Spotify Executive Explains How Spotify ACTUALLY Works feat. Sam Duboff

Sam, if you only had one minute to give music artists the best advice you possibly could, what would you say one minute on the clock? Oh wow, a timer. This is real. Half say best advice I'd give is to get informed, get educated, and really know the ins and outs of the business. In my role, I talk to artists all the time, and even working at Spotify, there's new parts of the industry I learn about every day. It's incredibly complicated. You definitely can't believe everything you hear online. And my best advice to artists is if you want to take control of your career, you have to know your stuff. So, look at your royalty statements, look at the you know, deals you have with your manager, your label, you know, your lawyer, look at platforms like Spotify and make sure you understand everything that we're doing, understand how the ad platforms work, understand how your royalties are generated, and really make sure you get the details of it, because if you don't know those things, you're not set up to make the best decisions that you can and help take your modern career to the next level. I think I was five seconds over. I am. You failed, now it's working out. The first five seconds didn't really count, because that was reacting to the timer, you know. Now that's all good. That was a great answer, because you're not, you're right about how complicated the music industry is, especially in terms of royalties, like everything's very opaque, and a lot of things are very delayed. You know, you upload your song to Disturquit or whatever. A lot of artists don't even realize that there's another 15, 20% of their royalties, just in going on like, you know, registering with a PRO, registering with a song trust or their mechanical rights site. And then on top of that, they don't understand how streaming services even pay, right? You're constantly fighting the swath of misinformation on threads as I am. And it's a lot of people, I've seen people say, like outright, that streaming services pay a flat rate per stream, when they don't, right? Not a single one does to my knowledge. Yeah, it's, I appreciate you for fighting the good fight too. I'm really happy to finally be on your show, because you hold us to account plenty and you've got a lot of fair criticisms for first Spotify over the years that I always like to listen to. But you also really are engaging online in good faith and not just going for clicks, but making sure people actually know what they're talking about. So I appreciate you. Yeah, you know, one of the biggest pieces of misinformation that I see online every day is people really believing that there's a fixed first-room rate paid out. On each platform, Spotify doesn't pay out that way. No streaming service pays out that way. And it's a great example of how artists can see something online over and over. Think it's true without really getting into the details and understanding it themselves. And there's lots of really important decisions you're going to make about which platforms you want to promote your music on and how you should analyze your relative statements from each platform that you're going to get completely incorrect if you think there's a fixed per stream rate. So yeah, always a good place to start off the conversation because that's one of the biggest pieces of misinformation out there. And I want to start off with talking about Loud and Clear because that is you just gave the Loud and Clear briefing for the 2025 stats. And there was a ton of information I was typing the whole time just writing down info so that when I filmed my video for later in the week when the embargo's up, I'm ready, right? So there's a ton of cool stats and I have my own favorite. But what was your favorite stat from this year's Loud and Clear? Yeah, for your viewers who don't know, Loud and Clear's are annual royalty report. We're the only streaming service that does anything like this. We've been doing it for five or six years. Every year in March, we take all the royalty data from the year before and publish on our site exactly how many artists are generating each amount of revenue from Spotify, from $1000 to $100,000 to $1 million to $10 million. We've been publishing that with full transparency and accountability every year since we started doing this. And I think it's really important for artists to know what the revenue opportunity on each platform is. So that's why we do it. And then we have an amazing team of data scientists who dig through the data and kind of pull out some of the most interesting trends and takeaways that we publish on our site. So if you don't mind, we'll give you like my top three because it's hard to pick one. And they all have to do with kind of the artist ecosystem growth. You hear a lot about superstars on Spotify and there's some really cool numbers about how well superstars are doing, in streaming. But the story of Spotify is really one about emerging artists and indie artists and a foldable ecosystem, finding success. So the first one I love from this year is we take a look at the 100,000th highest earning artist. So if you like, you know, stack ranked every artist on Spotify based on royalties generated, get down to number 100,000. In 2025, that artist generated $7,300. And that's up from $350, 10 years ago. So that's a 20X increase in just 10 years. And you know, the majority of artists earning money on Spotify are outside the US, $7,300 and local currency. You know, it's really start to be a material amount. And you know, in the CD era, even in the biggest record store, you wouldn't have $100,000 with a CD on the shelf, right? You like maybe how to. Also, would you want to have 100,000 artists on the shelf? Yeah. What these are even a concept of the 100,000th artist ranking, you know, in like 1997. Right. Right. I drew you a $350, 10 years ago on Spotify. It didn't exist as a concept 20 years ago, because yeah, you certainly didn't have 100,000 artists able to be on CD shelves. And so, yeah, that's why I love that one. Second one along the same lines is looking at the $100,000 level. So this is where there's, you know, nearly 14,000 artists who generated $100,000 or more on Spotify last year. That's more than the number of artists who generated $50,000, half that amount five years ago. So, you know, it was a bit under 14,000 artists were making 50K or more on Spotify five years ago. Now that's how many are making 100K. So you're seeing this consistent growth year over year. And that's what we do now clear over year. And that's just from Spotify