Here's all you need to know about Spotify's interactive website "Loud & Clear" explaining their payout process.
Written by Evie - Sep 2, 2021
We get a lot of questions regarding payouts and why we can’t share an exact formula that breaks down the pay per stream ratio. This is solely because as a distributor, we act like the middle man between DSPs (Spotify, Apple Music, etc...) and the artist. The royalties we pay out come directly from the DSPs, so we do not calculate or decide ourselves how royalties are earned.
After feedback from the artist community saying Spotify lacks transparency with the inner workings of stream payouts, Spotify has introduced “Loud & Clear”, an interactive website explaining their payout process.
“Artists deserve clarity about the economics of music streaming. This site aims to increase transparency by sharing new data on the global streaming economy and breaking down the royalty system, the players, and the process.” - Spotify
Here is a video from the website that explains in a clear way how artists and songwriters get paid:
The website also has an interactive section that shows calculations of different thresholds communicated through graphs, detailing the number of artists that are meeting the different revenue thresholds that Spotify goes by for payouts. Although the website doesn't disclose the exact amount an artist will get paid per stream, it sets a benchmark with these thresholds that are comparable to your own streaming data.
“If you look at those graphs of how artists of different earning thresholds have grown over the past four years, what you clearly see is that Spotify has invested in a more engaging consumer experience: Having better programming, launching in new countries, all the things we do to invest in our business—they grow the pie for everybody,” VP, Head of Marketplace at Spotify, Charlie Hellman said.
Photo: "Loud & Clear" - Spotify
“We’re constantly testing to see what is the revenue-maximizing price for [any given] market, because if we can find the revenue-maximizing price, that’s best for Spotify and it’s best for all artists. When we grow our revenues, artists’ revenues grow. When we make our programming better, more artists can fit in and have a chance to grow an audience.”
At the end of the site, there is also a FAQ section that answers common questions among the creator community like:
Spotify Co-Founder and CEO, Daniel Ek, said: “57K artists now represent 90% of monthly streams on Spotify—a number that has quadrupled in just six years.”
Hopefully, this will clear the air between creators and streaming services — creating a more trusting space between artists, distributors, and DSPs. We all share the same ambition. Like Daniel Ek said: “Our goal is to help musicians that aspire to be, or are professional to make a living.”