More and more people are streaming but Spotify is never going to see any of the money. Dumb business model:
Spotify made a deal with the three big music companies (Warner, Sony & Universal) to license their material for 75% of revenue.
Then they pay 75% of the remaining 25% to artists.
Then they pay the expenses of running the platform.
Play in, pay out
According to a new report from the world’s largest streaming service, Spotify paid the music industry more than $9 billion in total throughout 2023, adding that the “figure has nearly tripled over the past 6 years, and represents a big part of the $48 billion+ Spotify has paid since its founding”.
As we were charting at the end of last year, Spotify shells out 70%+ of its subscription revenue on delivering content to listeners, primarily related to the costs of paying record labels, artists, and publishers for their music. Often, these rights holders then take fees before paying shares to artists and creators — many of whom have criticized Spotify’s royalties policy, despite the platform’s crackdown on fraudulent streams in November.
More cowbell? Great video that explains more detail.
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