too. So like, I think I saw in a lot of the loud and clear stats at the bottom, there were there were some statement along the lines of typically artists will be making three to four times this from their overall recorded royalty. So once you factor in all the of DSPs and then you factor in like physical media sales and other forms like recorded music revenue, if you're making 100K and Spotify, you're probably making 300K overall, which is kind of insane. There's 14,000 artists doing that. That's right. And yeah, that's before non-recorded revenue as well. So, you know, your concert, live events, revenue, word revenue, certain kinds of sync revenue, and so on. And yeah, it's just right. Spotify is about a third of global streaming royalties. So for all these numbers, you can triple them. And that's what you may be looking at across all streaming services. And kind of awesome to see. And the last takeaway I wanted to highlight is about the DIY segment. And DIY, do it yourself. We use that as shorthand for artists self-releasing through independent distributor, like district it or CD baby or tune core and so on. And, you know, I think early days of streaming, people thought of that as like a niche path for artists. And what we're seeing is especially on Spotify, it's more and more viable. Over a third of artists who are generating $10,000 or more, that's more than 80,000 artists at that level. More than a third of them are DIY or started as DIY, which is really cool to see. So you look at that $10,000 level, that's when, you know, at least in the US, that's like starting to feel, you know, material as a, you know, part of your career and other parts of the country, it's really significant. Over a third of the artists making that amount or DIY or start as DIY and then decide to sign to a label because of the success of the DIY channel. So I think that's really exciting to see 90% of DIY royalties go to artists who started before 2024. So these are DIY artists who have been going on it for a few years, they're not, you know, one off who who just started. These are people have, you know, built a career over a number of years. And it's awesome to see that become such a kind of viable channel for artists who choose to go that path. Yeah, absolutely. I really liked the breakdown of DIY versus indie because the phrase indie music is kind of lost. Meaning like, for example, on billboard, I think the indie charts allows Disney to compete because they're technically an indie label, right? So it's kind of silly. So I love this section of the DIY because that is very different. Like you can be in a pretty big label on still being considered independent and you could be distributed through a major labels, you know, indie distra like the orchard is under Sony or a wall or whatever. My favorite step, yeah, please kind of blew my mind, is that if you could reach 1% of Spotify listeners and get 1% of their streams, you'll make a million dollars a year. Great. Which is crazy. And it makes sense. It's kind of like that, like a modern version of that 1000 true fans. Yeah. You know, because I don't know if the math would actually paint out this way, but if you could reach.1% of spot of listeners and get 10% of their streams, you'll probably break out to be roughly the same. Yeah. Which is a cool stat, right? Because you don't need to be a Taylor Swift. You don't need to be a Drake or a or Ed Sheer and or whatever. Yeah. You can be pretty obscure. And it's kind of shocking the amount of artists I'll work with where, you know, I see them booking a call with me or I see them coming through my agency and it's like, I go to check out the music and have a million monthly listeners and Spotify. And they have a song which like 300 million streams. I've never even heard of this artist. And they're kind of huge. But like, there's so many artists with like a million monthly listeners that you kind of forget that you really don't need to be you don't need to be everywhere or a household name to actually make it in the music industry. In fact, like the vast majority of artists who are successful are not household names. Yeah. But we are one of the stats we shared that gets at that is, you know, of those artists making a million or more a year just from Spotify. It's like 1500 a bit over 1500 artists. 80% of them didn't have a single song reach the top 50 charts last year on Spotify. Right? So if you think of those charts, that kind of encompasses anyone who is like, you know, big at the Grammy or Brit Awards that, you know, certainly you like be reading about and the Billboard chart recaps that we're having the biggest tours of the year. Right? You removed, you know, 80% of those 1500 plus artists didn't have a song reach the top 50. It's not about like a breakout viral song they had. It's about, yeah, that fan base they dealt over time. And that one percent of one percent meaning a million is really cool because I think artists would think you kind of need like ubiquity to make a million dollars a year from Spotify that you'd have to be everywhere. I'd have ever know you and that's the least how I would think about it. If I didn't know the data, it'd be like a million dollars as a ton. You must really have to be, you know, one of those artists everybody knows. And what we're seeing is, you know, I have the royalty pool grows 11 billion plus a year paid out by Spotify 50% of that to Indies. You know, if you have that sustained fan base, if you have, you know, that, you know, set of folks who are seeking out and listening to you, you can make real amounts of money. And maybe your goals to then become a household name and, you know, headline at Madison Square Garden, but maybe it's not. You can make a really good living with that kind of core fan base that is that, you know, ride and die for for your music. I have kind of a, well, I have a couple of fun questions that I'll ask. But first, we'll talk about like what do you actually do at Spotify? So your official title that I found in line is the global head of marketing policy at Spotify for artists, which is a mouthful. But like, what does that actually mean? Like obviously you do stuff like this. You do the loud and clear briefing. But what do you actually do outside of that? Yeah, this will be a useful clip to send my family because no one really understands what I do. And I go to parties and he asks me what I do. It's like, I don't, am I YouTuber? I guess. Right. Yeah, I could just titles are never that helpful. I mean, the way I define my job is, you know, my team's trying to do everything we can to set up artists