify mastered it and is one of the few audio streaming services to keep a huge user base that listens for free. Spotify's monthly active users are reported to be over 600 million, with 236 million paid subscribers. If you want to learn more, check our article about Spotify business model.

It's good to understand that monthly listeners and streams are different. Monthly listeners are a count of how many unique users listen to an artist in 28 days. Streams are purely a count of how many streams per song.

So when two users listen to your album, but one does it on repeat and the other just once, they both contribute to monthly listeners. However, the repeated listener will increase the stream count.

The annual report gives insight into the streaming industry's last year. It also provides a glimpse into the future for listeners, artists, indie labels, and others.

A Breakdown of Spotify's Annual Report

In 2021, Spotify released its first annual report after getting a lot of backlash for a lack of transparency. The year the report has also come with the added quote from Spotify about being the only DSP to be transparent about what they are paying artists.

Source – Loud & Clear by Spotify.

So, what does the annual report include?

• The Payouts (they are noting at a record high)
• The number of artists who are making money at all stages of their career
• How music streaming is breaking language barriers
• The impact of Indie artists and labels
• The new millionaires that aren't household names
• How music publishing is currently looking
• Career growth of artists
• The trajectory of music streaming

They also added a Streaming Numbers in Context page. It explains stream share and how it affects artist payments. There is a handy calculation that you can access to check how you stack up here: Streaming Calculator.

Artist Payouts

Probably the most anticipated piece of information in the report is how much Spotify is paying its artists. It wasn't so long ago that artists on Spotify protested against them because the pay was so low.

The 2023 year-end report says they paid a huge $9 billion to artists. It notes that this tripled in the last six years, bringing all-time Spotify payouts to over $48 billion.

It is worth remembering that tracks on spotify need to get over 1,000 streams before they start making money. And that, actually, the 1,000 play count needs to be the yearly minimum.

By diverting cents and pence away from low streams, that cash goes into the streamshare pool. In figures, Spotify believes that could be $40 million.

It might sound harsh to take rightfully earned money from artists, but those cents and pence don't usually get to them anyway. Aggregates and labels will take that, or it gets put on 'hold' until a threshold is reached.

All that said, the slide outlines the fact that Spotify paid out the highest annual payment to the music industry from a single retailer. The payments go to publishers and indie distributors. They also go to collection societies, performance rights groups, and record labels.

Money at Every Level

It might seem almost contradictory to stop payments for under 1,000 streams and say that artists are making more money. The number of artists making money at each threshold on this site has nearly tripled since 2017. The thresholds range from $1,000 to $10 million per year.

Between 2017 and 2023, here is the breakdown:

Artists earning:

• $10k in 2017 was 23,400 and is now 66,00.
• $100k in 2017, which was 4,300 and is now 11,600.
• $1 million+ was 460 and is now 1,250.

In 2023, Spotify announced that there were around 225,000 professional or aspiring professional artists that had at least ten tracks (consider that to be a body of work). And they generate around 10,000 monthly listeners.

They also stated that roughly 10 million people/artists have put tracks on Spotify. Out of that giant number, 8 million have less than ten tracks.

It is worth keeping in mind that these are single-year stats, spanning years. In that time, Spotify's own user base has grown:

Find more statistics at Statista

To further add to the discussion, Spotify's annual revenue was over 13.2 billion euros.

So, as Spotify Premium's user base has grown and more artists are available, more artists should be making money. They also add that the revenue is likely higher for each artist.

This is based on their market share and adds in things like merchandise, live shows, and revenue from other streaming services.

Music is Global

More specifically, music that isn't in English is becoming more popular. What makes the 66,000 of over $10k earners really fantastic is that over half of them aren't from countries where English is the main language.

This set of stats highlights that streaming allows a wider audience to find new music.

Here is the rundown on musical languages that took off in 2023:

• Spanish
• German
• Portuguege
• French
• Korean
• Hindi
• Indonesian
• Punjabi
• Tamil
• Greek

Indie Artist Impact

We know that artists like Taylor Swift, Drake, Beyonce, and Ariana Grande are making millions. They make it through streaming services. So, this figure could be fairly surprising. In 2023, Indie artists and labels accounted for about half of that $9 billion payout.

A massive $4.5 billion! Again, the report outlines that this is the highest amount that Indie companies have ever generated from a single retailer in one year.

Why the increase? A few factors in play right now will impact the rise of the indie artist. Getting your music onto a streaming service is now easier than ever. Many aggregates mean even if an artist doesn't have a label, they can get their tracks on a DSP.

One of the nicest things to see is that many of the artists who generated at least $1 million on Spotify in 2023 aren't household names. That's to say they aren't big names like Drake, Ariana Grande, and Lady Gaga.

Over 1,000 of the artists who made $1 million on Spotify didn't make it into the Global Top 50 throughout the year.

And while those artists might not be household names, they are getting at least 4 million monthly listeners or up to 25 million monthly streams.

