Swedish music streaming service Spotify is often referred to as the green giant. And this is not surprising, because this streaming platform not only ranks first in the world in terms of popularity among users, which today there are more than 380 million people on all continents, but also in the number of artists who post their songs on this music streaming.
Well, how does the artist understand how much he will receive royalties in the end? He also wants to understand how payments are distributed to artists and how fair they are?
It should be said that throughout the history of its existence, the Swedish streaming service Spotify has already paid out about $ 20 billion to artists. So, in 2021 alone, there was a payment of about $6 billion in royalties. As you can see, these are just huge amounts, which today for the vast majority of people in the music industry are practically the only and main source of income.
Mechanical royalties are paid to songwriters and their publishers for the right to reproduce a composition. At one time, royalties were paid out whenever someone wanted to mechanically produce the physical medium that carried the song—hence the name—but in streaming, they are generated whenever a song is played.
Royalties are paid to songwriters and their publishers for the right to publicly perform their music. Because no song is technically owned by the user, every stream counts as a public playback — even if they’re enjoying it in the privacy of their headphones.
The third and most significant part is paid to copyright holders through labels and distributors. If someone asks “how much does Spotify pay to listen to?”, 99% of the time it will be about this part
While mechanical and public performance royalties are subject to local law and may differ from country to country, almost all streaming services use pretty much the same set of rules to calculate the last part of the payout.
So how much does Spotify pay to stream? This very much depends on the type of rights we’re talking about, as well as how the royalty pipeline is set up. On the other hand, Spotify usually pays royalties through distribution companies like Believe or TuneCore, or directly to the record label if it has a direct licensing agreement with the platform (like Warner, Sony and Universal do). In terms of composition or copyright, Spotify pays royalties to songwriters through Performance Rights Organizations (PROs) or, again, directly to major publishing companies that have a direct relationship with the streaming service.
For the first time since the launch of Spotify, there has been no reduction in the rate per listen. The rate went up slightly from $0.00331 and stabilized at $0.00348 per stream.