and songwriters to succeed on Spotify. And, you know, specifically, we're working on all the products, resources, educational materials, policies that we offer to the music industry, whether that's artists, labels, publishers, songwriters, producers, you know, anything Spotify's, you know, providing to the music industry. My team's working on how can we help build that make sure it's serving artists the most? How can we market that? So they know what tools to use and, you know, things like Spotify for artists that I'm sure all your viewers know Spotify for artists and, you know, that's a huge portion of what my team works on kind of marketing and building those features through to educational materials, things like loud and clear and made to be found if your viewers have seen that or it breaks down discovery on Spotify or education, you know, our master class series where we dive into things like play listing or artificial streaming or songwriting and how publishing works. So we build all those materials and then on the policy side, we're trying to think about how can we make Spotify as fair and rewarding as possible to emerging a professional artist. So that's royalty policy, AI policy, we can get into issues around spam, artificial streaming infringement, lots of really thorny stuff. So it works on a kind of whole hodgepodge of stuff, the through line of it is, we're really trying to help artists and songwriters and the industry get as much out of Spotify as they can. Totally, totally. Now, does that include the the ever talked about online thousand stream threshold policy? Like was was that part of your your teams and I shit it because like the well, I was like you talk about it, but that that thousand stream policy a lot of people were were very upset about it online because they they from from their perspective they were making something from the music and then they they weren't and I've talked about a few times on my channel, but I've had people come up with extreme cases where they're like we have 100 songs that we've released over the years, we've never really been active and we had you know 50 of our songs were getting 800 streams a year. So we're we're losing out in like a hundred dollars a year or something. But what what is the I guess you know in your own words, what was that policy made for and then like what did that actually translate to on the back end of like what problem did it solve? Yeah, I mean let me say first I very much get where artists are coming from, you know most of my family are in creative fields and I'm talking to artists all the time, I know how hard it is to be a creative person on the internet today and in society today. And so you know I think where a lot of artists are coming from is you know they're trying to make a career in music, platform, like Spotify, you know makes a new policy like this and changes the way things work and you got used to things one way and you know any sort of policy is going to you know help some people and be harder for other people and you're trying to weigh those trade-offs and so I really get where anyone's coming from when they're asking questions about it or feeling upset about it. The principles of where the policy came from and what it's trying to do, I think it's really aligned with what emerging and professional artists are looking to get out a Spotify which is how can we make sure as much of the $11 billion that we pay out every year goes to emerging and professional artists. There's a whole wide range of you know aspects of our royalty system that was set up you know 15 years ago 20 years ago we're approaching this year is the 20th anniversary of Spotify so a lot of our royalty rules were set up 20 years ago in a very different time and for the first you know decade and a half of Spotify we really just wanted to focus on growth you know how do you just like keep growing the royalty pool let's put all our focus on that we were able to 10x from 2014 we're paying out a billion year now we're paying 10x that you know 10-11 years later. At the same time you know things that would be you know little questions and inefficiencies in the the royalty system you know once you're paying out 11 billion year they become you know a lot bigger and they really can impact how much money artists are making so with the 1000 stream kind of eligibility requirement the way it works is you know for each song that you release you need 1000 annual streams to be eligible for recorded royalties you know there's over 100,000 songs released on Spotify every day there's a lot of music out there about 99.5% of streams go to songs with over a thousand annual streams 0.5% goes to songs under a thousand streams so you know 10 years ago when we're only paying out a billion year something that's about 0.5% of the royalty pool maybe you wouldn't think about now 0.5 of the royalty pools 10 to millions of dollars a year and what we have heard from distributors what we see in our own data is a ton of that money get lost in the pipes so on average the songs that are below that 1000 stream level generate 2 cents a month so we're paying out 2 cents a month for 10 to millions of tracks and for you know any distributor pretty much any distributor there is minimums to withdraw the money or to take money out which makes sense because distributors take on a lot of infrastructure to be able to handle the finances so like you'll see like I anywhere from like two to 25 to 50 dollars even sometimes as like the minimum to take money out of the distributor and you know you'll see like two three four five six dollar fees especially outside the US the fees and minimums are way higher so what's happening we're using reusing PayPal yeah 3.5% plus 30 cents or whatever so right you're cashing out six dollars it's kind of a approval right you've lose money on doing that so you know artists don't do it which makes sense so you know tens of millions of dollars work hearing from distributors it's just sitting there it's not reaching anyone and so you know we're trying to you know think about how do we get ahead of things like AI technology generating mass uploads of songs. How do you try to get ahead of wide, wide troves of music being released online and maybe a bunch of it is getting 50 streams, five streams, 150 streams enough that is like below what make it notice, but you're able to release enough of it that it adds up. That's the sort of thing where whether it's bad actors trying to game the system that way or just money that doesn't reach those levels is just sitting there in distributors, we saw this opportunity to