YOU USE SPOTIFY TO LISTEN TO MUSIC.HERE'S HOW MONEY FROM ADS AND SUBSCRIPTION FEES FLOWS TO ARTISTS

Every day, millions of people use Spotify to stream music.

A few years ago, it would’ve felt like an impossibility: Click, and bam — a seemingly endless catalog of recorded music opens up, right at your fingertips.

Streaming now accounts for most of the money generated by the music industry — a whopping 84% in the United States, according to the RIAA, and 67.3% worldwide, according to a 2024 report by the International Federation of the Phonographic Industry, which tracks global sales.

Spotify is the largest platform of all — making up roughly 31% of the total market share — with a reported 626 million users and 246 million subscribers in over 180 markets.

In July, Spotify increased its monthly subscription cost. So, how does money from advertisers and subscription fees move from Spotify to artists’ wallets, anyway?

HOW DOES SPOTIFY PAY ARTISTS AND SONGWRITERS?

Short answer: They don’t. Spotify pays roughly two-thirds of each dollar it makes from music streams — a collection of paid subscriptions and advertiser income — to the rights holders of the music on its platform, paid out between recording and publishing agreements.

Those rights holders usually comprise a combination of record labels, distributors, aggregators and collecting societies — think Sony, Warner, Universal, the digital music licensing organization Merlin that represents independent labels — who then pay their artists according to their contracts.

If an artist is self-distributed, they might pay a small fee to an aggregator, or upload service (some popular ones include DistroKid and TuneCore).

A self-distributed artist keeps “the vast majority of (the royalties),” explains Charlie Hellman, the vice president and global head of music product at Spotify. Or it “goes to their label and their publisher.”

Payments to rights holders are determined by a process called streamshare.