How much does Spotify actually pay Artists?

10 years ago, the music industry was on the brink of financial collapse. From 1999 all the way to 2014, music was in a 15 year downward spiral. Emerging money each year, losing more money than the last. And all of this was for one major reason, piracy. With the invention of technology like Napster, Limewire, MP3 players, jail breaking your iPhone even, people were illegally downloading music left and right, giving nothing to the artist at all. And because all of that, music saw nearly a 70% drop 9 billion dollars in less than 10 years. However, all of that changed with the invention of one technology. Music streaming. The idea was that if we just charge people a subscription, and for that one monthly fee, they get access to all of the music in the world, so much music, that it would actually just be kind of inconvenient for them to pirate every song and win at a time. And to these people who were used to paying $20 for one CD, $12 for all the music in the world didn't sound like that bad of a deal. Enter Spotify and the genesis of the streaming era. Where every year, since then, the music industry has grown. So much so, then in 2024, the industry has been worth an estimated $29 billion surpassing its previous peak in 1999. And even the largest labels in the world, like Universal Music, put in their 2024 financial report that 77% of all recorded music, revenue came from subscription-based streaming. And Spotify, as the largest platform in the world, paid out over $10 billion to the music industry in 2024 alone. Despite all of this being true, however, there is a lot of discourse from artists saying that Spotify doesn't pay artists enough. So how does this make sense? How can an artist be struggling when the music industry is more profitable than ever? How can labels be reporting that nearly 80% of the revenue they collect comes from streaming, yet artists are saying nearly none of the revenue they collect comes from streaming? What is actually happening here? How are artists getting paid? And how can we look at this to decide the best path forward for an industry as a whole? Well, that is exactly the question we've set out to solve here today. I am sitting down with Sam Duboff. He's the global head of Spotify for artists, marketing and policy, and here to answer some questions about exactly all of these topics here today. Sam, I'm so excited to have you on. Thank you for being here. Excited to get into it. It's going to be good. I have many things to say, and I'm honestly very interested to hear your opinions on this topic. And I also would like to really commend like, I really appreciate the transparency. I know that this is a very sensitive topic, and it has been very easy for many people in the past, from all sides of the industry to just not talk about it at all. And I would really like to commend you for being willing to sit with me and have an open dialogue about this. And I think that speaks a lot to both your character and the character of the company. Well, I appreciate that. The music industry is so confusing. I worked with Spotify a little over six years, and I learned something new every day. Yeah, it's like a famously opaque industry. So we're trying to play our part in being as transparent as we can, and it's hard being an artist, and it's cool to do that. As the biggest figure, we will be transparent about this as the biggest company. We would appreciate it if all the other companies were also as transparent, even though many times they aren't. That does not go unnoticed and unappreciated. But something I'd really like to say is like, what exactly before we dive into this hall? Like, what is your role? You know, like, when does something come across your desk at Spotify versus Selena's desk, for example? Yeah, so my team's working on building all the products and features for the music industry. Okay. So Spotify for Artists is, you know, your listeners probably use Spotify as a consumer. Yeah. The other side of the coin is Spotify for Artists, which pretty much every artist, manager or person who works at a label uses over a million people use it every month, and it's the way artists can access how their music appears on Spotify. So my team's working on building all those products, you know, video features, promotional features, analytics, as well as all the education for artists in the industry. We publish a lot of videos, blogs, you know, live streams, trying to explain how Spotify works, how the music industry works, my team's living and breathing. Everything artists are asking us about through our help center on social 24/7. We try to put together, you know, materials to help them understand it better. No, that's very, very cool. So in my mind, it's like Salinas side of the music is like the consumer facing side, how you're discovering music, how you're interacting, what's your new favorite song, what sort of music is popular, whereas yours is like the artist side of the music. Dealing with the artist, dealing with the label, dealing with the publisher, blah, blah, blah. Yeah, you nailed it. Okay, that's super, super interesting. When I have done this, again, this is like independent research from me. I have the laptop, so it does not. And I think the way I want to structure this is like, I want to present the way I see this problem. And if I'm wrong, I should tell me that I'm wrong. And you know, if I'm right, then like we'll go through and we'll have a dialogue at the end about like why that is. Because I think what's very fascinating about this problem of streaming revenue is I think the first big issue is this misunderstanding of the way that music streaming monetizes. Like the way people actually make money off of music. The first big assumption is that there is this idea that it goes from like consumer to streaming platform to artist. And that is just not true at all. The way I found it is that it goes from consumer to the app store, to the streaming platform, to the music label or publisher to the artist. The Spotify is never paying an artist directly. That's right. So that is like a really interesting thing. And when I was doing a lot of research about this, there, something was very fascinating to me was, I think we look at it from like two perspectives. The thing people are always talking about is consumer streaming platform artists. And I want to like first analyze the two players in this and I think they're missing. Which is this idea of like the app store and natural technology, the phone you are streaming the music on, versus and also this sort of rights holder, whether that's like a label, whether that's like a publisher, whomever, starting with the app store side. Something I found very interesting in my research is that Apple, Samsung and Google all take 30% of all transactions in the app store. This is commonly referred to as like an app store tax. Many companies have sued these platforms for this. One of the biggest being Epic Games, which is the gaming company that created Fortnite, very big in the gaming world, had a very heated discussion about