modernize the relative system alongside the other policies we rolled out, take the tens of millions of dollars a year and use it to increase the payments to the other 99.5% of of activity. And so one of the stats we are releasing this week with loud and clear is that three and a half million artists reach that eligibility level of 1000 streams, annual streams for a song. So it's a really accessible level for tons and tons and tons of artists. It's like a huge number of artists. How many artists are on Spotify period? Do you know? I think there's like 12 million artists for profiles. It might be more than that now. Out of water or getting or have at least one song. Yeah, I mean, a huge number of those profiles have like one or two songs that never released again, but yeah, yeah, talking. I have like probably 10 music projects over the years and only like four of them have more than a couple hundred months. I think I have several that have like three monthly listeners because I just released music over the years and I never once promoted it. It was just like a fun thing before it started actually trying to give people to listen to my music. So I definitely get that. And I went to ADE a couple of years ago, which is a big music conference in Amsterdam. And I met someone who worked in music industry and he was like a software dude. And he was explaining me this like complicated like automation system he made where he uses some API to call this this AI music tool. And then he uses this other API to go make like artwork and stuff for that scale. And then this other API integration to distribute it. So he was explaining how he's he's distributing like, I think it was quite literally thousands of songs a month. And this was I think three years ago that he was walking through this. And so as when I first heard of this policy, I was like, Oh, that guy can't do that anymore. Yeah. Because you know, on one hand is explained, I'm like, Oh, that's like, that's really like clever because he's talking about how you make a SEO thing so that people would search from thing and find it. Exactly. Or he would use song names that match popular artists song names. I'm like, that's really clever. I was like, that's kind of messed up. So you're basically stealing money from actual artists, but that did actually solve that problem. Yeah, that's just like the fix for the white noise and functional music that happened like a year before that. That's right. Yeah. As part of set of policies, trying to attack a lot of these says, schemes people have once you're paying out, you know, 11 billion plus dollars a year. There's such a big revenue opportunity on Spotify that people do try to game the system on the margins like that. And it's tough because I totally get where an artist is coming from where, you know, you may be like generated dollar on a song, but that's your dollar that you generated. And you want to be in a world where you get to have that. And I, you know, totally got to think there's a reason, you know, most tech platforms kind of across industries have ended up with some sort of eligibility floor, because it's really tough to, you know, especially in modern times with the sorts of AI tools out there to allow anyone to monetize from day one, from any level of activity. You know, it's really important to us to keep it as accessible as possible. You release music on Spotify. Everyone has the same chance of monetizing, same roles for everyone. You know, any song gets to a thousand streams. It's going to be eligible. It's still a pretty accessible four, three and a half million artists reaching it versus, you know, in other fields outside of music, you often see way more restrictive floors until you can start earning. So we tried to really keep it accessible. That's one of like the great things about music streaming. But I totally get where artists are coming from when they're upset about it. And then I hope that as artists learn more about why we did it. They can come to understand, you know, this isn't money that Spotify's keeping in any way. All of it's used to increase payments to three and a half million artists who are earning royalties. So it's, you know, tens of millions of dollars extra going to those artists making more material amounts will actually get to see that money because they can withdraw it from their distributor and, you know, keep it, use it to pay their rent, reinvest it in more music, right? Like those have a sorts of payments we're trying to increase. And sometimes the trade-offs can be really hard. But that's the principles behind why we did it. Yeah. And on a similar note, there's a huge problem with, with AM Music getting uploaded all music streaming platforms now. And no one really knows how to handle it yet, just because it's so new. These are has been taking a lot of stances around AM Music, right? They label it with an automatic system they have for flagging it. And they don't push it out in their, their algorithm. And I know some people and ironically most of them are artists who have AI music side projects and some of them have hundreds of thousands of monthly listeners. And you see people on social media talk like they'll they'll accidentally listen to an AM project like I recommend it to them on radio, for example. And and they're they're mad because they feel like they're being misled. And I feel like there's some there has to be some system that that comes into place. I know Spotify is as something that they they're working on with regards to manual declaration of AI use. But is there any consideration on you know automatic detection or how do you treat AM Music differently in the algorithm so that there isn't like an unfair advantage for AI, you know, AI artist versus human artists. Yeah. That's a great question. It feels like the issue of the decade for music and ever and to figure out. And it's one of our top focuses. You know AI artist AI music like when you're talking about entirely prom generated sort of projects you might read a lot about them in the press. There's a lot of like novelty artists where they have a spike when everyone's talking about them for a few weeks and then graders. You know, that's sort of artist. Even if you read about it a lot, there really isn't significant streaming on Spotify at all. And you know, maybe I'd say yet, but I said don't think there ever will be. You know, low effort music isn't new. Think what's new is yeah, to your point, some of the ways AI can like create deceptive synthetic personas where you'd see an artist profile. I think it's a real person. You can like go see live and