[Roger Press]

Did you know that the top 500 artists on Spotify last year generated around $1.85bn in royalties from the streaming service – 37% of its overall payouts?Or did you know that the 286,000 DIY artists releasing through distributors generated $1.17bn of Spotify royalties last year – around 23.5% of the total?You do now. These are just a couple of the calculations that people (alright, digital music nerds like us) are going to be doing today, following the launch of Spotify’s new website Loud & Clear.The company isn’t explicitly describing it as a defence of music streaming, but given the recent upsurge in debate about musicians and streaming royalties – not to mention the UK’s parliamentary inquiry focusing on the streaming economy – the timing is no accident.”We absolutely think that artists deserve to have more clarity on how the music streaming economy is working,” is how Charlie Hellman, VP and head of marketplace at Spotify, explained it to Music Ally in an interview ahead of the site’s launch today.”Payouts and artist earnings and how its economy works is literally an every-day discussion inside the building, but in many ways I think we’ve been too quiet on the topic externally,” he continued.”It is complicated stuff, and that has created an environment where there are lots of conversations happening… This is another big step for us in increasing transparency.”The numbers at the top of this article were crunched by looking at one of the new website’s sections, where it offers some data for artists in various categories: established, DIY, market movers, chart toppers, specialist, heritage, breakthrough, and songwriters and producers.That’s where it says that the 500 top artists on Spotify last year (the ‘chart toppers’) generated average royalties of $3.7m each. Cross reference those stats with the company’s $5bn total payouts in 2020, and that’s where the $1.85bn / 37% figures come from.(It’s important to note that those artists did not ‘earn’ an average of $3.7m from Spotify each. That figure represents payouts to recording AND publishing rightsholders, with musicians’ share depending on their deals with those rightsholders.)Besides the DIY artists data (286,000 with more than 1,000 listeners averaging $4,100 in royalties last year) there are figures for 6,900 ‘breakthrough artists’ who had less than 1m streams before 2019, but are now in the top 50,000 Spotify artists by streams.Those artists averaged $31k in payouts to rightsholders in 2020 – around $213.9m in total. Meanwhile, 2,600 ‘heritage’ artists (those with more than 500,000 monthly listeners and 80% of their streams coming from tracks that are at least five years old) averaged $407k of royalties in 2020 – around $1.06bn, or 21.2% of Spotify’s overall payouts.The songwriters and producers category is slightly different: Spotify isn’t sharing its own payouts data, but rather estimates of total global revenues for publishing rightsholders from ALL streaming services, calculated for an upcoming report by its former chief economist Will Page.He estimates that publishing streaming revenues grew from $1.6bn in 2017 to $2.5bn in 2018 and then $3.3bn in 2019.”Our feeling is let’s put it out there. Let’s get the information of the global streaming economy shared, break down the system as best we can, and use this as a foundation for more conversation on the topic,” is how Hellman described Spotify’s desire to publish this and other data on its new site.”One of the big things we see is that clearly there are more artists than ever finding success in the music industry. The scale at which a number of artists are able to achieve significant success on the platform is really high, and it’s growing rapidly.”Spotify announced some of these numbers during its recent ‘Stream On’ event, and the new website fleshes them out with more data that it hopes supports its case.According to the site, 870 artists’ catalogues generated more than $1m in annual royalties last year, up from 450 in 2017. Meanwhile, the number of artists generating more than $500k in royalties has grown from 950 to 1,820 over that time.The data goes down as far as $1k in annual royalties, a bar met by 184,500 artists in 2020, up from 89,700 in 2017. Again, these are royalties paid to rightsholders, not directly to artists.”Probably the most exciting thing to me is the growth rate,” said Hellman. The number of artists earning $1m, $100k, $10k… from 2017 to 2020 all of those numbers are growing by more than 80%. That paints a really encouraging picture of where the industry is headed.”The Loud & Clear site also has a tool for artists to enter their all-time stream count or their number of monthly listeners to see where they rank overall on Spotify. For example, an artist with a million monthly listeners “would be in the top 7,000 artists on Spotify globally”.There is also a Frequently Asked Questions section responding directly to some of the key talking points in the streaming economy debates, including Spotify’s official line on whether it would consider switching to a ‘user-centric’ system of royalty calculations.”The