An aurora seen from Abisko National Park in Sweden, where prominent artists have generated Spotify royalties for nearly 270 billion streams since 2008, according to a new study. Photo credit: David Becker
How much does a commercially known pop group make from Spotify royalties when signed to a major label? That’s one of several questions industry researcher Daniel Johansson is trying to answer in a new “quantitative analysis of Swedish artists on Spotify.”
Johansson, a lecturer at Inland Norway University of Applied Sciences, recently published the nearly 50-page deep dive on the economics of Spotify royalties. As part of the comprehensive study, the long-standing The music industry According to the report, the author analyzed “all Swedish artists who have generated more than 1 million streams since Spotify was released,” taking into account a whopping total of 267.82 billion plays from 8,339 acts.
Of course, globally-renowned artists made up a sizable portion of those streams, with works by Avicii, Zara Larsson, Tove Lo and ABBA totaling around 31.89 billion views over the period in question, according to the breakdown. Meanwhile, the first 10 or so pages of the resource, which Johansson reportedly took six months to create, cover the basics of the industry in relative detail.
The latter include the distinction between composition and recording, the nuances of Spotify’s prorated royalty model, factors affecting earnings per stream (listener geography, ad-supported versus paid accounts, etc.), and the complex evolution of streaming service payments and in the pockets of label-signed artists.
Regarding the methodology behind the Spotify royalty study and its estimates, Johansson used the long-held average recorded royalty of one-third to one-half penny per stream.
The researcher also went ahead and introduced a “cruel simplification of licensing agreements” in label deals, calculating the amount signed artists actually get as anywhere from 10% to 50%. Finally, for important background details, Johansson set a per-stream royalty of 8% to 13% for the composition.
“Additionally, discussions with industry experts and label executives have shown that 15-25% can be considered reasonably standard for major label deals today,” the author summarized, while affirming that he had not factored in upfront payments or “other contractual necessities”. which are an integral part of the economic relationship between a label and the artist.”
In addition, the initially mentioned “pop band that is signed to a major label” is said to have been active in the industry for over 30 years and has been able to book around 300 million Spotify streams since 2008. (The name was anonymized in the study. This tape and the others whose streaming data has been incorporated into “simulation use cases.”)
According to the study, these streams would have generated between $900,000 and $1.5 million in total revenue for use of the group’s recordings, or (at 20%) between $180,000 and $300,000 for the creators themselves.
And assuming the four members involved split the total evenly over the past 14 years, each would take home between $270 and $450 a month, “excluding deductions,” the text says, and plus another $260 to $420 per month for the underlying compositions.
Interestingly, there’s a second “obviously simplified” use case, this time focusing on an unsigned hip-hop artist who has generated 580 million Spotify streams since joining the service in 2015, growing between 2.32 and $3.65 million in royalties for playback on the platform — or, if there’s no label split, a comparatively sizable $27,600 to $43,500 per month.
Another notable use case of the study (of which there are 11 in total) concerns a six-piece metal group (“one of the most well-known bands from Sweden”) signed to a sub-label of a “major label”. With 150 million on-platform streams as of 2008, the group would have been making just $160-$270 per member per month at a 20% label split.
Finally, the relevant statistics were published in the study to provide additional context on well-known listening preferences. For example, pop releases accounted for 40.9% of the nearly three billion streams analyzed, even though the artists responsible made up 36.6% of the sample. And much repeated (and much uploaded) Dance/Electronics Titles reportedly secured 27.22% of streams, while participating artists accounted for just 17.8% of those included in the analysis.