be a fan of and then you find out it's AI. That sort of deception. We it's a hard problem to solve. We're working on a bunch of things to really like make sure artists have to be authentic and transparent. Whether that's, you know, new roles around artist verification. We're working on, you know, a new feature that is actually rolling out today to artists called Song DNA where it's rolling out now to artists. Listers will get it soon and it lets you dive into your credits and see the humans behind the music. Like, you know, who's the producer, who's the guitarist, who's the mixing engineer. You know, who's the lyricist, you can click any of them and see their body of work. You're not really trying to like foreground the creative process and make sure listeners are falling in love with that music. We announced we'll be supporting AI credits so that for good faith, good faith, authentic artists who are incorporating AI in their workflow, you know, whether it's like using an AI plugin or using an imposed production or, you know, experimenting in an intentional artistic way. You know, those sorts of artists we want to be able to succeed, but represent themselves transparently. What we really are against is people using AI in these low effort and authentic ways. So we've been getting a ton against spam and impersonation, deception. There's even more to come. But, you know, right now, you know, I think UMG in their earnings statement last week, you know, their estimate from their best data is, you know, maybe 0.5%, you know, under 0.5% of streams might be from AI artists. And maybe there was like up to 10 artists in the top 92,000. They'll have like add in the YouTube notes, the exact link to it, but something in that space based on what detection software use or what proxy metrics, you know, there's no great single detection system that can figure out what's entirely prompt generated and what isn't. We're definitely using a few detection services so we can understand when, you know, spam or certain kinds of ad behavior are more likely to be happening. But, you know, with all these systems, you've got a bunch of false positives where music that isn't prompt generated, it gets flagged as prompt, you know, prompt generated or false negatives where, you know, you know, you know, someone's using detections, so you make some alterations to your prompt generated song, we try to evade detection. What we're really focused on is, all right, how do we like stamp out spam with our new music spam filter stamp out impersonation. We made it, you know, illegal to use a voice clone and audio voice clone of any artist without the mission that'll get taken down. How do we go against deception? So features like song DNA that bring credits to the forefront, plus, you know, new forms of artist verification. making sure soon other artists can spam your profile and get on your profile, which is something we're urgently working to fix. And, you know, for good faith artists who are using AI in their creative expression, how do we allow them to apply AI credits so listeners understand who they are? So that's our focus. Enable artists and producers and songwriters to be in control of if and when they want to use AI. But make sure that they have to represent themselves authentically without spam, without impersonating anyone, without deceiving anyone. And when that happens, they'll have a chance to succeed. You know, no extra benefit, but, you know, we think listeners expect at least, you know, that minimum standard. Absolutely. Yeah, because it's, it's, I guess it's from your perspective, it's you. The use of AI Spotify is agnostic towards. It's more so just on things that aren't authentic, essentially, or things that are trying to exploit the system. It's less about like, oh, you use AI. It's just like, are you exploiting? And I think when you did all the removal of AI music tracks recently, I think it was last year, the language used was specifically something along the lines of spammy revenue extracting tracks. So it wasn't like removing AI tracks. That's right. It was, we're removing spammy, deceptive revenue extracting slop. That's right. Yeah, we took it. We took down 75 million tracks that were spammy exhibiting those sorts of bad behaviors. I mean, call, call bullshit on me if you disagree. You know, we feel like we're trying to follow the lead of the artists, songwriters, producers that we talk to, which is that a lot of people are experimenting with AI as part of their workflow. You know, I saw a panel last year with Harvey Mason Jr., who runs the recording academy that runs the Grammys and music cares and lots of great services. And he said in his last 12 months, he hadn't been in a studio session where AI wasn't being used in some way, not a single one. And so, you know, we're talking to artists, songwriters and producers who are in control of their artistic vision and their of their own volition, you know, testing out different AI technologies to, you know, express themselves, maybe it's, you know, to enhance vocals like the Beatles did or, you know, image and heap and grimes of really interesting AI projects with authorized voice clones, maybe some artists are just using it for post productions or certain, you know, plug in maybe you're just using it for a demo, you have to try to have a songwriter help pitch an artist. You know, we don't think Spotify or any platform should be in the position of telling artists, songwriters and producers, you can't use AI tech at all and were the ones who are going to tell you what your creative tools can be. Instead, we think our role is set up a system where you have to present yourself authentically, make sure that when things reach the level where it would feel deceptive delisters that when we step in, you can't use AI to spam, you know, spam existed before AI AI can do at a different level. You can't use it to impersonate you could try to impersonate an artist with your voice, you know, free AI, AI makes it really easy, we don't allow that you've tried to deceive people pre AI, maybe you like Photoshop a fake image make a fake identity, but now you can kind of generate that pretty easily with a lot of AI tools. So AI is accelerating these things and so we're trying to stay a step ahead, you'll see us invest way, way more even this year in all those things where if you're using AI and good faith as part of your process, you have a chance to succeed. Our role is spam impersonation deception, making sure that you can't use AI to get ahead of artist doing things the right way. So pivoting from AI, I speak for a talk with