Spotify paid out a record $7 billion in royalties in 2021

However, only 52,600 artists generated more than $10,000 on the platform.

Spotify Money Background

Image: ZUMA Press, Inc. / Alamy Stock Photo

Spotify’s annual “Loud and Clear” transparency report on Thursday (24 March) revealed some important numbers about the platform and the music industry in 2021. Read on for a breakdown of the royalty system, and the players who stand to gain from it.

The streaming giant affirms its dominance once more with more than $7 billion paid out to rights holders — including artists, labels, and distributors — last year, up from 2020’s $5 billion. According to Spotify, this is the largest sum paid by one retailer to the music industry in one year in history, including any single retailer at the height of the CD era.

One thing that’s certain about the music streaming industry, is that it isn’t going anywhere anytime soon. In 2021, recorded streaming revenue alone (across all services) was higher than the industry’s total revenue for each year from 2009 through 2016.

The report also mentioned that over 1,000 artists generated $1 million on Spotify alone, with 450 artists generating more than $2 million, and 130 artists generating over $5 million on the platform.

However, since Spotify does not pay artists or songwriters directly — they pay the rights holders instead — most of the money actually goes to the labels and publishers, who then take a cut according to the artist or songwriter’s contract.

This video explains in detail how the money flows:

The three major record labels — Sony, Universal and Warner — earned $12.5 billion from streaming recorded revenue alone, with Spotify payments making around a third of that streaming total.

On the more modest side of things, 52,600 artists generated more than $10,000 from Spotify in 2021, though the number looks a lot less impressive when you learn that Spotify has over 8 million artists on its platform.

Of those, nearly a third (28%) of them self-distribute their own music to the platform using artist distributors like TuneCore, CD Baby and Distrokid, a 171% increase since 2017.

Read the full report here.

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