research we’ve seen to date suggests that a shift to user-centric payments would not benefit artists as much as many may have originally hoped,” it says, citing the recent study by the National Music Centre in France.However: “We are willing to make the switch to a user-centric model if that’s what artists, songwriters, and rights holders want to do. However, Spotify cannot make this decision on its own – it requires broad industry alignment to implement this change.”The longest answer in the FAQ section is to a question about why Spotify’s per-stream rate is so much lower than that of many of its rivals. As far as we’re aware, it’s the first time the company has addressed this question head on and publicly.Streaming services don’t pay royalties out on a ‘per-stream’ basis – their royalties pools are divided up based on each track’s share of total streams (as the new website reminds visitors).However, artists and labels can calculate an average per-stream rate by looking at their royalty statements and dividing their payouts by their number of streams, and artist rights site The Trichordist publishes an annual, widely-shared table comparing the different streaming services, using the data of an anonymous mid-sized independent label.Its 2019-2020 ‘streaming price bible’ revealed that the label’s average per-stream rate from Spotify was $0.00348, compared to $0.00675 for Apple Music and $0.01123 from Amazon Music Unlimited, so questions are understandable.Spotify’s answer claims that “the average subscriber to Spotify listens to more music per month than on other services” which drives down the average payout per stream, while stressing that this also means “more listeners discovering more artists, more opportunities to deepen engagement with listeners, and more chances to convert them into fans who buy tickets and merch”.”Spotify has invested more than any other services and been more successful than any other service in driving that engagement,” said Hellman. “They’re spending time with music! Driving that up is a good thing. Perversely, if we wanted to improve that ratio [the per-stream rate] the easiest thing we could do is try to get people to stream less.”That’s not on the cards. However, Spotify’s transparency only goes so far in this case: it has not published the data used to make its claim that its subscribers are more engaged than those on rival services.Spotify’s answer to the per-stream rate question also explains that its expansion into countries where subscription prices are lower, and its ad-supported tier, are also factors in its lower per-stream rate, while also arguing that both have other positive impacts.Hellman put the launch of Loud & Clear into the wider industry perspective. “Spotify has paid $23bn in royalties to date, which is really an astounding turnaround from when I joined Spotify at the beginning of 2011,” he said.”When the industry was at its lowest point in 2014, we had a total industry of $14.3bn [for recorded music] and now flash forward to today: when we see the 2020 numbers come out, it’s likely that streaming is going to be bigger than the entire industry was in 2014,” he continued.”We’re seeing our part: we paid $5bn out to rightsholders in 2020 alone, but Spotify is just one piece of that puzzle. Its other key role is being a source of discovery to drive fanbases that propel all of the other different revenue streams for artists.””We also totally embrace that we’re nowhere near done. We have an unapologetically ambitious mission as a company. We’re more committed than ever to continue growing the pie.”Hellman also addressed the issue of artists who are struggling to survive on their streaming royalties by talking about the pros and cons of an ever-greater number of musicians competing for listeners’ ears on streaming services.”Our total payouts have grown from $3.3bn a year to $5bn a year from 2017 to 2020. That’s 50% growth in total payouts, but the number of artists achieving these different levels of earning thresholds [outlined on the new site] has grown by 80%. The number of artists participating in success is growing much faster than the total pie,” he said.”We’re finding more and more shelf space for more types of artists to gain an audience. Think of the period that most people think of the heyday for the industry: at that time how many artists could get in the record store, how many artists were selling more than 1,000 copies [records], how many could get on terrestrial radio?””Now you see 13,400 artists generating more than $50k from Spotify alone… No doubt that it’s at a bigger scale now than it was before. But if the great part of removing those barriers is so many more artists are able to succeed, that also means there is going to be exponential growth in the artists who don’t get over the bump and achieve their goals,” he continued.”Millions of artists won’t make it all the way to their goals as they compete with the entire history of recorded music and try to get attention. But our goal is to create more and more shelf space.”

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