AI for two, I was just kind of a hot topic, but going a little bit hypothetical perhaps is there a path towards Spotify and and or every other streaming platform, paying a penny per stream. This is a number you hear on all like online all the time, streams should pay out a penny and so no platforms actually pay out a flat rate per stream. It's all done in the world, people system, but is there like a path towards that and you know, even just hypothetically like what are the the levers that Spotify or the platform is going to pull to make that happen. So we could do a hour on a press stream rate to probably the yeah, as we talked about at the top, certainly one of the biggest misperceptions and music is people thinking there's a fixed per stream rate when you see artists share a per stream rate online. And it's just an average after the fact where they're taking their paycheck from a platform, dividing it by streams, it really makes sense that artists do that because that's like the two most accessible numbers I get why artists share it. And you don't get access to a stream share, which is how royalties are actually calculated. If you get 1% of streams in a given month, you get 1% of the royalty pool. So you know, if you get one in every a million streams on Spotify that's $11,000 last year. So that's the way royalties are actually calculated. When it comes to average per stream rate, it is kind of you know, one of the few metrics that feels available to artists and especially if you don't realize it's paid out by stream share, you might think it makes sense. For stream rate, it's a very simple calculation. It's just you know, the price that's being charged for the service divided by the number of streams per user. And Spotify subscribers listen to three to four times more songs every month than subscribers of other services. And so the most active fans, the most engaged listeners are on Spotify. Three to four acts more streams per month for the stars on Spotify for other services. So you think about that calculation. Every service is paying, you know, they charge around the same amount plus or minus a dollar. That stays consistent. You divide by streams for user. And for Spotify, you've got three to four acts more streams per user than other platforms. So that's making the average per stream rate lower. The thing is, having a high streams per listener rate is a really, really good thing for artists and for the industry. You know, we grew our payouts more than 10% last year at a time where other the rest of recorded music revenue grew around 4%. The reason we're able to grow the most is because we have the highest engagement with the most engaging product. Right? Like when you're on the free tier and you're thinking about if you're going to upgrade. Number one predictor of upgrading is that you're using the service a lot. If you are already in premium, we want to make sure you keep paying to the royalty pool every month because two thirds of that money is going to go back to artists and the right soldiers. And if you're using the product a lot, that's when you're discovering more artists getting more value and you're retaining. So, you know, that fact that list or some Spotify stream the most, it's a good thing. That's why we're growing the royalty pool so fast. It's not going to buy Sam his second. Yeah. And that's unfortunately not. But. And you mentioned the number in passing about two thirds of the money that you collect goes directly back to the rights holders. That number is pretty standard across other streaming platforms too. Yeah, I'd add a call as best I know. Yeah, I want to make sure your viewers don't think I'm evading the question about how we would get for stream rate up to a penny per stream or anything else. But that context was kind of needed to explain the sorts of things you would do to get for stream rate up. You know, for us, we're focused on maximizing the paycheck to artists. Like you said, two thirds of the money we make for music goes back to artists. So when we make more money, artists make more money, when artists make more money, we make more money and centers our lines. So we're trying to maximize our revenue. That maximizes the paycheck. So if there are things we could do that would make the paycheck higher for artists, the royalty pool higher. We would do it because it would come along with us making more revenue. So you can believe me, we're going to talk about these things. The source of things we would do to make the average for stream rate go up would be, you know, first and foremost, could we get people to listen to less music. So we could, you know, cap the number of streams. And do in a certain month, like let's say you can only play hundreds, 800 songs in a month and then you have to pay more to top it off that would get for stream rate up a bunch way fewer people would sign up for streaming services because what people love about it is that unlimited access what you're not thinking about each song. And then you can do more after you love a song, you might buy vinyl, might go buy it on bandcamp, but the premise of streaming is that unlimited access or you can play your playlist and not think about it. But that'd be one thing to do. Another thing we could do would be, you know, charge way more like, you know, if we tripled how much it cost buy a subscription service if all services did it. So ever had to do, you know, you couldn't just like go to the cheaper one if ever and triple their amount. That's kind of what's what's been happening over the last couple of years like every every couple quarters, Spotify, Nejas up a dollar and then six months go buy a Spotify, Nejas up a dollar, but also since it's in these increments like apples also incremented a bit and they're not all going up at the same but Spotify has been incrementally increasing and it was it was 99 for like forever. Now it's 1299, what you're trying to do it thoughtfully, I mean, you've got some services who you know, bragged about not raising the price a dollar. You know, to us, it's a good thing to thoughtfully raise prices as an industry because two-thirds that money goes to grow the royalty pool for artists. That's a good thing that helps artists get paid more. And so we're trying to do it thoughtfully at the scale of maybe a dollar at a time in music, obviously. The music catalogs the same on every service. So if you're priced higher, it can be easier for subscribers to think about other alternatives. So there's a bit of a dance there, every service, whether it's us or any other one, you can trust there trying to maximize their