Spotify’s annual report on music economics is now out, and the latest Loud & Clear claims the music industry is growing at a healthy pace.

But it’s always worth reading these things with some skepticism. What’s good for “the music industry” can be very different from what’s good for individual artists.

So let’s look at Spotify’s headline numbers and ask ourselves what they mean, if anything, for our own music.

The top findings from Spotify’s recent report:

Spotify paid $9b to rights-holders in 2023

This set the record for the highest payment to the music industry from any single retailer, with at least $4billion going to publishers and songwriters.

That $9billion annual payout figure has nearly tripled over the last six years.

But of course it should! More people are streaming music. Less people are purchasing CDs and downloads.

And, here’s another factor: More people are creating and distributing music than ever before. The real question for emerging artists isn’t how much did Spotify pay “the industry,” but rather, “how is that sum being divided?”

That being said, kudos to Spotify for paying out more in the aggregate than any other DSP!

The number of artists generating revenue on Spotify has tripled since 2017

This figure either sounds encouraging or inevitable, given the angle. With increased streaming adoption, one hopes that the most in-demand artists within a rapidly expanding catalog would share in the growth benefits.

But to state the obvious: More artists making more money is a good thing. And last year, 66k artists made at least $10k from Spotify.

Another stat showed that half the artists who generated at least $10k in 2017 are now earning at least $50k.

My question here is: Wouldn’t that “$10k+ in 2017” cohort include EVERY famous artist with a well-established career up to that point? So it shouldn’t be surprising that half of them still did well in 2023, benefiting from the growth of streaming overall.

It’s like saying “See, there were lots of famous people in 2017, and at least half of them are still successful! Oh, maybe there were a few indies in that mix too.”

Music is global, and so is the music economy

Over half the artists earning more than $10k annually from Spotify are from non-English-speaking markets.

It’s an increasingly global music marketplace for both listeners and creators.

No complaints there!

Half of Spotify’s payouts went to indies

$4.5billion was paid to independent labels and DIY musicians from Spotify last year.

That figure is up 4x from 2017.

This is another figure that sounds great, but I’d want to know a few more things before admitting it as evidence of a healthy industry.

For instance, how exactly do they define “indie label?” It may contain some very notable artists.

And what about the loooooooooooooooooooooong tail? Okay, payouts to indies went up 4x in 6 years. But how much did the “indie” catalog grow in that same duration?

And that doesn’t even account for royalty changes that will demonetize a huge percentage of the long tail catalog in 2024.

$4.5billion to indies IS a record number though. So, cool.

Most Spotify millionaires are NOT stars

Try as I may to be cynical about this one, it just seems like straightforward good news.

Spotify says:

In the streaming era, the charts aren’t big enough to contain all of the artists finding success. Fans’ tastes are more diverse, and the royalty pool is increasingly massive ($9B+!) – which means more revenue to a wider range of artists. You’d be surprised to see the artists who generated a million dollars on Spotify last year. Many aren’t household names and didn’t need a “hit” song to have a big year.

Of the 1,250+ artists who generated $1M+ from Spotify alone – and likely over $4M across all recorded revenue sources – over 1,000 of them didn’t have a single song that reached Spotify’s Global Top 50 all year.

This list is not just classic, generation-spanning artists. The majority of the artists generating $1M+ started their careers in 2010 or later.

80% of the artists who earned more than $1million from Spotify didn’t even have a song in the Top 50 of Spotify’s Daily Global Songs Chart.

Ummm,… footballers?

Spotify’s Loud & Clear offers a clunky metaphor to illustrate why they’ve demonetized a massive portion of their catalog in 2024, rendering tracks worthless that have less than 1000 streams on a 12-month rolling basis.

If you’re not one of the top 225k “emerging & professional” artists on the platform, maybe you should think of yourself as an aspiring footballer! A dreamer from the glut.

Or to quote Spotify directly:

More artists are succeeding and, as a result, even more are interested in becoming artists. Sure, more than 10 million uploaders have at least a single track on Spotify, but when it comes to building financial opportunities, we’re focused on those most dependent on streaming as part of their livelihood: these 225,000 emerging and professional artists that are building careers.

As a point of comparison, FIFA estimated there are hundreds of millions of people who self-identify as “footballers,” but 128,694 people are actually getting paid any amount of money from it. While music and sports are quite different, this demonstrates how widespread the aspiration is to participate in creative and athletic pursuits and make a living from them.

Another way to think about it: The 10+ million uploaders on Spotify are comparable to the tens of millions who have uploaded at least a single video to YouTube, often just to share something they enjoy with the world. The number of creators trying to build a career as a video creator is much smaller.

Okay, my brain stopped working when I heard a sports analogy, but lemme just put it this way:

If I’m a musician, with a hundred different tracks on Spotify that each generate 999 streams from actual fans, do I deserve literally nothing?

Oh, actually, nevermind. I guess I deserve a condescending metaphor.

To be clear, as an artist myself, I have some tracks on Spotify that are well above the monetization threshold, and some tracks that aren’t. I’ll earn more from the former and nothing from the latter. When it comes to my own earnings, I don’t care that much. It might be a wash.

But on behalf of artists who have small but REAL audiences, I do take this personally. Especially when we live in an age of instant access and robust digital accounting that COULD just as easily monetize music streams per-usage, regardless of overall streaming volume.

Know how I know? Because that’s exactly how Spotify’s accounting already worked for more than a decade.

Almost 330,000 songs were streamed more than a million times…

… but it takes MORE streams than it used to in order to stand out from the pack as a dominating artist on Spotify.

With more users, stream-counts for popular songs are higher than ever.

How do you stack up to the best-performing artists on Spotify?

Conclusion

Lest I sound overly strident or jaded, lemme be clear: I love Spotify.

I’m a long-time subscriber.

The company has done more than almost any other digital music service to empower artists — ESPECIALLY emerging artists — giving them tools and access to shape their music’s destiny to some degree on the platform.

They pay something like 70% of their revenue to rights holders year after year, despite operating at a loss for the bulk of their existence. I’ve been a vocal defender of Spotify’s royalty model in the past, given that they are an audio-only service locked in fierce competition with giants like Apple, Amazon, and Google, all of whom have the luxury of offering music streaming as a loss-leader when necessary.

Plus, Spotify features such as playlisting and Discovery Mode have helped my music reach hundreds of thousands of listeners I never could’ve reached on my own.

But c’mon! It can also be true that these types of reports are (propaganda?)… selective.

It’s interesting propaganda, for sure. And lots of these numbers do suggest the industry is growing. But you’re not the industry. You’re an artist.

Which is why I wanted to take a closer look at these cherry-picked data points.

The numbers want to show that almost everyone — labels, distributors, the listeners, the “real” artists, Spotify itself — is doing well.

Everyone’s doing well, they claim. Except footballers.

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