Last week, Spotify announced that it paid more than $9bn to the music industry in 2023. Today it has revealed how much of that money went to independent artists and labels.
It’s $4.5bn. Yes, half of the streaming service’s total payouts.
Spotify added that this was a record total – not just for its service, but “the highest amount indies have ever generated from a single retailer in one year” – and that it’s the first time independent music has accounted for 50% of its payouts.
Spotify also said that the $4.5bn paid out to indies last year is four times what they generated on its service in 2017.
It also noted that the company accounts for “more than 20% of global recorded music revenues” – a nod to the fact that this payouts figure is just a portion of overall independent revenues.
For Spotify, this is part of a pitch to the independent sector: that in its words it has “levelled the playing field” by enabling independent artists to “access the same global audience and tools as the superstars”.
Mischievous readers might wonder whether the timing of the announcement is not entirely unrelated to the fact that Spotify’s fiercest rival, Apple Music, is currently receiving some criticism from the independent music sector.
The latter service is planning to give music catalogues that are available in its spatial audio format a boost in its royalties formula. That has sparked concerns from independent music bodies Impala and AIM, as well as from labels, that this will penalise smaller indies.
With Spotify engaged in its own long-running battle with Apple over regulatory issues, let’s just say – because Music Ally abhors mischief-making – that this is a fortuitously-timed moment for the company to be trumpeting its value to the independent music community.
Whatever the motivations, though, $4.5bn of payouts is something that the sector will seize on as the latest evidence of its value and importance in the streaming era, alongside the catalogues of the three major labels.
Spotify’s announcement today also follows the disclosure in its latest annual report that music licensed to it by the three majors plus indie licensing agency Merlin accounted for around 74% of its streams in 2023.
The other 26% came from independent ‘DIY’ artists and also independent labels who license directly rather than through Merlin. This proportion has grown steadily in recent years: it was 15% in 2018.
However, now we know a figure separating ‘major label’ music from all ‘independent’ music on Spotify – payouts split roughly half and half between the two.
One final caveat around this data, however. Some of the $4.5bn of ‘indie’ payouts is still travelling through the financial pipes of the majors: the royalties for independent artists and labels who put their music out using those companies’ distribution arms.
Music Ally understands that for the purposes of this calculation, artists like Taylor Swift – those with major label deals that enable them to retain ownership of their recordings – are not included in Spotify’s calculations for ‘independent’ payouts in this case.
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