Subscription music streaming modified the fortunes of the report business over the previous decade.
That’s the message from David Kaefer, Spotify’s VP of Music Enterprise, in a weblog publish revealed immediately (January 28). In it, he notes {that a} decade in the past, in 2014, “the music business reached a low level when world recorded music revenues hit $13 billion.”
Kaefer additionally notes that Spotify’s annual contribution on the time was round $1 billion, and that it had round 15 million paying subscribers.
This is a vital little bit of historic context for Kaefer to ship the large information that Spotify paid out “a report” $10 billion to the music business in 2024.
The corporate revealed final February that it delivered USD $9 billion the prior 12 months (2023), that means Spotify paid out a full $1 billion extra in 2024 than it did in 2023.
Spotify’s music business payout recipients embody report corporations and music publishers, plus impartial distributors, efficiency rights organizations, and gathering societies.
Spotify additionally revealed immediately that, as of the top of 2024, it had paid out almost $60 billion to music rightsholders because the firm was based in 2008.
Spotify’s $10 billion payout determine signifies that it paid music rightsholders a median of $833 million each month in 2024.
Spotify is as a consequence of publish its This fall 2024 monetary outcomes subsequent week, so will probably be a number of days earlier than we are able to calculate the precise share of the corporate’s annual revenues it paid out to the music business final 12 months.
In 2023, Spotify’s $9 billion payout determine meant that it paid out roughly 62.8% of its EUR €13.247 billion (USD $14.336bn) in annual revenues that 12 months.
The corporate can be as a consequence of publish its newest subscriber numbers (as of the top of This fall, ending December 31, 2024) subsequent week. Spotify counted 640 million Month-to-month Energetic Customers, and 252 million paying customers on the finish of Q3 2024 (the three months to the top of September).
Spotify’s steerage for This fall 2024 was that it will attain 665 million MAUs, an addition of round 25 million web new MAUs within the quarter.
The corporate additionally projected its whole Premium Subscriber base to hit 260 million in This fall 2024, an addition of roughly 8 million web new subscribers within the quarter.
Spotify’s David Kaefer famous in his weblog publish immediately that “there are greater than 500 million paying listeners throughout all music streaming providers” and argued that “a world with 1 billion paying listeners is a practical aim we must always collectively set”.
Kaefer additionally revealed an attention-grabbing stat concerning the conversion from free (ad-supported) to paid customers at Spotify.
“We provide an ad-supported free tier, whereas some providers don’t,” mentioned Kaefer. “Past the advert {dollars} this generates, greater than 60% of Premium subscribers had been as soon as free tier customers.”
Added Kaefer: “Bringing in customers who don’t count on to pay for music, and deepening their engagement, means they’re extra inclined to change into subscribers sooner or later.
The Spotify exec additionally pointed to “great progress” throughout markets like India, Brazil, Mexico, and Nigeria. “These are locations the place our investments are paying off,” he mentioned.
“A decade in the past, there was a extensively held view that you simply couldn’t monetize sure markets. However the journey of getting the world to pay for music means making long-term investments.”
Elsewhere in his weblog publish, Kaefer famous that “funds to the music business have shifted from a concentrated few on the high to an more and more numerous and rising ecosystem of artists discovering success”.
Spotify estimates that in 2014, round 10,000 artists generated at the least $10,000 per 12 months on Spotify.
Right now, in keeping with Spotify, over 10,000 artists generate over $100,000 per 12 months from Spotify alone.
“That’s a fantastic factor,” mentioned Kaefer.
“Spotify’s mannequin is uniquely enabling extra room for extra artists to seek out success and in the end maintain a profession in music, demonstrating actual change throughout the music enterprise.”
Kaefer additionally cited MIDiA Analysis stats that recommended “Spotify represents greater than half of indies’ streaming income”.
We’ve beforehand written about how indies are nibbling into the majors’ streaming market share. Stats from Luminate, revealed final 12 months, confirmed that within the US in H1 2024, indie distribution corporations dealt with 62.1% of tracks that had been performed between 1 million and 10 million occasions on on-demand audio streaming providers.
Indie distribution corporations additionally dealt with 37.4% of tracks that had been performed between 10 million and 50 million occasions and 22.1% of tracks that had been performed between 50 million and 100 million occasions.
In every of those classes, the indie (i.e. non-major-distribution) sector grew its market share vs. the second half of 2023.
“Reaching 1 billion paid subscribers throughout all streaming providers will probably be a collaborative effort, requiring innovation, strategic partnerships, and a continued give attention to delivering distinctive worth to music followers worldwide.”
David Kaefer, Spotify
Added Kaefer in immediately’s weblog publish revealing Spotify’s most up-to-date annual music business payout determine: “Certainly, this has been a decade of unparalleled transformation. The worldwide worth of music copyright immediately sits at $45.5 billion. A decade on from its low level, what number of different industries have skilled this sort of revival?
“Our aim is to assist artists get their work in entrance of present and future followers, proceed to innovate on their behalf, and ship it in a method that conjures up folks to pay for it. Onboarding folks to paid streaming is exactly what has elevated our payouts — tenfold — over the previous decade.
“Reaching 1 billion paid subscribers throughout all streaming providers will probably be a collaborative effort, requiring innovation, strategic partnerships, and a continued give attention to delivering distinctive worth to music followers worldwide. It’s a aim we’re assured we are able to obtain collectively.”
“Bringing listeners to paid streaming is exactly what has elevated our payouts (tenfold) over the previous decade, and is enabling extra room for extra artists to seek out success.”
Writing on LinkedIn immediately, Spotify CEO Daniel Ek mentioned: “For an additional 12 months, Spotify set the report for the best annual cost to the music business – $10 billion.
“For context, in 2014 whole world recorded music revenues had been simply $13 billion, and Spotify’s pay out on the time was round $1 billion. Bringing listeners to paid streaming is exactly what has elevated our payouts (tenfold) over the previous decade, and is enabling extra room for extra artists to seek out success. It’s an actual change throughout the music enterprise and one which we’re proud to be part of.”
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