this, kind of saying like, okay, it's ridiculous that like somebody buys a skin or whatever in Fortnite and for some reason, whatever phone gets 30% of it, like there was a heated legal battle about this. And one of the biggest things that came out of this was this law that was passed towards the forcing of stopping the force of in-app purchases. So prior to this, if you wanted to buy something on, I don't know, Candy Crush, right? You had to pay for the thing inside of Candy Crush. Like you had to give your credit card information in Candy Crush and Apple would take 30% of that. So companies like Candy Crush would like, that's kind of annoying. What if we linked them to our website instead? So it wasn't through the app store. Apple was like, no, no, no, we like are 30% blah, blah, blah. So they made it impossible to do this like from a technological perspective. And this was overruled in court. So now platforms are able to do this. Like it's also probably why next time you're listening on your phone, like and you purchase something on your phone, it will open Safari or whatever. And that is, I think, this very, very first big piece of misunderstanding that people didn't realize, that there's actually, in many cases, in many things you're spending your money on, on your phone, 30% of that to 15% of that is going to whatever the company of your phone is at all times. Yeah, well, I'll add for Spotify is for us, because of some of those rules, we don't let you upgrade to premium through the app. Yeah, so it's a missed revenue opportunity, right? The more people we get to sign up for premium, the more money, that's going to music rights holders, the more we're growing, the music industry for us, because two of our three biggest competitors also have an app store, have a phone ecosystem for them, they can upsell in all different ways. They want to get people to sign up for the service for us, since we don't have our own phone hardware, we can't promote upgrading to premium in a bunch of different ways in the app, in ways that would help people upgrade to subscribe, more money for the music industry, for artists, for songwriters, growing it all around, and so yeah, for us, it's really that missed opportunity. It's not that any of your Spotify premium monies going to the app store, it's that we're missing out on people that we could kind of help to upgrade because of those rules. Totally. And, you know, our competitors are able to, you know, put as much upsells. And it's annoying for the consumer. Like, I have said, both myself included, and I've seen people online, like, it is annoying when the thing you're open, tries to open Safari, and then it's like, not that, it'll just take you to, like, Instagram.com, not like the specific post, and you're like, well, I can't not log into my Instagram, but we're like, it is just an annoying piece of this business of technology that is not even just a music industry problem, I think is what's fascinating about it. It is, it is a tech industry problem. And I think one of the big takeaways for me, after researching this, was that we're in this, I think, very weird era of technology progressing faster than, like, regulation and also, like, just understanding of what we're doing has developed because we live in this technological age, which is amazing for innovation, but has also just created confusion around a lot of these things. Yeah, yeah. I think there's all these, you know, phones and the app store and this whole app economy develops so fast that a lot of the rules and regulations haven't kept up, and, you know, for something like the 30% app store, yeah, tax, that's leading to higher prices to consumers, because the app developers have to raise prices to accommodate it, that's what it's really hurting. And it's interesting too that even when I was doing research, like, in places like the EU, they've decreased this. It's 17% in the EU, they can't do more than that. And I know that there's like DOJ legislation, but which is so above my pay grade, so above sales pay grade, couldn't tell you anything about the DOJ. But like it is, I think like the, what I'm trying to say is that this is not something that like just I deem as an issue. Like the department of justice, the European Union, epic games, like it is a thing that has been discussed for a long time. And with that, too, I think what's very fascinating, just about the business of music streaming as a whole, is if you think about like the biggest competitors in the space, they are spot Spotify, they are Apple music. It is Google with YouTube music, and then also just like any sort of Google phone. And then Amazon with Amazon music. And when you compare Spotify to the rest of these competitors, while Spotify is the biggest in music streaming, Apple is the largest, most profitable company in the history of the world worth 3.5 trillion dollars. Google is the fourth with worth 2.2 trillion dollars. And Amazon is worth 2.1 trillion dollars. So Apple music only makes up like 6% of Apple's total revenue. And it's very fascinating to me about like when I compared the Spotify experience to Apple music experience is that I think that there's a very large emphasis for them on like what the goal is is to keep you a part of the Apple ecosystem. It's why when you have, if you had songs on iTunes from your I touches the kid, they're still in your Apple music. If you, uh, when you buy an iPhone, it's already downloaded on the thing if they can send a push notification over 2 billion. And devices or whatever. Like it is just interesting to me that if you're to look at the competitor analysis of like music streaming Spotify is the only one who makes the majority of its business off of streaming music genuinely. And I think that there is probably a lot of emphasis as to why Spotify cares more for that reason. Right, we need music to work as a standalone business. And our competitors don't. And I think that's one of the reasons you see us able to grow royalties faster than other streaming service have was we are investing so much more in making the music experience new innovating. Yeah. And make sure that listeners love our service. And we aren't trying to sell hardware or, uh, you know, subscription. The Spotify phone coming soon, right. Yeah. You did not hear it here first. Yeah. You did not hear it first. You don't hear it at all. Um, but that is interesting. Honestly, like as it adds like a consumer. I do think it's also why you see like there's a lot more emphasis from Spotify's company on things like wrapped and discover weekly and DJ. And you know, because I think they are there's this understanding that like the soul of Spotify is really in those sorts of tools and features that make it the primary music discovery tool of our generation. Yeah. When, you know, I go to work every day. All people are doing is talking about music 24/7. Like everyone who works as well as obsessed with music. We need music to work as a business. We're obsessed with innovating in new ways for listeners to experience music. And that's cause where a standalone company that's focused on