Revealed: how much Spotify really pays artists

Barry Collins Read more November 12, 2014

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Spotify CEO Daniel Ek has launched an impassioned defence of his company, after renewed claims that it was ripping off artists.

Pop starlet Taylor Swift pulled her albums from Spotify last week, becoming the latest artist to take a stance against the streaming service, which has been routinely accused of short-changing artists.

However, in a lengthy and detailed post on the Spotify blog, CEO and founder Daniel Ek reveals that the company has returned $2 billion to the music industry since it was founded in 2008, with $1 billion of that revenue coming in the past year alone. He also reveals that a “top artist like Taylor Swift” would earn around $6 million a year from Spotify royalties.

Spotify has paid more than two billion dollars to labels, publishers and collecting societies for distribution to songwriters and recording artists

That might be small beer compared to the revenue Swift and her label would earn from album sales, but Ek says the industry is wrong to blame Spotify for declining sales of music.

“Piracy doesn’t pay artists a penny – nothing, zilch, zero,” Ek writes. “Spotify has paid more than two billion dollars to labels, publishers and collecting societies for distribution to songwriters and recording artists.

“That’s two billion dollars’ worth of listening that would have happened with zero or little compensation to artists and songwriters through piracy or practically equivalent services if there was no Spotify.”

Ek says it’s a myth that Spotify is harming album sales, pointing to markets where the company didn’t operate. “Canada is a great example, because it has a mature music market very similar to the US,” he says. “Spotify launched in Canada a few weeks ago. In the first half of 2014, downloads declined just as dramatically in Canada – without Spotify – as they did everywhere else. If Spotify is cannibalising downloads, who’s cannibalising Canada?”

Without saying so explicitly, Ek suggests the artists should be taking up their grievance with their record labels rather than Spotify. “As I said, we’ve already paid more than $2 billion in royalties to the music industry and if that money is not flowing to the creative community in a timely and transparent way, that’s a big problem,” he says.

“We will do anything we can to work with the industry to increase transparency, improve speed of payments, and give artists the opportunity to promote themselves and connect with fans – that’s our responsibility as a leader in this industry; and it’s the right thing to do.”

Smaller artists?

Yet, whilst leading artists such as Swift, Ed Sheeran and Calvin Harris may do nicely out of Spotify, fears remain over how much money is returned to the vast majority of artists who don’t rack up millions of plays on the service.

Ek’s blog claims that “500 thousand listens on Spotify would pay out between three and four thousand dollars” to the record company. Even at the higher end of that scale, that equates to a return of just $0.008 per play.

British singer songwriter Tom McRae has been a vocal critic of Spotify. In an interview with The Guardian, McRae explained how little he earned from the service. “Friends and family tell me with pride how they listen to my earlier albums on Spotify, in the knowledge that every time they listen I’m earning money,” he said.

“I haven’t got the heart to tell them that if they listened every hour of every day for the rest of their lives it wouldn’t add up to the price of a round of drinks.”

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McRae’s biggest hit, Boy With The Bubblegun, has been played 620,105 times on the service, according to its global play count, earning revenues just short of £5,000 during its lifetime.

Yet, McRae told PC Pro he’s never seen a penny of the royalties. “Curiously, I’ve not had a single payment from Spotify, via Sony [McRae’s former record label]), ever,” he said via Twitter. “I’ve been chasing them since 2008. Gave up.”

“It highlights how easy it is for labels to hide revenue from streams. Sales are traceable. Streams are dark magic.”

Radiohead frontman Thom Yorke claimed Spotify made it impossible for emerging artists to earn a living, tweeting: “Make no mistake new artists you discover on #Spotify will no[t] get paid. Meanwhile shareholders will shortly being rolling in it. Simples.”

Ek, however, argues Spotify does more to support artists than many other sites. “Today, people listen to music in a wide variety of ways, but by far the three most popular ways are radio, YouTube, and piracy – all free. Here’s the overwhelming, undeniable, inescapable bottom line: the vast majority of music listening is unpaid. If we want to drive people to pay for music, we have to compete with free to get their attention in the first place.”