Subscription music streaming changed the fortunes of the record industry over the past decade.
That’s the message from David Kaefer, Spotify’s VP of Music Business, in a blog post published today (January 28). In it, he notes that a decade ago, in 2014, “the music industry reached a low point when global recorded music revenues hit $13 billion.”
Kaefer also notes that Spotify’s annual contribution at the time was around $1 billion, and that it had around 15 million paying subscribers.
This is an important bit of historical context for Kaefer to deliver the big news that Spotify paid out “a record” $10 billion to the music industry in 2024.
The company revealed last February that it delivered USD $9 billion the prior year (2023), meaning Spotify paid out a full $1 billion more in 2024 than it did in 2023.
Spotify’s music industry payout recipients include record companies and music publishers, plus independent distributors, performance rights organizations, and collecting societies.
Spotify also revealed today that, as of the end of 2024, it had paid out nearly $60 billion to music rightsholders since the company was founded in 2008.
Spotify’s $10 billion payout figure means that it paid music rightsholders an average of $833 million every month in 2024.
Spotify is due to publish its Q4 2024 financial results next week, so it will be a few days before we can calculate the exact percentage of the company’s annual revenues it paid out to the music industry last year.
In 2023, Spotify’s $9 billion payout figure meant that it paid out approximately 62.8% of its EUR €13.247 billion (USD $14.336bn) in annual revenues that year.
The company is also due to publish its latest subscriber numbers (as of the end of Q4, ending December 31, 2024) next week. Spotify counted 640 million Monthly Active Users, and 252 million paying users at the end of Q3 2024 (the three months to the end of September).
Spotify’s guidance for Q4 2024 was that it would reach 665 million MAUs, an addition of around 25 million net new MAUs in the quarter.
The company also projected its total Premium Subscriber base to hit 260 million in Q4 2024, an addition of approximately 8 million net new subscribers in the quarter.
Spotify’s David Kaefer noted in his blog post today that “there are more than 500 million paying listeners across all music streaming services” and argued that “a world with 1 billion paying listeners is a realistic goal we should collectively set”.
Kaefer also revealed an interesting stat about the conversion from free (ad-supported) to paid users at Spotify.
“We offer an ad-supported free tier, while some services don’t,” said Kaefer. “Beyond the ad dollars this generates, more than 60% of Premium subscribers were once free tier users.”
Added Kaefer: “Bringing in users who don’t expect to pay for music, and deepening their engagement, means they’re more inclined to become subscribers in the future.
The Spotify exec also pointed to “tremendous growth” across markets like India, Brazil, Mexico, and Nigeria. “These are places where our investments are paying off,” he said.
“A decade ago, there was a widely held view that you couldn’t monetize certain markets. But the journey of getting the world to pay for music means making long-term investments.”
Elsewhere in his blog post, Kaefer noted that “payments to the music industry have shifted from a concentrated few at the top to an increasingly diverse and growing ecosystem of artists finding success”.
Spotify estimates that in 2014, around 10,000 artists generated at least $10,000 per year on Spotify.
Today, according to Spotify, over 10,000 artists generate over $100,000 per year from Spotify alone.
“That’s a beautiful thing,” said Kaefer.
“Spotify’s model is uniquely enabling more room for more artists to find success and ultimately sustain a career in music, demonstrating real change across the music business.”
Kaefer also cited MIDiA Research stats that suggested “Spotify represents more than half of indies’ streaming revenue”.
We’ve previously written about how indies are nibbling into the majors’ streaming market share. Stats from Luminate, published last year, showed that in the US in H1 2024, indie distribution companies handled 62.1% of tracks that were played between 1 million and 10 million times on on-demand audio streaming services.
Indie distribution companies also handled 37.4% of tracks that were played between 10 million and 50 million times and 22.1% of tracks that were played between 50 million and 100 million times.
In each of these categories, the indie (i.e. non-major-distribution) sector grew its market share vs. the second half of 2023.
“Reaching 1 billion paid subscribers across all streaming services will be a collaborative effort, requiring innovation, strategic partnerships, and a continued focus on delivering exceptional value to music fans worldwide.”
David Kaefer, Spotify
Added Kaefer in today’s blog post revealing Spotify’s most recent annual music industry payout figure: “Without a doubt, this has been a decade of unparalleled transformation. The global value of music copyright today sits at $45.5 billion. A decade on from its low point, how many other industries have experienced this kind of revival?
“Our goal is to help artists get their work in front of existing and future fans, continue to innovate on their behalf, and deliver it in a way that inspires people to pay for it. Onboarding people to paid streaming is precisely what has increased our payouts — tenfold — over the past decade.
“Reaching 1 billion paid subscribers across all streaming services will be a collaborative effort, requiring innovation, strategic partnerships, and a continued focus on delivering exceptional value to music fans worldwide. It’s a goal we’re confident we can achieve together.”
“Bringing listeners to paid streaming is precisely what has increased our payouts (tenfold) over the past decade, and is enabling more room for more artists to find success.”
Writing on LinkedIn today, Spotify CEO Daniel Ek said: “For another year, Spotify set the record for the highest annual payment to the music industry – $10 billion.
“For context, in 2014 total global recorded music revenues were just $13 billion, and Spotify’s pay out at the time was around $1 billion. Bringing listeners to paid streaming is precisely what has increased our payouts (tenfold) over the past decade, and is enabling more room for more artists to find success. It’s a real change across the music business and one that we’re proud to be a part of.”
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