growing this business. And that's what makes it fun to work there. And I think it's also one of the reasons we've been able to succeed. Yeah. So that is like this interesting tax side of the industry. Now I want to talk about the music side of the industry, right? As sort of Spotify sits perfectly in between those two things. And really just like this concept of music licenses the way it works. Like obviously to nobody surprised Spotify does not own music. They license it from your favorite artists and their label and their publisher bubble bomb. So because of that for every dollar you make 67 cents of it goes to the license holder. That's right. So whether that is that like the label, the publisher, etc. Yeah. And this is a very interesting thing. One for Spotify, the idea that 67% of your revenue is not even cannot even cover costs. It's just gone, right? Like it's not. It's just gone by the nature of even trying to exist in the space. And because of that, there is like a lot of emphasis on the way also records deal deals work. Because again, going back to something we talked about, Spotify does not pay artists. Spotify pays these rights holders, which for most cases is in music label, but can also be. It leaves you like a distribution software, like a district like a lot of artists can sign up for distributors to pay a few dollars a month. That distributor sends the music to Spotify and other streaming services and the artists get 100% of the royalties. Interesting. So in that situation, we'll use DistroKid as an example. Yeah. Spotify pays DistroKid. DistroKid pays artists. Yeah, that's right. Okay. And in that case, the artist is the right shoulder because they're retaining 100%. Right. Yeah. It goes through these distributors who, you know, handle distributing it everywhere, collecting the money, lots of other tech stuff. And so the artist is paying a subscription to them. They get to collect all the money. Interesting. So yes, Spotify is never paying artists and songwriters directly. Ever at all. Always in any case. Yeah. A label, a distributor, a publisher, and so on. Okay. That is interesting. Yeah. Interesting that that's even true, like when it's an independent artist is like it's not just the idea of it is across the board, Spotify does not pay the artist directly. That's right. Yeah. We don't own any music. We don't deliver any music to Spotify. Okay. We don't pay any of those creators directly. It's always through a right shoulder. Interesting. And that's true for every streaming service. Not just us. Yeah. Yeah. Yeah. Yeah. Yeah. Yeah. It is it is the way that the streaming business works. Sorry. So with that, I think I want to talk about like first like the record deal structure. Although, again, that doesn't apply to everybody. I think it plays the most sort of this because the concept of a record deal is it starts with like they give you a big advance. And then you sort of pay that advance back and royalties. And there is many good and downsides to being a part of a label. Also, I'm not an artist. So like can give you my experience with a label like it's not my choice. You know, I think it's a very like choose your own adventure. But the way I think I want to break down the deal first before I like talk about like the pros and cons of that thing. Right. And I'm going to use an example. There was this incredible video by Jelly Roll that I really love to really like really broke this down. Well, so let's say they give you an advance. Right. They're like, here is $500,000. We want you to cut your record. You're going to make the music. You got to turn it in and let's say two years, right? For starters, that $500,000 is a loan. Like it is not here blank check $500,000. The idea is like we are investing in you. You have this money so that you can quit your job so that you can fund your music so that you can spend your 40 hours a week, either writing, per practicing, making social content, promoting it. Like however you do it is up to you. Yeah. But the point of the money is to give you this ability to pursue this thing full time. Yeah. And exchange for this industry standard for my reading was an 80 20 split. I know that the real way it works is that everybody has like their own contract with their own label. Some people could be more. Some people could be less. I think generally for like indie labels. It'll be like the they get because they know they're smaller. They get a little less percentage. But we'll buy. I don't know. It depends on the label. Yeah. Yeah. Generally major labels take a bigger cut in the label somewhere in between that if you're self-releasing your music. It's all you. Yeah. So in exchange for this 80 20 split to the label, we're using as an example. They give you the advance. They promote it. They do the marketing. They are helping with social strategy. They might give you PR. They might fund a music video. They are having connections to do things like touring. Maybe they can get you on an opener for somebody else. They can be equipping you with songwriters, producers, dancers or just other things that develop you as an artist, right? Like the idea is that you are giving this percentage of your rights. You're streaming to have the incubator to be in this thing where you can develop as an artist and where you are going to have every tool in the tool about all that support. Yeah. And in many ways you can do. Also, there's like weird logistical stuff, you know what I mean? Like your favorite like your favorite artist isn't like sending a 1099 for streaming royalties for the songwriter that you use on one song. Like the label is doing that for that, right? Yeah. There's like an actual genuine service being done through this system. Absolutely. However, in this video by Jelly Roll, which I found so fascinating is when he talks about this idea of an 8020 split, right? Let's say you they give you $500,000 advance and you go and release an album that generates $500,000. You might be like heck yeah, break even on my first album period. And the answer is no. The way it works is the label would get 400K. The artist would get 100K. However, according to the advance, you still owe 500K. So the repayment comes from only your percentage. So you actually would get nothing. And you're owing would come down to 400K. Even though your art generated as much as it costs in theory to make for this thing. And in order to break even, for example, on a 500K advance or whatever, you would have to make $2.5 million. And then after that, you'll start seeing your 20 cents on the dollar essentially. Yeah, and basically that's the trade off. You get all the big advance up front that can let you pursue your career in music, you're going to get this whole giant team around you, helping you grow. And then you know, you know, you can go shit your terms up front. Yeah, that math, you know, I think a lot of artists end up signing deals without totally knowing what that math is going to be. Yeah, totally. Later on, they're wondering why they are saying more. Why they are getting money? And I think that's what Jelly Roll was really talking