MBW Reacts is a series of comment pieces from the Music Business Worldwide team. They are our analytical (and sometimes opinionated) reactions to major recent entertainment news stories.
“Our mission is to unlock the potential of human creativity by giving a million creative artists the opportunity to live off their art and billions of fans the opportunity to enjoy and be inspired by it.”
It’s been Spotify‘s mission statement, published in its annual financials, for the past five years.
I’ve pointed out previously that it amounts to nothing more than a daft fantasy. But Spotify’s latest proclamations really hammer the point home.
Last week, Spotify held its now-annual Stream On event, while simultaneously giving an annual update to its Loud & Clear platform – a repository of information regarding how much Spotify pays in royalties, and to whom.
In Spotify’s words, Loud & Clear exists for one reason above any other: “[To] provide a valuable foundation for a constructive conversation”.
Thing is, it’s not the surface-level data on Loud & Clear – the data that Spotify wants you to pay attention to – that makes for the most “constructive conversation” about the music industry and where it’s headed.
To get to the good stuff, you’ve got to dig a little deeper than that.
Here are two key examples of such surface-level data in the latest Loud & Clear update:
- Spotify says that 57,000 artists generated $10,000 or more on its platform in 2022 (across recorded music and publishing royalties);
- It also says that 1,060 artists generated over $1 million dollars on its platform in the same 12 months.
Taken at face value, these figures point to the ever-widening base of artists earning decent payouts from the world’s largest subscription streaming platform.
Spotify obviously likes that narrative a lot. As its Loud & Clear site boasts: “More artists are sharing in today’s thriving music economy compared to the peak of the CD era.”
Thing is, any half-credible analysis of these numbers has to take into account how they’ve changed over time.
And when we start treading this path, these figures begin to take on a different nature – one that flies in the face of Spotify’s wonderfully earnest, but laughably silly, mission statement.
Looking closer at the facts
Let’s zoom in.
Loud & Clear, with an admirable level of detail, tells us how many artists generated annual royalties (again, across records and publishing) above various financial thresholds in 2022.
These thresholds include $10k+, $50k+, $100k+, $500k+, and $1 million+.
Below, you can see four examples of what this information looks like on the Loud & Clear site itself:
What we mustn’t forget: when Spotify says 57,000 artists generated more than $10,000 on its platform in 2022, that number lumps together a wide range of acts – from those who generated $10,001 last year, all the way up to the handful of artists earning multiple millions of dollars on the platform.
To get a more granular understanding, therefore, we need to further crunch the numbers on Loud & Clear to ascertain how many artists are generating distinct amounts of money within individual royalty brackets on Spotify.
Below, MBW has done exactly that, using Loud & Clear information covering the past three years (2022, 2021, and 2020).
Now. The really interesting thing about the above three donuts isn’t just their handsome colors – it’s the year-on-year difference between the data they present.
Particularly the year-on-year difference between the richer annual categories ($50k+) in 2021 and 2022.
Don’t fear: we’re not expecting you to scroll up and do the math on that in your head. Instead, here are a couple of visuals that sum it all up:
What’s striking about the above charts is the dramatic shrinkage in annual growth of the volume of artists generating above $50k a year on Spotify in 2022 vs. 2021.
Overall this bracket of artists (i.e. the $50k and above categories added together) stood at 17,800 in 2022 – up by 1,300 on the prior year.
But in 2021, that same category grew year-on-year by 3,100… more than double its rate of increase in 2022.
Things get starker the higher up you go in the earnings categories.
For example, in 2022, the ‘$100k and above’ category grew by just 600 artists YoY. In 2021, the equivalent figure was nearly three times bigger, at 1,700.
Drilling down further: in 2022, the ‘$100k-$499k’ category grew by 540 artists YoY… in 2021, that year-on-year growth was 1,330.
Annual growth in the volume of “creative artists” able to “earn a living from their art” on Spotify is slowing – not growing.
At this stage let’s remind ourselves, once again, of Spotify’s (continuing) mission statement: “[T]o unlock the potential of human creativity by giving a million creative artists the opportunity to live off their art.”
It seems fair to me that, for Spotify to individually give that “opportunity” to these creative artists, said acts would each need to generate at least $50k on the platform a year.
(Bear in mind whatever these acts ‘generate’, their royalties will inevitably be reduced once they’ve paid their distributor/publishing admin company/publisher/record company a fee, commission, recoupment charge, etc.)
As mentioned, in 2022, there were 17,800 artists generating $50k or more on Spotify. Their number that year increased by 1,300.
How long will it take, at that rate of annual growth, for Spotify to hit its “million creative artists… living off their art” target?
Oh, y’know, just another 755 years.
Preposterous.Music Business Worldwide