Spotify paid $7 billion to the music industry in 2021

Spotify paid out $7 billion in royalties to rightsholders — primarily labels and publishers, but also distributors, performing rights organizations and others — in 2021, the company said Thursday in its annual “Fort and clear”.

This total is more than any other service – with more than 180 million paying subscribers, Spotify is by far the world’s leading paid subscription music service – and sets the record for the highest annual payment of any retailer in the world. history, including during the heyday of the CD era, according to the announcement. (Because Spotify’s data is proprietary, it’s not possible to cross-check all of these figures with precision – see the full report here.)

The report also states that in 2021, for the first time, more than 1,000 artists generated more than $1 million on Spotify for rightsholders. Some 450 artists have generated over $2 million on Spotify, 130 artists have generated over $5 million – and over 50,000 artists have generated $10,000 from Spotify alone.

However, it is important to note that unless the artist or songwriter is the rights holder, these payments have gone directly to the labels, publishers and other entities listed above, who distribute them. then according to the contract of the artist or the songwriter. Spotify explains how this money is distributed in this video:

In Thursday’s report, Spotify says it has paid more than $30 billion to rightsholders since its inception in 2006 (which largely explains its aggressive move into podcasting: a music-only model isn’t viable in current circumstances). In 2021, streaming revenue alone exceeded total industry revenue in every year from 2009 to 2016, although these were the years the industry bottomed out, as CD sales fell and that illegal downloading was rampant.

The turnaround started when Spotify was launched in the United States in 2011 and industry revenue began to rise over the following years. In 2014, recorded music generated $14.2 billion across all sectors (streaming, physical sales, synchronization, downloads, performing rights); in 2021, recorded streaming revenue alone topped $16.9 billion, according to the report.

He notes that over 28% of artists who have made over $10,000 self-distribute to Spotify, many of them through distributors like DistroKid, Tunecore, CDbaby or others who help artists self-publish their music. It says these 15,140 artists represent a 171% increase since 2017.

On the other hand, the major record labels – Sony, Universal and Warner – earned $12.5 billion from recorded streaming revenue alone, with Spotify payments accounting for around a third of that streaming total: around $4 billion. dollars.

The report says Spotify also paid more than $1 billion to publishing rights holders for the second year in a row, far less than they paid labels. But it’s important to note that Spotify’s payments for recorded music dwarf what they pay publishers – Spotify says the ratio is 75-80% vs. 25-20% – due to the way labels have structured their initial agreements with the company.

He also notes that although streaming generally generates less money per user than CDs, it is more equitable in nature – rather than being limited to a CD or other physical product from a single artist, fans generate lower incomes for a much wider range of artists. . The report notes that at the height of the CD era, nearly 25% of album sales in the United States were made by the top 50 artists. On Spotify in 2021, only 12% of US streams belonged to the top 50 artists, which means the revenue opportunities now go far beyond superstars.

Read the full report here.

Alice P. Darby