With the advent of the era of music streaming services, the music industry has changed radically. Today, 80% of the profits of the entire global music business are generated by music streaming. And so music streaming services have become the main source of livelihood for many artists.
That is why many people in the music industry are wondering how much the world music market leader Swedish streaming service Spotify pays artists?
Contrary to what many people think, Spotify does not have a fixed value for each play, so there is no fixed value for each play of a song by a particular artist. In fact, there is a monthly platform calculation that takes into account the performance of the artist and Spotify itself, so that professionals can receive for their streams. Below we will explain in detail how this calculation works, the average cost of each reproduction and the payment process for the service.
The value of a Spotify stream and how much each artist receives for their performance on the platform is a topic that is brought up from time to time by artists around the world. Moreover, the service does not set a fixed cost per playback, arguing that it makes no sense to have a fee for the stream, since the listeners themselves do not pay for each song they listen to.
On the other hand, the amount paid to each professional is also not fixed as it varies based on their monthly performance on the platform, making it important to use some specific algorithm so that they can be rewarded.
In the case of Spotify, this metric is inevitably based on the broadcast itself, which, despite not having a tabular value, is ultimately calculated on a monthly basis through a calculation that takes into account the net revenue generated by the service for that month.
Since the average cost of a stream has already been estimated, it’s now easier to calculate when Spotify pays per artist. More precisely, for each copyright holder, since all of the platform’s royalties (the amount paid for the use and sale of the song) actually go to the copyright holders of the song.
Rightsholders are companies that have the right to commercialize music, ranging from record companies and distributors when we’re dealing with recording royalties, to publishers, management companies and agencies when we’re talking about song royalties. Either way, the company has its own contract with the artist, with specific clauses stating how much they will take home for their Spotify performance.
This means that we can know how and how much Spotify pays royalties to copyright holders, but on the other hand, we have no way of knowing the final cost that each professional receives from these companies.
To arrive at this final payment amount, the platform divides the number of streams the owner received during that month by the platform’s total number of plays, thus calculating the fraction of everything owned by that company.
Based on this calculation, all owners working with Spotify receive a monthly payment and then pay their artists on the dates and amounts specified in the contract.