about in his first label that like he didn't understand like, why did my music make money? Right, right, right. And it's like, no, it did make money. It's just that's not how you're agreement with the label works. Yeah, again, there's an interesting POV to both sides here. I think from the label's perspective is like, hey, we bear 100% of the risk. There is zero risk to you. If you make this thing and it flops, like, we don't get our money back, right? We are investing the money, we are giving you. uh, staff, two years of support, all the money they're spending on this, like, marketing promotion, development, whatever. Um, and also, I think another label POV is like, well, if you do get famous, and it does work, the label spent all this money building a brand for you, and you get to leverage that brand however you want. Like, in the day, it is, you know, if they're making Nicki Ridd in the pop star famous, and then Nicki Ridd in the pop star in five years wants to do a brand deal, do movies, switch music labels, whatever that fandom is mine, and it will follow, it would follow me where I go. So that is why they're structured so heavily in this percentage skewed towards the label. Yep. And there's already answer here, right? Like, some artists, you see they win a Grammy, and the first thing they do is they go up and thank their team, and there's some artists who have won a Grammy without any team at all, right? Like, I don't think that there is a right answer. Yeah. I think it is understanding this flow of commerce essentially, right? Like, you're one dollar or it's paying $10 for easy math. Yeah. You're $10. Yep. Goes to Spotify, which then only gets to keep $3 of it, essentially, $6.70 goes to the music label. Then out of the music label, that's $6.70, they are taking their cut, then also the royalty cut of like a producer and a songwriter. Then there is the advance, you know, if you have to pay back an advance still, there's also like whatever your contract percentage is. And then it, like, that is what you're seeing on the check. That's right. Yeah. Streaming services are paying the label for the recording, the publisher for the songwriter, and then from there, all the deals are different. And yeah, you're getting at all the complexity of it where artists and songwriters hopefully more and more are starting to understand what they're sending before they sign it, but they often might not realize those terms until it's too late, until it's later on. And yeah, that's where I get through the challenging. Totally. And this explained the big problem that I talked about at the beginning where people don't understand like, how can a label report that 77% of their all revenue comes from music streaming. Yet an artist is complaining how like less than 10% of the revenue comes from music streaming. Like, it's not that either one of them is wrong. They're both right. It is the structures of the contracts in the way the music business works on like that side of the equation. And I think also it's kind of almost an accounting question. When the artist gets a big advance, the reason the label is paying that advance is cause of the streaming royalties. They know how much money is coming in. The streaming royalties are paying that advance. But it feels like it's coming from the label. And obviously the label is other sources of revenue too. But that's part of it. You kind of think, oh, I should be getting these royalty checks. I already got that advance. That's from the label. It's like actually, you know, over 80% of a lot of label revenues coming from streaming. That's what's paying the advance. And a lot of artists don't think about that as part of what they're earning from streaming. Yeah. And one of the really interesting things again, I think really where like Spotify sits between this rock and a hard place. All music streamers sit between this rock and a hard place of like, you don't get to choose like what the relationship with the artist in their, like what their contract is. You also don't necessarily get to choose how much someone so it gets ex-wise the amount of streams or either. Like it is an intermediary in the flow of where this value is going from the consumer to the artist. And I think the artist's perspective is like they see a check or whatever that from their label says title revenue. And they're like mad that they didn't get as much, you know what I mean? Or whatever. And then it's like, well, yes, but it's like there's eight filters through that as like we just kind of outlined. Yeah. I mean, this is why I'm so passionate about more transparency for artists in the music industry because it's really about the options they have just like you're saying. So for some artists, they're going to want that big advance to, you know, let them focus on their art. Yeah. They might want a big team around them. They don't feel as comfortable doing it themselves. There's other artists who are going to want the indelible path where, you know, you get fewer services, you get to keep a bigger cut, but you still have a bit of a team around you. And, you know, there'll be different terms there that can, you know, be a little bit more in the favor of the artist. And then, you know, in the 10 billion royalties Spotify paid out last year, 50% of them went to Indies. And so that's indie labels and artists who are self-releasing their own music. And so for some artists, they want to build their own team around them. They want to do things themselves. They're figuring out how to use all the tools themselves. And they're keeping 100% of the royalties there. All these options are great. I talked to artists all the time. You know, my family members are creatives. And so I know how hard that path can be. For some artists, you just want to be able to focus on the art, have a big team do it around you and you trust them to do it. Yep. But the finances can get quite confusing. There's some artists who are way more entrepreneurial. And there's artists making millions a year on Spotify who are keeping 100% of the royalties. It's pretty straightforward for them. They're releasing the music. All the money comes in. Go straight to them. Yep. That's great too. That's not for everyone. And the importance of transparency is for artists to get, here's the pros and cons of your option, right? Totally. Like, what is the traditional label deal? What's an indelible mean? What tasks do I have to do if I'm doing it DIY? And there's even other elements we have discussed. Like, do you have a manager? Yeah. Does a manager take a percentage of the royalties? You know what I mean? If you're in a band, I just split up between the band members. Yep. If there's a band, that is why I think also, like, when people discuss this, it's as if there's one solution to this problem. What is interesting to me and my, like, again, like researching this was it's like exactly, like, some person might not have a band. Some person might have a six person band. Some person might be a completely solo artist, but they have a manager. Some person might be a solo artist if they have a manager. And they