Within the final 25 years, the music business has advanced in enormous 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 typically 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 annually. 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 very least $100,000.
“I believe it’s crucial for ecosystems to have an understanding of the form and dimension of how outcomes are going for various contributors so that folks can perceive the place they’re, the place they stand and the way the ecosystem is evolving,” says Charlie Hellman, Spotify vp, world head of music product.
And the way properly is the ecosystem evolving? Spotify needs to provide “a million creators the opportunity” to creating a residing from their artwork — which may embody each musicians and podcasters. That objective goes again to a press release 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, nonetheless). Immediately, because of Loud & Clear, we are able to see 1,000,000 creators are most likely not making a residing from their artwork. However as Spotify, and streaming normally, has grown in recognition, the variety of artists making a sustainable quantity — outline that as you might — is slowly rising.
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 practically 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 previous 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 12 months in streaming royalties.
If streaming goes to supply a residing for a lot of musicians, the economics must 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 via the likes of DistroKid, TuneCore and CD Child. That works out to just about 15,000 artists, a 200% improve 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, comparable to ticket gross sales and merchandise gross sales. Spotify lists some merchandise gross sales via third-party suppliers comparable to 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 information share about that specifically. We didn’t do this this 12 months, however it’s a massive strategic focus for us.”
