With Spotify changing how royalties are distributed on the platform, many artists are wondering what this means for them. Spotify CEO Daniel Ek resorted to social media to respond to these questions.
On February 8 (days after Trevor Noah made a joke about Spotify ripping off musicians at The Grammys), Spotify announced that it had paid out $9 billion in royalties to various music industry bodies for 2023. Spotify announced that its annual payouts to music rights holders have “nearly tripled in the past six years.” Spotify will have paid out $48 billion in recording and publishing royalties since its inception in 2008, as of the end of 2023.
READ MORE: Spotify Paid Out $9 Billion To The Music Industry In 2023, And $48 Billion-Plus Since Its Founding
Daniel Ek came to X/Twitter today to further break down the $9 billion amount, noting that independent artists produced $4.5 billion. That figure is supported by Dr. Richard James Burgess, CEO of A2IM, which represents more than 600 independent recorded music companies.
“In 2023, independent music’s historic achievement, generating nearly $4.5 billion on Spotify, underscores the transformative and democratizing impact of streaming—marking a milestone in the global accessibility and success of independent artists,” Burgess stated in a press release.
Ek defines the video as “receiving a lot of questions about artist payouts.” That’s because the method Spotify distributes royalties is changing. Spotify used to pay its artists based on the total number of plays their songs received.
The DSP is now transitioning to a system that only counts tracks with more than 1,000 streams each year, with the goal of combating streaming farms and other forms of fraud. Spotify says it plans to address bot listening on its platform, which generates fraudulent plays. Digital Music News revealed how streaming farms operate in 2022.
Despite Ek’s best efforts to ‘gently correct’ the narrative that Spotify does not rip off musicians, these adjustments will have an impact on independent artists. According to Billboard, the new payment scheme will effect two-thirds of Spotify’s music collection, with millions of recordings now falling below the 1,000-stream threshold. The new licensing model will provide 0.5% of Spotify’s revenue pool to more popular music, amounting to around $46 million in royalties in 2022.
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