revenue and they're going to find the right intersection of price with how many people sign up. And when they increase their revenue, two-thirds of it is going back into the royalty pool, to get the per-stream rate way, way, way higher than it is now. That average calculation, you'd have to be like three-exing. How much is charged? You're going to get way, way fewer subscribers. Total paycheck goes down, but average per-stream rate goes up. We could stop investing in markets like India or emerging markets where there didn't used to be much of recorded music revenue opportunity. We're trying to get a viable place for a local artist to release music and that brings the average per-stream rate down because you charge less based on local currency. But it's helping recorded music that's monetizable, reach these new markets. So there's a bunch of things we could do that would lower the paycheck size. You know, we could cut off our business and emerging markets and the average per-stream rate would go up, but we'd lose out on all that money that artists could be making from those markets. So that's why we focused on maximizing paychecks, not maximizing average per-stream rate. A high per-stream rate just means you have really unengaged users and you're probably not going to be growing your business as fast. Yeah, and the actual, I mean, just talking to artists that I know and my own music and label instead of it. It's very rare that I see an artist who makes more from a different platform and Spotify. I say 95% plus of the artists I talk to Spotify is their biggest DSP by pretty gigantic margin. Every so often I'll meet someone where it's iTunes or Apple Music or in one of these cashpandora. It's usually because those artists have a very particular fan base and the average, vast majority, most artists that I know make most of their streaming money from Spotify. And it's because of that fact, the amount per person per listener is less or per-stream is less, but it might be they're making $1,000 a month and like 700 of that from Spotify while. And that's typical. Yeah, that's pretty typical for an indie artist. Absolutely. I mean, and please, I'll check out the comments on your show. Later, I hate sometimes on a Mondays if I sound like I'm just like shouting the party line. I'm saying you want a link to or you think it's actually true. Please let me know in the comments and I'll try to kind of share some context for it. But yeah, what you say is definitely usually the case for indie artists. As we talked about earlier, Spotify is about a third of streaming royalties globally, but on average, we're over 50% of what indie artists and labels make. Backing from a third party study, Medea did where they did a survey of thousands of indie artists and labels over 50% of their streaming revenues coming from Spotify typically. So you compare that 33% of the global average versus over 50% for Indies. And what it tells you is that Spotify majorly overindexes to indie artists and indie artists discovery. And so, you know, when I talk to artists and they want to break down with me, how much to make any platform, they'll often point out the average per-stream rate and say, oh, it's the lower average per-stream rate than these other ones. And I say, all right, think about that metric if you want to, but spend as much time thinking about why is it that you're overindexing on your Spotify revenue by so much? Spotify is a third of global streaming payouts. Why is it that over 50% of streaming royalties for, you know, almost any indie artists are from Spotify? And why does no other streaming service break out how much money is being paid to indie artists? And so, 50% of our 11 billion year, there's a reason other platforms have been shared with their split is what Spotify is really good at. It's related to that high streams per listener thing we were talking about. We get people to discover a lot of music they went listen to otherwise. The average Spotify subscriber listens to 200 artists a month. Nearly half of them are new artists discoveries each month. And when you're discovering more music, that's when you're discovering indie artists, that are the mainstream when you're trusting our personalized recommendations, that means you're going to try out new artists that you might not otherwise. That's the story of Spotify. And that's why, you know, almost any indie artist, I'm sure in the comments will hear from that, you know, 5% not the case for, but typically you're going to see over 50% of your revenue from Spotify. And that's because our model and our product really shifts to artists to discover an engagement. And yeah, for stream rates, maybe interesting to look at, but you really should be looking more, if not at least equally as much at the total paycheck you're getting, and which services are over under indexing what you're earning. Yeah. And then a lot of people like, why do you talk so much about Spotify on your channel, Andrew? And it's like, well, that's really the answer is like biggest market share. It's a platform artist typically make the most in and has the best discovery algorithm. And actually one thing, you might be able to clear up for me in a couple of minutes we have left here is a lot of people accused me of being a secretly paid by Spotify and say good things about them. So can you confirm that you are not paying by? And then both confirm that we're not paying you and I can confirm that you DM me plenty of things you don't like. And that's Spotify offer. Our cap of your audience. So yeah, it's clear up that room where, for sure. Awesome. Let's do some quick rabid fires just because we don't, you know, we don't have unlimited time unfortunately, but fun one. You were interviewed back in 2014 and you were asked, where will you be in 10 years? I found that. It's been 12 years since this hour today. Are you still unable to be decisive about where you want to get a drink on your birthday? Wow. I'm not going to say that. No, if it's emulator where you've been found this, you know, I am. I still am. That was the case then. This is a walk down memory lane. Yeah, I'm pretty decisive in professional life and famously and decisive in personal life. So I'm more of a go with the flow guy. So that hasn't changed. Yeah. Gosh, wasn't actually not. You worked at Meta, I think, back when you interned or something at Meta back when I read this article. Oh, funny. Yeah, never worked there. I did an internship there. Internship. Gotcha. Gotcha. Did your team work on Discovery Mode? Yeah, definitely. Can everyone seems to have no idea if it's better to have their whole catalog in Discovery Mode or to opt in a super selective list of songs? Like, I know some artists with hundreds. They're kind of like a label. They have hundreds of songs in a catalog. We've experimented putting like 800 songs in Discovery Mode versus putting in 100. I have an other artist's experiment that putting in the whole catalog. 