have a label. Someone might have a merchant doing all those things, but they're an indie label. They have a slightly higher percentage, right? Yeah. It's so hard to just, like, blanket problem, blanket solution when I'm like, no, like, I think most of the solutions come in that contract that we are not allowed to see. That's right. Yeah. But Spotify, we're like, our role is to pay out as much money as possible to write soldiers that artists and songwriters are selecting. And so the more that artists and songwriters know their options are thinking thoughtfully about what path they do, there's great paths available now because so much money is getting paid out, right? Yeah. That's the good news. Maybe 10 years ago, there wasn't enough money to go around. Now there is every year across Spotify and all the other streaming services. There's so much money to be made. And so, now that's putting artists more in control. Yeah. They can think, all right, here's the options I have. Here's, you know, the team I might need around me. Let me talk to other artists and learn what that might look like. There's great creators like you are helping to educate artists about, you know, what they might need to navigate their career. Yeah. And so once the money is there, we hope that's going to trickle down to artists understanding they have more options. Right. And they can think about what the best path for them is. Interesting. And I'm glad that this is exactly what it's about to say to you. It's like, I think it's like the emphasis of like, you've got to really vet your team. Yeah. And like plays a lot of emphasis and weight into that decision lens. You how you're like the very, I mean, you know, like you always hear about like the Britney type stories of that's like the worst worst case scenario. But again, like this idea of like the team and your relationship with them, how much value you, they are providing to you in exchange for what you are offering to them. Yeah. The percentage you are offering to them is like a very cost-benefit analysis. You should think about very deeply. Yeah. It's so critical. And a lot of these contracts can be, you know, can stay with you for years. So artists being really thoughtful about who they're partnering with, the team they want around them. Hopefully, there's more and more educational resources out there for them to start to navigate it because it's big decisions. And a lot of artists just want to focus on the music. Totally. Totally. And understandably. Yeah. And understandably. And again, to like I am excited to talk about this. But it's also like, I'm not an expert. I'm not a lawyer. I never worked in a music label. Like what I am saying is vetted and correct. But like I do, you know what I mean? Like I'm like there's layers that even I cannot empathize with their understanding. Totally. This is also why this, you know, $0.67 on the dollar has made it so for Spotify's first nine years of life, it was not profitable. It was a huge business. Yeah. Tons of revenue. But it was not profitable. Like it was breaking even essentially more or less. And it was, this was also a very common thing that happens in tech companies with like Twitter and Uber and blah blah blah. Until this past year, it's part of my head profitability, which is exciting. But so when people are talking about like as like this is a big problem, it is like it is, it is, it's probably isn't a tough place where like $0.67 on the dollar is a lot and they don't have, you know, Amazon or Apple or like whatever, like other aspects of the business, like to fund and invest in just we want to be in music. Yeah, there's some really challenging parts of the music business. The part that's kind of beautiful and works really well is that $0.67 sense. It's that for every dollar we make for music, that's more money going to artists and songwriters writers. So for, you know, 10 years ago, Spotify had like 15 million subscribers. Now we have over 250 million subscribers. That's, yeah, aggressively investing and launching in hundreds of new markets or in 180 markets now, billions of dollars in marketing to get people to understand why they would pay for streaming, to pay for streaming, all the engineering costs, building at the legal costs and so on. Yeah. The team that licenses all the music. Yeah. So that's how we got to where we are today. By us growing our business from 10 years ago, quite small to what it is today. That's what's grown the royalty pool from one billion year to 10 billion year. Yes. Right. It's the same thing. Yeah. And so incentives are really aligned and that's the part that's great. Even though, yeah, there's a lot of parts that are pretty good. Yeah. And also like to go off that like this, you know, remaining 33 cents on the dollar is also like being used to hire the editors that are curating the playlists to get new music. Discover. They are pioneering their inventing technology like DJ and discover weekly to create algorithmic suggestions. They are doing things like the Spotify single series or the Spotify green room series that's like highlighting new artists like a lot of the investment initiatives in music from Spotify are geared towards new talent, which I think is cool. Yeah. And again, like talking about like where this cut is going. Yeah. And like you go back 20 years to CDs and between the store, all the kind of middlemen between even the label to the consumer, there's more like 40 to 45% that would go out before a reach rate solders. Yeah. So 33%, you know, which is true across all the streaming services way less than that. But because streaming is more efficient than shipping CDs all over the world, but yeah, it's a tough business. There's a lot to build. It's a really competitive space and we're happy to be able to grow as much as we have. Yeah. And I think that perfectly segues us into the next question is like, where does that leave us now in a perfect world, how like how does an artist make more revenue on Spotify than they were making today? I like thinking of potential solutions that are hard, right? It's like they could add more ads that would increase the revenue pool, but like and they would pay that out to artists, but then it's like none of the consumers want to experience more ads, right? Like they don't want ads on their music or it's like you could increase the subscription price to increase the pay off price, but then that's more burden on the consumer or is it like you could lower the quality of the products and make it have less editors and have less data centers to make how fast it is and have to lower the cost of production so that there's more money in the pool, right? Like that was like what is interesting is like kept trying to like reflect on like what is the solution? And that I think is the real problem that no one is discussing is that it is a good thing that like 67 cents are going to the right holders and the people who made the music. And people want more, but that I'm not sure that comes from Spotify, right? Like I'm not sure how making more ads makes it like a better experience or whatever, you know