Spotify reveals it pays $0.007 per stream, claim major artists make millions from their service

Spotify has revealed that it pays an average of US$0.006 and $0.0084 per stream which covers both the free and subscription tiers of service. But the streaming revenues can total up to thousands of dollars, it emphasises, adding that it only keeps about 30% of earnings. Nearly 70% goes to labels and publishers who take their cut before passing it on to their acts.

The Swedish music company says it has paid out more than $500 million to rightsholders in 2013, and over $1 billion in total since it launched in 2008.

Responding to criticisms from the likes of Thom Yorke and David Byrne that royalties paid to artists are too low, the company has set up a new website Spotify For Artists. It allows artists to track their streaming, and explain how its business model works and how it calculates its payments.

As part of its explanation, Spotify gives figures from July 2013 from five unnamed albums. These show that a niche indie album” earned $3,300 that month, a ’breakthrough indie album’ made $76,000 while a “global hit album” made $425,000. What’s more, it is eager to point out, these figures will rise as the company expands into new markets from its current 32 countries.

It adds that this specific “global hit album” made $3 million over the past 12 months – and it’s not even one of the most played artists on the site. In other words, major acts are making more than $3 million annually from the service.

Spotify reveals it has 6 million paying subscribers with around 24 million ad-supported free users of its 20 million tracks. They streamed 4.5 billion hours of music in the last 12 months.

It plans to build its subscriber base to 40 million. Then, its executives explain, the small indie band could make about $17,000 a month while a worldwide hit maker could pocket $2 million a month. That figure will be augmented as Spotify intends to set it up so artists can sell merchandise via their profiles.

Comparatively YouTube has about one billion users with a catalogue of 120 million videos. Apple iTunes has almost 600 million users and by February 6, 2013 had sold 25 billion songs worldwide.

According to Spotify’s Year In Review 2013, the most streamed artist on their service in Australia was Daft Punk. Aussie Flume was third, after Macklemore and Ryan Lewis. Globally the honour went to Macklemore and Ryan Lewis, with Avicii second and Daft Punk third.