Spotify is the most popular streaming service of our time, with more users than any other streaming platform. In 2021 alone, Spotify generated €9.66 billion in revenue! That is a lot of digital money-- and that's great for Spotify, right? But what about musicians? Do musicians make money from Spotify?
Or is their music being consumed by millions across the globe without them being compensated?
First and foremost, yes! The answer is, yes! Musicians do make money from Spotify! Collectively, Spotify has more users than Apple Music and Amazon Music put together, so it would really suck if they weren't being paid.
So, how do musicians make money on Spotify, and how much do they make?
Those are great questions! Let me break it all down for you.
Do Artists Get Royalties from Spotify?
Royalties are the earnings you get when your music is streamed. Artists get royalties from Spotify, although they do not receive them directly from the platform.
The money has to go through a middleman - a music distribution company. Similarly, to get your music uploaded on Spotify, you’ll require a distributor such as TuneCore, AWAL, DistroKid, CD Baby, etc.
Distribution companies are conduits between the artists and the streaming services. They receive the royalties on your behalf.
To receive your streaming payments, Spotify first does some due diligence. After determining the total amount earned within a month, it first pays the right holders.
This includes your record label (if you are signed to any), your publisher, and other bodies such as ASCAP. Next, it pays your distribution company, and finally you.
It’s upon your distributor to get the actual payout from Spotify. Once you register with a distribution service, they will initiate you into Spotify, and together you’ll review the amount you’ll receive per stream and the process of receiving those royalties.
How Much Do Musicians Make on Spotify?
It’s pretty difficult to tell precisely how much a musician makes from Spotify for several reasons, one of which is the opaque nature in which Spotify pays per stream. But as of May 2022, Spotify established that it pays its artists between $0.003 and $0.005 per stream.
Perhaps you are wondering what the term ‘per stream’ means. According to Spotify, any track played for at least thirty seconds is counted as a stream and earns you per-stream royalty. The amount you earn per stream is usually added to the total, which you’ll receive later, usually every month.
To help you understand these figures better, you’ll need about 250 streams to earn a dollar. That is roughly 400K streams to earn the average US monthly salary.
However, you should realize that any artist's pay-per-stream rate will fluctuate from time to time. This is because there is a myriad of factors that determine the overall earnings. I will briefly discuss the three major ones for Spotify.
Factors that Affect Spotify Royalties
- Your Music Distribution Service
Spotify doesn’t pay you based on any agreements between you and them. Instead, your contract with your distributor or record label determines the royalties you earn.
This means your per stream royalty is directly influenced by the distribution service you are dealing with.
Some distribution companies will take a percentage of your royalties as commission, while others will let you keep 100% but pay an annual subscription for their services.
For instance, CD Baby will pay you 91% of your net royalties and keep 9%. On the other hand, AWAL will take 15% while you keep 85%. Other services like TuneCore and Ditto Music will pay you 100% royalties for every music play.
- The Location of Your Fan Base
You heard me right. The country in which your audience is based matters. Listeners from different countries will pay different streaming amounts on Spotify. For instance, a listener from the US will pay approximately $0.0039 to stream your song, one from Canada will pay $0.0027, and another from Portugal will pay $0.0018.
This means having a solid fan base across the globe will significantly influence your royalty rates as an artist.
- The Spotify Subscription Plan of Your Audience
Spotify offers two kinds of subscription plans: Spotify Free and Spotify Premium. The royalties obtained by Spotify are from the revenues collected from:
- The ads put in the free version
- The subscription fees from premium version users
Comparably, Spotify fetches more money from premium users than the free tier listeners. Therefore, high numbers of paying subscribers who stream your songs translate to better royalty rates.
How Much Does Spotify Pay for 1 Million Streams?
Going by the average per stream rate of $0.004, Spotify will pay roughly $4000 for 1 million streams.
But as mentioned earlier, Spotify treats the precise amount earned by an artist as confidential information. You can, however, get a general idea of the amount you could potentially earn from Spotify playbacks by using their royalty calculator.
To be on the same page, a royalty calculator helps you predict how much you can get per stream. Different streaming platforms have their own calculators based on their average payout rates.
It’s worth noting that the royalties projected by these calculators are not 100% accurate. They are just estimates based on certain factors. Therefore, don’t get your head wrapped around these figures. Instead, utilize the calculator as a guide.
Can You Make Money Making Music on Spotify?
The only surefire way of making a reasonable amount of money on Spotify is by generating more streams of your music. Perhaps you wonder how you can go about this. Here’s how:
- Grow a Fan Base
It is a no-brainer that the more followers you can build on Spotify, the more revenue you obtain. There are several methods you can employ to grow your Spotify listeners, including:
- Creating awareness on your social media platforms. Your socials are great platforms for promoting your Spotify profile; hence, you should consider utilizing them. Funnel your social media audience into Spotify and turn them into followers.
- Releasing music regularly and consistently. You must understand that Spotify uses an algorithm to recommend new music to its audience. Therefore, focus on consistently releasing new stuff to increase your pool of listeners. Also, be consistent in creating great music worth returning to every now and then.
- Boost Your Streams Using Playlists
A majority of music lovers consume music on streaming platforms in the form of playlists. So, getting your songs into Spotify playlists is a sure way to increase your streams but an art on its own.
You can secure a spot on Spotify playlists using the following ways;
- Pitching your songs directly to Spotify’s own playlists, curated by their editorial team.
- Pitching your songs to Spotify influencer playlists created by people outside of Spotify.
- Curate your own playlists and incorporate artists with a similar sound.
Here’s a detailed YouTube video on how to pitch to Spotify Playlist.
Spotify is a giant in the music streaming space, and dismissing it is an injustice to your music career. It is a great way to widen your fan base and boost popular appeal.
Even though their per stream royalties are notoriously low, you can develop necessary strategies (like the ones mentioned here) to increase your music streams and make more money.
What other streaming platforms can musicians make money on?
These platforms are now the go-to places for artists to showcase their art and music lovers to access songs they enjoy.