what I mean? Yeah, I mean, this is again where incentives are a lot and we're trying to maximize the revenue we bring in, which maximizes the revenue we pay out to rights holders. And certainly like we want to continue growing the royalty pool as much as we can. We're going to keep paying out more and more. I think part of the solution has been just continuing to build streaming, right? Yeah. So 2014 Spotify is paying out a billion a year, yeah, it's 10 times that and totally, you know, I want to say this sensitively because there's so many artists out there, you know, who want a bigger career in music than they have, but there's a lot of artists making a ton of money out of Spotify right now and not always as like vocal on social about it. They're focused on their art as they should be, you know, we're not doing that for charity. They're earning the money. Yeah. But, you know, we're talking about 1,450 artists generating a million a year from Spotify, 12,000 artists generating $100,000 a year from Spotify, half all this money going to Indies where artists might be keeping a lot of it, you know, label advances going up because the labels know so much streaming royalties are going to come in, you know, you're a successful video creator. You know how many more people are trying to make it on TikTok and Instagram. Then yeah, are you able to make money doing it like you do? Same is true for music. There's now 12 million people who have uploaded at least one song to Spotify, which is great. Like 20 years ago, you couldn't do that. You'd have to pay it up, print a CD and mail it to someone, right? Now, it's so fun that you can upload three songs and send it to your friends and family with a link. That growth, the growth of people uploading this Spotify, that's always going to outpace the number of artists making it. But, you know, one of the things that I'm clear showing is that the number of artists making it is increasing massively, right, from, you know, triple from 2017 to 2024, the number of artists making $1,000 through to $10 million is doubled, you know, the global superstars you talk about on your show sometimes, the 70 biggest artists in the world are all generating more than 10 million a year just from Spotify. A lot of them are generating way more than that. That's just Spotify. Yeah. And I also think it's important to realize that like streaming is not the only way an artist makes money. No. It's touring. It's merchandise. It's their brand. Whether you, there are people like Selena Gomez who launched their own brand. Yeah. Exactly. Like, you know, but again, like when you hear these like anecdotal pieces of information, it's also like weird to me how like they'll notoriously be like, this is how much money I made on Blank Company. And I'm like, okay, well, like your music streaming is on 10 different things. Like, you know what I mean? Maybe like me saying like, this is how much I make for my podcast, but only telling you Spotify. It's like, no, like it's a YouTube video. Like, most of the people are watching it on YouTube. Like, there's element. Like, it's a misrepresentation. I think of the information and like the way, not that I think they're doing that on purpose, but it's like the way a consumer hears it. You know, like, I would never tell somebody like, this is how much I do this, how many views I got and like only be reflective of like one of the four out of five, four or five places that this is posted to. It's just like not an accurate representation. Yeah. Like part of this is Spotify's the biggest streaming service where, you know, the biggest funder of music royalties, more contributing more than any other company because of that artist should hold us accountable to pay out more. I want them to get paid more too. That's what we're working on. Yeah. Part of this is yeah, totally in good faith. Like, the artist should hold us accountable with, we love that part of what we're doing with loud and clear is each artist only knows their own experience, right? You have your own label deal, your own publishing deal, maybe your, you know, DIY and you're collecting all the money yourself, but you aren't able to get that bigger picture of how many artists are succeeding and streaming. And so, yeah, I think there's some great structural changes that could happen. Some of them you're talking about, but also part of it's like, let's just bring more transparency to the industry, right? Yeah. I think that's how much is each streaming service paying out? What are traditional label deals? How much artists taking home like, I think the more we normalize talking about those things, company sharing those things. Totally. Totally. And like, I hope that that is the takeaway from this episode for the people watching because like, again, like I'm saying, like, I don't, I'm not the expert, I'm, I think I'm informed. I mean, informed consumer, not the CEO of a label. But one of the things speaking of like, transparency that I really want you to talk about because honestly, it confuses me. Okay. Spotify does not pay per stream. That's right. How, so how do you calculate how much money people make? So Spotify pays out the same as every other major streaming service, which is not a fixed amount per stream. If you think about it as a listener, you're paying, you know, $11, $12 a month in the US. You pay the same amount no matter how much you stream. Yeah. You pay it out of fixed amount per stream, they'll have to be a limit to how many songs you can stream. Something like that. Yeah. The way every streaming service pays out is called stream share, which is complicated. But we can simplify it a bit, which is if you get 1% of the streams on the platform, you get 1% of the royalty pool. It's on a percentage of consumption basis. Okay. So if there's 100 billion streams in a year, and I, Nikki Reard and the artist, get a billion streams. I get 1% of whatever the total revenue is. Exactly. That $10 billion a year, you're getting 1% of it. Okay. So yeah, one of the data points we shared in Latin clear this year is last year in 2024 for the first time. If you got 1 in 1 million streams on Spotify, out of all 1 million streams, you just need to get one. You generate more than $10,000, which is pretty solid 10 years ago for 1 in a million. You get 1,000. It's 10x now. Yeah. No, that's pretty interesting. And honestly, even like me, I'm like, okay, how do I compare that to YouTube revenue? Yeah. Yeah. Because, like, I'm pretty sure I wrote those down. Like, YouTube monetization is a different way. YouTube is a CPM structure. But like for me, I'm pretty sure like a video of mine with like, in order to make like $5,000, I don't have to get like $850,000 views. And keep in mind that's like a 45 minute episode. Right. So comparing that to like a million streams for $10,000, it doesn't seem that crazy to me. Yeah. Yeah. A lot of people, because of the way that video services pay out, are used to some fixed amount per impression. And streaming doesn't work that way at all. Yeah. Yeah. Yeah. One of the most confusing parts of streaming is if you're an artist, all