Spotify Revenue Splitting Model

Goals

To understand how artists make money on Spotify and how that is determined by the streaming platform.

Early Findings

  • Spotify earns money from subscription fees and advertising. Depending on the region of operations, how much of its revenue it gets to keep depends on certain factors such as taxes, credit card fees, billing, which all vary around the world.
  • From the revenue balance, Spotify figures out the artist's share by tallying up the total number of streams on the platform in a given period and country, and then pro-rate it against the number of streams an artist has.
  • This is known as stream share and will determine the artist's cut of Spotify's revenue less all the expenses listed above. For example, an artist with 100,000 streams will get 10% of the revenue pool if there were one million streams.
  • According to CNBC, Spotify pays "about $0.006 to $0.0084 per stream to the holder of music rights."
  • Another source puts Spotify's per-play rate at 0.00437 cents in 2019. The average payout per stream is expected to increase by 0.0006 cents in 2020.
  • Some artists have called for Spotify to amend its pro-rata model and instead ensure that the type of user - paying or non-paying - should factor into the revenue-sharing model.

Proposed next steps:

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