The rise in indie artists and music millionaires on Spotify may be due in part to TikTok. TikTok is phenomenal at getting ten seconds of a song stuck in your head. The few seconds heard millions of times a day make for quick fans. Those fans head to streaming sites in search of the track, and millions of streams pour in.

Music Publishing

Perhaps one of the most important pieces of information in the report for music publishers is this:

"Publishers, songwriters and their CMOs are seeing more than 2x the revenue ($5.5B in 2022) in the streaming era than they ever had in the CD/sales era ($2.5B in 2001), per the Global Value of Music Copyright."

Spotify has paid out almost $4 billion. It paid this money to performance rights organizations, collection societies, and publishers. These groups represent songwriters.

Career Growth

One area that music streaming platforms have been improving is the career growth of the artists who use their service. Not only is this good for the artists, but it is also good for the shareholders, Spotify Stock, users, and more. The idea is that professional and new artists can make a sustainable living off their work.

The career growth looks like this: Of the 23,4000 artists who made over $10,000 in 2013, half went on to make $50,000.

Of course, the artists' hard work is key. It almost means these artists and music makers have worked for the last six years.

Does Spotify have career growth tools? They have a good number of tools! (Although you could argue that TIDAL offers more artist-centric options.) Here is what Spotify offers for career growth.

• Artist Profile
• Artist Pick
• Merch
• Ticketing
• Fan Support
• Lyrics
• Clips
• Playlist Pitching
• Canvas
• Marquee
• Discovery Mode
• Showcase
• Countdown Pages
• Promo Cards
• In Focus
• Noteable Studios
• Spotify Charts
• Best Advice
• Fan Study
• Loud & Clear
• Songwriter Pages
• Soundtrap

Spotify released more information on these tools and how to use them to their full potential in Stream On.

Source.

Trajectory of Music Streaming

For years, music streaming platforms have given users easier access to more music than ever. The report compares Radio Stations and record stores. Radio is very popular and artist-focused, concentrating on the Top charts in any genre.

There is limited space for millions of artists in a store, so they tend to focus on what is most likely to sell, which tends to be charting music.

Between streaming platforms and aggregates, it is now easier than ever for people to put their music out there and make a career. Spotify is correct when it says that on-demand music has changed the music business.

And more than that, the average artist on any given streaming service wouldn't have radio play and CDs in store.

Spotify has over 600 million listeners in 184 markets, which translates to over 329,000 songs streamed over a million times. And now, some artists are cruising beyond the billion streams.

As a label or artist, one key thing is having data to help you get a good position. Then, you can use all of Spotify (and other music sites) to do it. The Power of Data

Spotify's annual report emphasizes the importance of data for artists and labels. Spotify has over 600 million listeners and access to vast user data. It offers valuable insights that can help artists and labels make informed choices.

By using data analytics, artists can understand their audience. They can learn their demographics, streaming habits, and locations. This information lets them market their music better. They can find fan bases in specific regions and adjust their strategies.

Key Takeaways

Record Payouts: Spotify's annual report reveals record-high payouts to artists. They were $9 billion in 2023, triple the amount from six years before. The total all-time payouts surpassed $48 billion.

Increasing Revenue for Artists: They need 1,000 streams per track per year to earn money. But, the number of artists earning money at every level has nearly tripled since 2017. This shows a more sustainable income stream for musicians.

Global Impact of Music Streaming: Music streaming breaks language barriers. Over half of artists earning over $10,000 come from non-English-speaking countries. This demonstrates the global reach and diversity of Spotify's platform.

Indie Career Growth: In 2023, indies and labels got about half of Spotify's $9 billion payout. This shows the platform's role in helping indie musicians and making the music industry more fair.

Accessibility for Emerging Artists: Indie artists are making more money now. This is due to easier access to streaming platforms. These platforms let artists without major label support sell their music and make money.

Music Publising Money: Spotify's payouts have greatly increased revenue for music publishers. They have also helped songwriters and their collecting societies. They now make over twice what they did from CDs and sales. This marks a fundamental shift in revenue streams for music creators.

Tools For Success: Spotify offers many tools to support artists' career growth. These include merchandising, ticketing, fan support, and playlist pitching. These enable musicians to build sustainable livelihoods and connect with their audience.

Streaming has transformed music: It has revolutionized the music business by giving unprecedented access to millions of songs. It has also let artists reach global audiences. This has fundamentally changed the distribution of music.

Using data for success: Spotify emphasizes the importance of data for artists and labels. They offer insights into audience demographics, streaming habits, and locations. This info informs marketing and boosts promotional efforts.

Future Opportunities and Challenges: Music streaming is evolving. Using data and embracing new trends will be crucial for artists and labels. They need to do this to navigate and profit from change in the industry.

Not on Spotify and want to move after reading that? Transfer your liked songs, albums, and playlists with FreeYourMusic.