you're receiving is your paycheck. Yeah. And you see the number of streams. Yeah. So it's easy to do that math. You feel like it should be related. But often it's, you know, kind of inversely related to what you want a streaming service to do. And I'll explain what I mean, you know, imagine there's a streaming service where it pays out $1 per stream in heart of spec. Oh my god, that sounds amazing. That'd be incredible. So then you kind of think through what is a streaming service priced, since all streaming services have the same music, you know, tends to be priced pretty similar. $11, $12, it's hard to price much more than that. If a service is paying out $1 per stream, that means the average subscriber is only listening to like 10 songs a month. Right. I think I get what you're saying. What would be true about that streaming service? If you had a streaming service where people paid $12 a month, but they only listened to 10 songs a month, you know, you'd look at a pic, oh, $1 per stream, but it's probably not a very engaging streaming service. If you're buying people to listen to a lot of music, subscribers probably aren't going to retain. If you're only listening to the 10 songs a month, you're probably not going to keep paying $12 a month, because you're not getting that much value from it. You're not discovering new artists. You're going to go see live. It's not going to have strong word of mouth, because it's probably not that engaging product. What you want is a service where people are listening to tons of music, right? They're paying the same no matter what. You want them listening to thousands of songs per month, because that means they're discovering new artists. That's the product. They're retaining and subscribing over time and not canceling. They're going from the free tier to the paid tier, because they love it so much. Those are all things that make the calculated per stream rate go to. down because it's more streams for the same money, but that's what makes a product grow. That's why Spotify is growing payouts so much faster than other services because people on Spotify listen to the most music. - Okay, interesting. - So it's kind of this counterintuitive thing where you're like, oh, I've calculated this per stream rate, that should be high, right? But actually given how stream share works, how streaming works, you want a service that's maximizing your paycheck, not your per stream rate. So you want a service with high engagement or subscribers, love it, keep signing up and get new people to sign up. - Okay, is this why when you see these graphs that people make, you know what I mean? How much of the one stream is per each platform? And it's like, one, they're not right because no streaming service actually pays that way. - That's just a calculation they're doing later. It has nothing to do with how much the service is paying out. They're just after the fact looking at how much money they made and looking at their stream count and dividing them. - And just doing the math. - Yeah, interesting. Like, with like, $10,000 and $100,000 streams and they're just dividing it. - And the graphs, I think that are more valuable, right? If you ask an artist, do you want a bigger paycheck or more money per stream on average? People want more money, you want a bigger paycheck. - Yeah. - So that same graph, if you do it by payout, boughtifies number one. We're paying out the most, there was a recent study done last fall by a third party research firm and they basically asked the entire network of indie labels, indie distributors, a bunch of indie artists, how much money they're making sources of revenue. Over 50% of streaming revenue for the average indie is coming from Spotify. And so that's because it's such an engaging service. It's because listeners listen to so much interesting. The same things that are making that calculation, the per stream rate, low. Those are the reasons that we're paying out the most. That's why the paycheck is high. So I'd love to see, you know, on every graph of per stream rate. - I'd love to see that next. - So it's like because there are more streams happening on Spotify in 365 days than anywhere else. - That's right. So because of that, to attain 1% to get the $1,000,000,000,000 or whatever, you have to reach a higher threshold on Spotify. - Yeah, but another way to think about it is, same music catalog and all services, you have the same chance to get one in a million streams. That's how all streaming services pay out, based on that idea of one in a million, one in blank, for the same level of popularity on Spotify, you make more than any other service. - Interesting. - And stream shares that get what you're saying. That's the actual, but-- - The actual part is the biggest. - That's right. Yeah, like you have the most amount of paid subscribers out of anybody. - Exactly. - So also to get 1% on Spotify versus 1% on anywhere else is more meaningful on Spotify. - Exactly. - Okay, that is super interesting. And you really just clarified a lot for me. - Oh, good. - It's really, thank you. - Thank you. Yeah, no, it is really common in it. - Yeah, I can totally see why artists are confused too. - Well, I know, I also know I see why people like try and do these breakdown things and like, you know, like try and compare like Amazon versus whatever, and blah, blah, blah. But I also see now like after explaining why that doesn't make sense. I think another thing that's super interesting about this problem that like people really aren't thinking about is this weird issue. And but I think it's worth talking about. It's like, did we devalue music too much? Did the fear of piracy? Like I saw this one graph. I don't know why it's so funny to me. But it's like, things that are worth $12. A wingstop combo meal, a 12 pack of lacrawl, a six pack of Duracell batteries, a carton of eggs in New York City in front of the seats. And then like even Netflix, you know what I mean? It's like, I pay $18 a month for Netflix and it's not even close to all the movies ever made from every global market through the history of time. Like, but then it's a delicate balance because then it's like, hey guys, know the economy's bad. No cost of living is so expensive. We're gonna up our subscription price so we can pay artists more because the consumer perspective, they're like, well, the artists are already millionaires. Like why, they don't need more of our money. Did you get what I'm saying? Like there's some disconnect there. There is no, like I don't know how you win that sort of thing. But it is super interesting to me and I think something we all need to think about. Like is $12 for every song ever made in the history of mankind in every language across the world like too cheap? And if you think no, then like why are you paying more than that for Netflix? Yeah. Like I don't know. It's just a thing that I even think about a lot after like doing this research. Yeah, I mean, certainly the low price point has allowed us as an industry because all streaming services is over 500 million paying subscribers now. Yeah. This is a brand new model