The streaming giant is naming names and sharing numbers that artists never see.
Spotify recently reached a huge milestone by paying $10 billion to the music industry in 2024. Now, it calls itself the largest contributor to the music ecosystem.
This shows just how much things have changed since 2014, when the company only paid about $1 billion during what many consider the industry’s lowest point.
However, most people in the industry continue to criticize Spotify for the low streaming rates artists receive.
Spotify has been silent for years. But now, it has had enough and is starting to fight back by sharing its side and revealing who’s actually to blame.
Spotify Points Finger at Record Labels for Low Artist Pay
Spotify has recently started to actively push back against public complaints from artists. And, they’re bringing receipts with specific data to counter these claims.
Take Bush frontman Gavin Rossdale, who claimed that “Spotify barely pays.” The streaming service didn’t waste time responding with actual numbers.
“As Gavin correctly points out, streaming services do not pay artists or songwriters directly. They pay rights holders, who in turn pay artists and songwriters based on their individual agreements,” Spotify stated.
“Once that revenue leaves a service like Spotify’s hands, how much money goes to artists and songwriters depends on their own contracts with their rightsholders.”
So far, we haven’t heard anything back from Rossdale or his team about Spotify’s response.
The same thing happened with Cradle of Filth’s Dani Filth. After he complained about getting “about 20 pounds” from 26 million plays last year, Spotify quickly shared a very different story.
“Spotify has paid out around a million dollars in revenue to Cradle of Filth’s rights holders for fans’ streams of their catalog.” said the company.
“We’re disappointed to hear that Spotify’s payments are not making it through to the band.”
Do Spotify’s Claims Have Grounds?
According to the company, they pay roughly 70 cents of every dollar they earn from music streaming to rights holders around the world. This rate can vary slightly by region due to different licensing agreements, though.
When it comes to how much artists get per stream, we’re talking about somewhere between $0.003 and $0.005 on average.
But, Spotify doesn’t just hand out a fixed rate per stream. They calculate payments based on each rightsholder’s slice of the total monthly streams.
This system, known as the pro-rata model, basically throws all subscription money into one big pot before dividing it up based on who got what share of all streams that month.
Looking at the numbers Spotify has shared, along with data from the IFPI (International Federation of the Phonographic Industry), the global value of music copyright has bounced back from its low point of $13 billion in 2014 to around $45.5 billion today.
In fact, Spotify claims that well over 10,000 artists generate more than $100,000 annually from Spotify alone.
Spotify points to this growth as proof that streaming has been good for the music industry as a whole.
A recent MIDiA Research study also strongly supports Spotify’s position on independent artist success.
According to this, Spotify contributes roughly a third of global recorded streaming revenue. And, it actually represents more than half of independent labels’ streaming revenue.
How Record Labels Split Streaming Revenue
The revenue breakdown from streaming reveals why artists often see so little money, despite Spotify paying billions into the industry.
The thing is, Spotify typically keeps about 30% of subscription fees to run their business, develop their technology, and make a profit. The other 70% goes to rights holders, including record labels, publishers, and distributors.
But, standard recording contracts usually allow labels to keep 70-80% of their portion before paying artists anything. This arrangement leaves musicians with approximately 10-20% of the original streaming revenue, which is often just fractions of a penny per stream.
The system isn’t new, though. It mirrors how physical sales worked, with one major difference.
In the CD era, artists might make $1-2 per album sold. But each album represented one fan. Now that same fan might stream my song 100 times, but they’ll earn pennies from their repeated listens.
How Record Labels Defend Their Cuts
Record labels justify their large percentage by pointing to the investments they make.
Money moves through the system in a complicated way.
If a track generates $1,000 in streaming revenue, Spotify keeps around $300, leaving $700 for rights holders. If a label keeps 80% of that amount, they would receive $560, with the artist contractually entitled to $140.
Yet, this $140 is typically applied against recoupable expenses like marketing and recording costs, video production, and advances.
Many artists don’t see actual payments until these expenses are fully recouped, which can take years or never happen at all.
The payment system also lacks transparency. There are just so many complex calculations that many artists struggle to verify independently.
Artists have no way to cross-check the streaming numbers against what they’re being paid. You just have to trust the reports.
How Artists Work Around the System
Musicians haven’t just accepted the low streaming rates and unfair payment splits. Many have found creative ways to navigate the streaming economy more effectively, especially by taking control of their own rights.
Smart artists now diversify their income beyond streaming alone. Merchandise sales, live performances, licensing deals for film and TV, and direct fan support through platforms like Patreon have become essential parts of building a sustainable music career.
Music industry observer Liz Pelly summarizes the situation:
“Streaming was sold as this thing that was going to be democratic and level the playing field for musicians, but it has reproduced a lot of the same music industry problems.”
So, for fans who want to support their favorite artists directly, industry experts recommend buying merchandise, attending concerts, and purchasing music through platforms that give artists better deals.