Within the final 25 years, the music business has developed in big leaps: the arrival of Napster in 1999, the launch of the iTunes music retailer in 2003 and YouTube’s debut in 2005 are notable, epoch-defining occasions. However progress usually is available in a collection of small steps ahead.
One such small step is Spotify’s Loud & Clear, an annual report that gives some transparency into the quantities of royalties the corporate pays every year. The third Loud & Clear report was launched March 8 to coincide with Stream On, Spotify’s live-streamed media occasion the place a parade of executives launched new product options and mentioned the way forward for the world’s largest music subscription service.
Loud & Clear is useful as a result of it places artist royalties in context. Any artist is aware of how a lot they earned on a streaming platform. However Loud & Clear will inform an artist how they stack as much as others. It’s one factor to make $100,000 in annual royalties however one other factor to know what number of different artists are additionally making at the least $100,000.
“I feel it’s essential for ecosystems to have an understanding of the form and measurement of how outcomes are going for various individuals so that individuals can perceive the place they’re, the place they stand and the way the ecosystem is evolving,” says Charlie Hellman, Spotify vp, international head of music product.
And the way effectively is the ecosystem evolving? Spotify needs to offer “1,000,000 creators the chance” to creating a residing from their artwork — which may embrace each musicians and podcasters. That purpose goes again to an announcement by CEO Daniel Ek at its 2017 Investor Day. On the time, Spotify counted 22,000 artists as “top-tier” earners (it didn’t specify precisely how a lot they earned, nevertheless). At present, due to Loud & Clear, we will see 1,000,000 creators are most likely not making a residing from their artwork. However as Spotify, and streaming typically, has grown in recognition, the variety of artists making a sustainable quantity — outline that as it’s possible you’ll — is slowly growing.
There are 27,000 established artists outlined as being in Spotify’s prime 50,000 artists three straight years however outdoors of the highest 500. In 2022, they earned a median of $224,000 from Spotify and averaged 1.45 million month-to-month listeners in 2022. So, they’re not superstars however they’re removed from hobbyists. They’re additionally probably signed to document labels and obtain solely a fraction of these royalties.
In 2022, there have been almost 3,000 “catalog-heavy” artists that earned greater than $100,000 on Spotify. These artists earned over 80% of their streams from tracks 5 years outdated or older. Provided that Spotify estimates different streaming sources account for 75% of an artists’ income, these artists most likely earn round $400,000 a yr in streaming royalties.
If streaming goes to supply a residing for a lot of musicians, the economics have to work for the unbiased musicians that make up a big portion of the working class. In 2022, 1 / 4 of the 57,000 artists who earned $10,000 or extra in royalties from Spotify in 2022 are self-distributed by means of the likes of DistroKid, TuneCore and CD Child. That works out to just about 15,000 artists, a 200% enhance since 2017. That’s a far cry from a million. However as streaming platforms proceed to develop, the variety of self-distributed artists incomes that quantity will develop, too.
More and more, streaming platforms will facilitate different elements of artists’ careers, reminiscent of ticket gross sales and merchandise gross sales. Spotify lists some merchandise gross sales by means of third-party suppliers reminiscent of Shoptify and Merchbar. And though it hasn’t included merch gross sales in Loud & Clear, Hellman says, “I can think about in future years doing extra knowledge share about that particularly. We didn’t try this this yr, however it’s a huge strategic focus for us.”
