Over the past few years, streaming has become one of the leading income sources for musicians. Whether you’re an independent artist or signed to a label, a seasoned performer or just starting out, it pays to understand how streaming platforms work out compensation for musicians. Here is a closer look at how much Spotify pays per stream in 2024.

Music Streaming in Numbers

Music streaming has become big business for streaming platforms, labels, and artists alike. They have also been wholly embraced by music fans around the world. Just two decades ago, it was easy to recognize music lovers by how much wall space was taken up by CDs and perhaps also by vinyl LPs. Whilst vinyl has retained a place in the heart of music aficionados and collectors, CD collections have all but disappeared.

The sheer convenience of streaming music anywhere and organizing firm favorites into digitally held playlists was something that CDs couldn’t keep up with. Listeners have embraced digital streaming platforms with more of them migrating to the likes of Spotify, Apple Music, Tidal, and Amazon Music, to name just a few.

In 2023, music streaming was expected to break the $6 billion mark, equalling a growth in revenue of just over 10%. The industry is expected to grow even further, reaching more than $7.3 billion by 2027. Within the same timeframe, experts expect the number of users to exceed 160 million people or nearly 50% of the total population.

Whilst this is all good news for streaming platforms, the question is what it means for artists.

How Spotify Pays Musicians

It’s time to let you in on a secret – it’s not that easy to say exactly how much Spotify pays musicians each time a user streams one of their songs. So, how do Spotify royalty calculators work? They’re basing their predictions on estimates.

Spotify Royalty Calculators

No royalty calculator is 100% exact, but as an artist, they’re an excellent tool to help you get an idea of how much might be paid out by the platform. In the case of Spotify, the amount you can expect to receive lies between $0.003 to $0.005 per stream. That’s roughly equivalent to a 70/30 split between the rights holders with 70% and the platform with 30%.

Before you pull out your calculator and dream of a fat bank account, it’s important to notice the distinction between ‘rights holders’ and ‘artists.’ Of course, performing artists get their share of the 70%, but what exactly that share is, depends on how their music was produced. Most of the time, the royalties will be split between songwriters, publishers, and the owners of the master recording. The latter could include the artist but may also be the label they’re signed to.

Platform-Centric Distribution

As if that was not complicated enough, there are also platform-related factors that influence what Spotify pays artists that use its services. The exact formula Spotify uses is a closely guarded secret, but here are four of the influencing criteria:

  • The platform’s total revenue pool created from streaming;
  • The agreed global payout as a percentage of that revenue;
  • The total number of streams on the platform, and finally;
  • The number of streams that your music generated on the Spotify platform.

Balancing four factors may seem straightforward, but in reality, Spotify doesn’t have one single revenue pool. Instead, there are separate revenue pools for different countries and local markets as well as individual subscriptions. As a result, the same number of streams in one country doesn’t necessarily have the same value in a neighboring country.

Why Spotify has Become the Target of Labor Unions

You’d be forgiven for thinking that this model of paying royalties is enough to get any musician’s head spinning. That is one of the reasons why Spotify has become the target of challenges by musicians’ unions.

Industry experts have noted an overall explosion in union activity throughout 2021 and 2022, no matter which industry you’re considering. In some of the most highly-publicized cases of union activity, workers at household names like Starbucks and Amazon even started their own unions.

But let’s get back to music and royalties. Over the past year or so, musicians formed the Union of Musicians and Allied Workers. The goal of the organization? To challenge streaming platforms like Spotify to raise royalties per stream and make their revenue data more transparent and accessible.

Independent musicians especially felt like they were the main driver of innovation and the creative development of the music industry whilst benefiting the least. For these artists, coming together and getting organized is the first step toward greater fairness.

Can Artists Make Money on Spotify?

On paper, platforms like Spotify create a huge amount of income from recorded music. Statistics from the Recording Industry Association of America (RIAA) show that more than 80% of all income from music recordings was made through streaming in 2021.

What looks like a success story on an industry-wide basis feels distinctly different for individual artists who aren’t yet generating millions of streams. For example, one streaming calculator predicts that it would take more than 280,000 streams to make $1,000 on Spotify. For new artists, that figure can seem far out of reach. By comparison, it would take about half of the number of streams to make the same amount on Apple Music. On Napster, musicians need less than 60,000 streams to make $1,000.

Using your initiative to promote your music can help increase streaming numbers and improve your income. Music labels may also be able to negotiate different terms with platforms for their artists. However, these measures will have a limited effect if the average pay per stream remains extremely low.

Final Thoughts

Based on what we know today, streaming will play a big role in the future of the music industry. How much artists will get paid per stream continues to evolve. As Spotify and others enter into a dialogue with musicians’ unions to find a solution that is fair to musicians and sustains the entire industry, we are likely to see more changes in how much Spotify pays rights holders for each stream. Watch this space for updates!