In the last 25 years, the music industry has evolved in huge leaps: the arrival of Napster in 1999, the launch of the iTunes music store in 2003 and YouTube’s debut in 2005 are notable, epoch-defining events. But progress often comes in a series of small steps forward.
One such small step is Spotify’s Loud & Clear, an annual report that provides some transparency into the amounts of royalties the company pays each year. The third Loud & Clear report was released March 8 to coincide with Stream On, Spotify’s live-streamed media event where a parade of executives introduced new product features and discussed the future of the world’s largest music subscription service.
Loud & Clear is helpful because it puts artist royalties in context. Any artist knows how much they earned on a streaming platform. But Loud & Clear will tell an artist how they stack up to others. It’s one thing to make $100,000 in annual royalties but another thing to know how many other artists are also making at least $100,000.
“I think it’s very important for ecosystems to have an understanding of the shape and size of how results are going for different participants so that people can understand where they are, where they stand and how the ecosystem is evolving,” says Charlie Hellman, Spotify vp, global head of music product.
And how well is the ecosystem evolving? Spotify wants to give “a million creators the opportunity” to making a living from their art — which could include both musicians and podcasters. That goal goes back to a statement by CEO Daniel Ek at its 2017 Investor Day. At the time, Spotify counted 22,000 artists as “top-tier” earners (it didn’t specify exactly how much they earned, however). Today, thanks to Loud & Clear, we can see a million creators are probably not making a living from their art. But as Spotify, and streaming in general, has grown in popularity, the number of artists making a sustainable amount — define that as you may — is slowly increasing.
There are 27,000 established artists defined as being in Spotify’s top 50,000 artists three straight years but outside of the top 500. In 2022, they earned an average of $224,000 from Spotify and averaged 1.45 million monthly listeners in 2022. So, they’re not superstars but they’re far from hobbyists. They’re also likely signed to record labels and receive only a fraction of those royalties.
In 2022, there were nearly 3,000 “catalog-heavy” artists that earned more than $100,000 on Spotify. Those artists earned over 80% of their streams from tracks five years old or older. Given that Spotify estimates other streaming sources account for 75% of an artists’ revenue, those artists probably earn around $400,000 a year in streaming royalties.
If streaming is going to provide a living for many musicians, the economics need to work for the independent musicians that make up a large portion of the working class. In 2022, a quarter of the 57,000 artists who earned $10,000 or more in royalties from Spotify in 2022 are self-distributed through the likes of DistroKid, TuneCore and CD Baby. That works out to nearly 15,000 artists, a 200% increase since 2017. That’s a far cry from one million. But as streaming platforms continue to grow, the number of self-distributed artists earning that amount will grow, too.
Increasingly, streaming platforms will facilitate other parts of artists’ careers, such as ticket sales and merchandise sales. Spotify lists some merchandise sales through third-party providers such as Shoptify and Merchbar. And although it hasn’t included merch sales in Loud & Clear, Hellman says, “I can imagine in future years doing more data share about that in particular. We didn’t do that this year, but it is a big strategic focus for us.”