120 versus three. Is there any like decisive words of wisdom you can give for Discovery? Other than just try different things? Yeah, definitely not your full catalog. It is absolutely not made for that. So that would be a bad idea. Maybe you try that once as an experiment, but that's certainly not how you're going to optimize performance. But you know, for artists, our approach with Discovery Mode is provide all the data transparently after each campaign, break down different types of goals. And then I know this is the most annoying answer, but it's up to that artist or label. So we give you metrics based on growth, engagement, and streams. Growth, the biggest one to look at is new listeners, move to that song level and campaign level for engagement. We'll look at like saves, playlists, ads, intent rate, streams per listener. So that's getting at like, are they just listening to one's in radio? And that's it or they save it and go listen to you later outside of Discovery Mode context. And then streams for some people, they may just like want to make sure it's ROI positive. And we show stream lift in two ways. We have stream lift and historical stream lift we can get into. But both kind of help you just make sure that you're making more money from that song after Discovery Mode than you would have without it. And so based on your marketing goal, you're going to use that data differently. If your pre-release, maybe the most important thing is new listeners because you're trying to warm up brand new audience before your new album comes out. If you are on cycle and you're trying to figure out what like your next single to promote might be or you're trying to make sure that you're like turning listeners into fans and often think you might look more in engagement and be like, which songs are actually clicking with people. And then for some people, you know, maybe you're managing a back catalog. And it's more of just a financial operation for you and you want to make sure you're getting more royalties now than you would have with that Discovery Mode. That's when you might look at the streams reporting they give. So annoying the answer right now, but that's all I would think about it. Start with your goal. Think about what a growth engagement or stream metrics are what you're optimizing for the different points in your. career, you may focus on different ones. And then absolutely turn it off the next month for a song, so it's not working. Don't keep your whole catalog in. Gotcha. That's good advice. Um, to spotify look at active or I guess what I've heard referred to as lean in versus lean back streaming or active versus passive listening and wait that differently when it comes to the algorithm. Like we've seen a lot of data on our end just tracking stuff manually that it suggests like actor streams or kind of weighted better so to speak then like if you've just get paid to get thrown on some third party play as for example. Yeah, but can you give any like definitive answer that that's actually the case. That is the case. Yeah. Um, you know, in spotify for artists, if you go to the segments section in the audience tab, uh, we'll break out what we call your audience segments. So you can look at your active audience versus your programmed audience and active audience are those like real fan listens. It's in, you know, listeners intentionally seeking you out from their own library from your profile page from your album page from search from their own playlist. Programmed are really good for discovery, but they're less about fandom. So that's Spotify, a trail playlist, Spotify, algorithmic programming, third party playlists, you know, a user playlist, someone else's been um, the real thing you should be looking at, you know, monthly listeners a nice vanity metric, but your monthly active listeners and that active audience, all our data shows that's actually the thing that signals you have a real sustainable fanbase and you're going to start to grow your relatives every year like we talk about and lad and clear. Um, and within active audience, you can even see all the way through to like who are your super listeners and what percentage of their streams do they represent a senior screenshot your segments section sometimes where you know, on average, I think 2% of your monthly listeners are super listeners, they're usually 28% of streams. I've seen some of your screen jobs where it's why higher than 28% and that's a really good sign. Uh, in today's modern music economy, you want as many super listeners and active listeners as possible because attention is really hard to get. So if you're just counting on programming over and over, that's not a healthy sign of a sustained fanbase. So, you know, when you're thinking about if your marketing strategy is working, active audience, super listeners, that's what you should be using to make decisions and there's definitely parts of our algorithm where if songs and programming aren't turning into active streaming, that tells us the song isn't resonating. And so our system optimizes for the types of music that people save, listen to again and end up, you know, falling in love with that artist. Brilliant, brilliant. Well, Sam, uh, thanks so much for coming on. Answer questions and also just generally being so open on the internet. Um, it's great to see, you know, that you're kind of like the face of transparency. It's Spotify in my opinion. So, uh, thanks for thanks for being you. But, uh, is there anything you want to leave the people with? Well, no, I'm blushing now. Yeah, it's a hard, um, but I definitely represent a much larger team at Spotify, um, working all this stuff. I try to be transparent. I promise I'll just come check out the comments on YouTube, uh, so you can yell at me in the comments if you want to or ask me questions, uh, hopefully better than yelling, but whichever you choose to do, all good. Um, uh, and yeah, I guess I'll plug our Spotify for artist social channels. Um, if you're not following us on, uh, Instagram, we've got a broadcast channel on Instagram where we blast out like, you know, just everything you need to know. Um, uh, straight to your Instagram inbox. That's one of our newest marketing channels. Have it definitely say you should go follow.