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Do Music Streaming Platforms Pay Artists Fairly?

Anyone involved in the modern music economy understands the dichotomous reviews of digital music streaming platforms (DSPs) such as Spotify, Apple Music and TIDAL, pertaining to how fairly they pay artists for their contributions. A recent LinkedIn post from Spotify founder Daniel Ek highlighted the $9 billion in revenue that Spotify paid back to music rights holders in 2023 – with around 50% of this going to the independent sector. 


On face value, this seems like an incredibly impressive number. However, the paradox between “positive” stats such as this, and constant negative anecdotal reviews & bad press that streaming platforms constantly receive around how little they pay artists - a paradox acknowledged by Ek in the video - would understandably leave many confused.


The post’s comment section reflected this narrative, washed with damning thoughts from artists, label owners and other industry stakeholders, each with their own stories & accusations against DSPs. So, who should you believe? Read on in this article as we dive into music streaming platforms, exploring their negative reputation at paying independent artists fairly, before examining whether this is a realistic criticism.


Spotify's Music Categories

Contrary to belief, Spotify doesn’t pay “by streams”, or even pay money directly to artists. Instead, it makes payments to a number of “aggregators”, such as record labels, distribution platforms and collective management organizations, so the amount that an artist receives actually depends a fair amount on their agreement with their label or publisher. Spotify pays 70% of its earnings back to rights holders, but this is diluted further by the aforementioned aggregators. For example, if your label agreement is that streaming royalties are split 50/50, you’d actually only receive 50% of this 70% – or 35% of the total revenue.


The existence of these aggregators muddies the waters slightly, but this does not mean that it’s impossible to actually calculate a ballpark revenue figure, which has been placed at between $0.003 and $0.005 per stream; a very small number on face value. While this is slightly higher for other platforms, the ballpark remains relatively narrow and, as such, independent artists would need roughly 5 million streams every single year just to earn the minimum wage on DSPs. For the majority of artists, this is unattainable to say the least.


“So what about the $4.5 billion that was paid to independent artists last year? Isn’t that impressive?” 


Well, there are actually no statistics around the number of independent artists on Spotify, as this is quite hard to measure. However, conservatively assuming that the ~6.3 million creators on Spotify with <50 monthly listeners are the only independent artists, this figure equates to roughly $800 annually per artist; nowhere near even the monthly figure for living wage. Even factoring in the potential from other streaming platforms, it seems impossible that the majority of artists would be able to earn a comfortable living from streaming royalties, in the same way that traditional consumption methods such as CDs and vinyl disks used to remunerate.


What’s the opposing argument to this, then? Well, it’s now easier than ever to write, produce and release music, meaning that a vast majority more people are having a go at “making it”. As such, we’re now experiencing the most open, free-for-all music market that the industry has ever seen, which means it would be completely infeasible to pay back all artists to a satisfactory degree. This $4.5 Bn isn't being split evenly between ~6 million artists, it's going proportionately to those who make the most engaging music, and a portion of these creators are likely earning a living from it as such. This doesn't change the fact that streaming royalties are incredibly low, but it's definitely important to offer some perspective.


Whichever viewpoint you take, one thing is undebatable: it’s going to be incredibly hard to revamp the music consumption model, for obvious reasons. Streaming is incredibly popular with consumers, and finding an option which balances the scales closer towards artists is only going to tip it away from the consumers who ultimately put money in the industry’s proverbial pocket. It’s important, therefore, to make minor adjustments to the model, with the ultimate aim of making music a more friendly industry to earn a living in.

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