Spotify has always been a double-edged sword for artists. Streaming music is a gargantuan business and one of the best ways to quickly attract an audience, but the pay rates are minuscule for all but the biggest acts on most services. Some artists have even publicly condemned Spotify, but up until now the company has never released official numbers to back up its claims that it shares an appropriate portion of its profit with the musicians that populate the service.
Spotify for Artists is the streaming company’s attempt to pull back the curtain and give both artists and fans a detailed look at exactly how the payment system is set up. Although the actual artist payout is determined based on an algorithm involving Spotify’s monthly revenue, the total amount of streams during the month, the royalty rate of the individual artist and the rate of the publisher/owner, the company understands that most onlookers simply assume that each stream of a song is worth a certain amount of money. This is not the case, and the number is constantly fluctuating, but the average pay-per-stream recently has averaged between $0.006 and $0.0084.
Spotify prefers to break down payouts in terms of monthly activity. In July, a “niche indie album” garnered $3,300, whereas a “global hit album” awarded the unnamed artist $425,000. Based on the company’s projections, these numbers will increase exponentially as the subscriber base grows.
Since Spotify launched in 2008, the company has paid over $1 billion in royalties, and $500 million of that is from 2013 alone. Spotify expects to shed its reputation of undercutting artists as its revenue continues to grow.
“We have proudly achieved these payouts despite having relatively few users compared to radio, iTunes or Pandora, and as we continue to grow we expect that we will generate many billions more in royalties,” the company says.