• Spotify has shared its latest Loud & Clear report aimed at showcasing transparency when it comes to how much money artists earn on the platform.
• In 2023, Spotify estimates that royalties generated by South African artists increased 240 percent since 2019.
• The number of local artists earning more than R100k in royalties has grown more than five times since 2018.

Revenue from streams on Spotify remains a divisive issue. This is especially so for South African artists trying to break through on the platform. For every Amapiano or Tyla, there are far more creators still struggling to make streaming their music on Spotify a gainful exercise.

While the company still keeps the precise details of its revenue split and percentage of royalties a closely guarded secret, Spotify is trying to be more transparent about its dealing with creators, which is why it has released its latest Loud & Clear report.

This report offers up a more general overview for how much is earned on the platform, but for South African artists, Spotify has also shared some details with Hypertext.

To that end, the 2024 Loud & Clear Report says that royalties generated by South African artists from Spotify alone reached nearly R256 million last year. This reflects a nearly 240 percent increase since 2019, and a more than 500 percent increase since 2017, the company shared in a release sent to Hypertext.

The approximate revenue split for songs streamed on the platform is yet to be officially confirmed, but is believed to be around 70/30, with the former going to the artists. On top of this the money earned per song stream is estimated at roughly $0.003 to $0.005 by third party analysts.

Spotify, however, refutes such claims of a pay-per-stream model, and has unpacked the process of how revenue is generated, calculated, and dispersed.

“We distribute the net revenue from Premium subscription fees and ads to rightsholders. To calculate net revenue, we subtract the money we collect but don’t get to keep. This includes payments for things like taxes, credit card processing fees, and billing, along with some other things like sales commissions. From there, the rightsholder’s share of net revenue is determined by streamshare,” it explains in a support page regarding royalties.

“We calculate streamshare by tallying the total number of streams in a given month and determining what proportion of those streams were people listening to music owned or controlled by a particular rightsholder. Contrary to what you might have heard, Spotify does not pay artist royalties according to a per-play or per-stream rate; the royalty payments that artists receive might vary according to differences in how their music is streamed or the agreements they have with labels or distributors,” it continues.

The platform has even gone so far as to adjust its payment model, announcing plans to refine it late last year, with the objective to create an additional $1 billion in revenue over the next five years.

“We’re working in close collaboration with industry partners — artist distributors, independent labels, major labels, label distributors, and artists and their teams — to introduce new policies to (1) further deter artificial streaming, (2) better distribute small payments that aren’t reaching artists, and (3) rein in those attempting to game the system with noise,” it outlines in a blog post.

“While each of these issues only impacts a small percentage of total streams, addressing them now means that we can drive approximately an additional $1 billion in revenue toward emerging and professional artists over the next five years,” it adds.

We are yet to see how the above mentioned plans will yield benefits for creators making use of the platform, but for South African artists in recent years, there appears to be an upward trend.

Here Spotify notes that in 2023, South African artists were discovered by first time listeners over 735 million times on the music streaming platform. It is unclear whether these are simply the more popular artists that are garnering new discoveries, however, so it still remains to be seen if emerging artists can also find a place to thrive on Spotify too.

Still it appears as if South African artists are finding Spotify a more lucrative place to be than when it first launched in SA in 2018.

On this front the number of South African artists generating over R100 000 in royalties from Spotify alone has grown more than 5 times since 2018, the platform shares, and in 2023, nearly 2 800 South African artists were added to editorial playlists (curated by the company’s music team) on Spotify.

“South African artists’ streaming revenues on Spotify keeps growing every year, a true testament of their immense talent. It’s a privilege to continue supporting them, in keeping with our vision of ensuring all professional artists can make a living off their art,” enthuses Jocelyne Muhutu-Remy, Spotify’s SSA MD.

It is indeed promising to see local creators doing well on Spotify, but we hope future reports can get a little more granular in terms of how earning money on the platform is working out for South African newcomers, especially given how difficult the music industry is to crack in the first place.

[Image – Photo by David Pupăză on Unsplash]