and piracy was really easy, right? But destroyed the recorded music industry almost overnight. Yeah. And so entering the market at a price point that gets people used to paying a subscription for streaming is the right thing to do. And I think that's why we've reached half a billion paying subscribers across all the services to your point. Yeah, I think it's a really, really good deal. Probably, you know, too good a deal. And we've raised prices a little bit the last few years. And yeah, when we raise prices, that means more money for right soldiers too. Yeah, we love to see that. So I agree. I think it's a really, really good deal. And it's so weird because it's like people, somebody could yell at a streamer for not giving enough to artists. So then in order to accommodate for that, the streamer could increase the price of the service. And the headline of the article would not be Spotify pays songwriters more. Yeah. The satellite would be Spotify raises prices against consumers amidst like decimating economy. Do you know what I mean? Yeah, the fans do not celebrate it. Yeah, it's increasing even though. And again, it's like empathize with all sides. I empathize as a consumer who does not want to pay more. We'll be paid to like, there's way too many subscriptions for too many things. I empathize as the Spotify because you're like, I really want to reward and incentivize and benefit these hardworking creative people. And I get it as like the songwriter side of being like, why I made all this music and I'm only getting this tiny little chick. Like, it is so. Right, that does. No, I don't think there is a bad guy. I think it's like exactly like this disconnect of like, and that's why I think it's like really like truly an industry problem because I don't think a solution can come from anyone intermediary. I think it has to be this like greater evaluation of like, what is streaming as a business? Yeah. And yeah, another factor too is, you know, versus video services where you have your originals and exclusives that keep people there. And streaming, it's the same music catalog on all the services. Yes. When you raise prices, if people don't want to pay more, even if that's going to help, artists and songwriters get paid more, you switch to the same music somewhere else. And I think that's why you're seeing all the streaming services kind of more delicately raised prices the last few years. Yeah. Yeah, I think it'd be great if fans kind of saw some of the price increases across any service that way. Because, yeah, streaming is a really, really, really good deal right now. It already was a really good deal 10 years ago. The price hasn't changed so much. It's a really good deal. Yeah. And another thing I was thinking about too is, like, I do genuinely believe that so much of this globalization of music, they're being cross-genre representation. They're being young artists emerging is because, like, when it costs money to discover music, you don't want to do it as often. Like, I have listened to Spanish albums all the way through. If I had to pay $20 for it, I'd have been like, I am not going to understand any of this. Anyways, like, you're not having my $20. But, like, I was like, okay, like, you know, like a lot of people are talking about bad money. Like, let me give it a try. Right. And, like, that is how people, like, discover. So, there is this interesting paradox in all things too. You know, I think you see it a lot in a lot of the discussion from a creator standpoint about monetization on, like, TikTok versus YouTube. It's like, yeah, you make less money from TikTok, but the discoverability on TikTok is, like, astronomically higher. So, what you are willing to sacrifice, like, this ad revenue, because you understand, like, it is exponentially easier to get like a million views or whatever, a rowing audience that you can then monetize in other ways. Whereas on YouTube, it's like, you would get paid 10 times. You would, on TikTok for those a million views, but, like, it's astronomically harder to get a million views, right? Interesting. So, like, I equate that problem. It's like, again, like, the way I perturb it as a creator, but to this music industry thing, you know, of, like, I don't think people would do that. Like, they wouldn't pay for these new genres and stuff like that. So, it's like, it is a cool and good thing. Right. And I hope after you, like, discover a bad money because you don't have to pay extra to listen to them. Then you go on and buy his vinyl and go to a show and, you know, buy his collaborate through some fashion brand. Yes, streaming is kind of the gateway to all those other revenues. Exactly. And, again, then that makes this other weird discussion to be out of, like, are we in a world where music is a discovery tool, you know what I mean? Like, is the world of music now, like, that it is a tool for discovery and the conversion is the concert ticket. The conversion is the merch, whatever, you know, whatever. Part of the way we've thought about it is 20 years ago, you had this separation of radio stations in the record store on the radios where you discovered music. And then the record store is where you went to purchase the music. And that was the end point. Streaming brings us two things together. So, it is discovery, but it's also consumption and library where you return to your favorite. Right, I mean, it's not like actually Blah A or B. But then it's also this gateway to all those other revenue streams. So, it's like, you know, both of those things. And it's also kind of what's exposing people to all the music that they go out. And, yeah, not even just concerts and vinyl and merch and brand collabs, but, like, you know, live streams and listing parties and all the other innovative ways that artists are making money now. Even build a world as an artist. Yeah, absolutely. And I think I learned a lot. Again, I don't know. I don't know the answer. I can't tell you if you signed a record deal or not. I can't tell you if, like, what percentage of. worth it. I think that there is this greater discussion to be had about the economics of streaming. Really, it's like what it is. This is an entire multi billion dollar industry that is being not just done by one streamer, by multiple streamers, not just being done by one label, multiple labels, by songwriters, by producers, by artists. Like, there's so much more that goes into this. And my goal with this video, I hope you guys like took away, is that I want to paint the picture. I want you to come to your own conclusion. I don't know. This is up for you to decide. And I really, Sam, like, I really appreciate, like, you did not need to do this. It would have been very easy to say no. And not, and letting me say some things about, like, what I think is weird in this industry, I appreciate that. And it doesn't go unnoticed and appreciate it. I could, I could talk about the music industry all day. So some of us do for living, actually, yeah. That would be so weird. Yeah. But thank you so much for being here. Oh, thanks for having me. Cool. And I'll see you all next week. Bye.