Spotify paid more than $9bn to the music industry in 2023

It turns out Spotify wasn’t quite done with announcing big numbers this week after publishing its latest financial results on Tuesday.

“Spotify paid the music industry more money than ever in 2023: $9B+,” announced the company in a statement this morning. “That figure has nearly tripled over the past six years, and represents a big part of the $48B+ Spotify has paid since its founding.”

The figure was released in advance of the next update to Spotify’s ‘Loud & Clear’ stats website, which the spokesperson said would be updated with more details on its 2023 royalty payments in the coming weeks.

Time for some analysis. This week’s financial results revealed that Spotify’s annual revenues last year were €13.25bn – around $14.27bn at current exchange rates. That means Spotify paid out around 63% of its revenues to the music industry in 2023.

We can also track the growth of those payouts, using figures revealed in 2022 on the ‘Loud & Clear’ site. They have grown from $3.3bn in 2017 to $5bn in 2020, and then more than $7bn in 2021.

More maths? We have some. When Spotify updated its site last year, it said that 200,000 artists generate 95% of its payouts, despite only accounting for 15% of its daily track uploads.

That’s an average annual payout in 2023 of around $42,750 for each of those 200,000 artists. Not that this number tells us much. Those at the top end – hi Taylor! – will have earned much, much more. And those at the bottom much less.

Also, remember that this is payouts generated by the work of these musicians to their rightsholders. However much of it they end up with depends on their label and publisher deals, as well as how many people it’s being split between.

Spotify’s latest payouts figure also gives one of its rivals a new target to aim for.

In 2022, YouTube said that its payouts to the music industry for the 12-month period running from July 2021 to June 2022 were $6bn.

YouTube has openly stated its ambition to overtake Spotify and become (in its head of music Lyor Cohen’s words) “the #1 contributor of revenue to the industry by 2025”. Now it has an update on what the current top contributor is paying.

Finally, one of 2024’s hot issues in the music industry is streaming fraud, and we can do some tentative calculations – with important caveats – using Spotify’s payouts figure.

Last January France’s Centre National de la Musique published a study of music-streaming fraud based partly on data from Spotify.

After the report came out, Spotify revealed that it had detected “signs of artificial streaming” on 1.14% of its total streams. With $9bn of annual payouts, that could mean $102.6m for the fraudsters.

We say ‘could’ because this is where the caveats come in, and not just that this data was from a single country (France) in 2021. The 1.14% of streams were the ones that Spotify identified AND “mitigated” (i.e. blocked from getting payouts).

In other words, the calculation is that Spotify may have prevented $102.6m of payouts to fraudsters in 2023 if that 1.14% figure was the same that year.

Anti-fraud startup Beatdapp has regularly claimed that at least 10% of DSPs’ streams may be fraudulent, which would be a whopping $900m+ if that was true for Spotify. But that really is pure speculation.

Sticking to facts, Spotify paid out more than $9bn in 2023, and more than $48bn since its launch in 2008.

At a time when TikTok is embroiled in a dispute with Universal Music Group partly over royalties, it’s hard not to also see Spotify’s announcement as a timely broadside at a disruptive rival – one which, remember, has been rolling out its own streaming service.