Is Spotify Changing For the Better?

Good news for you, bad news for the gatekeepers! Spotify is seeking a music revolution for the masses. They’ve locked onto their targets and declared war… It’s total anarchy!

It all started back in 2018 when Spotify CEO and Co-founder, Daniel Ek, took his first shot. Ek proudly asserted that Spotify’s “mission is to enable one million artists to live off their work”, and set his sights for tearing down the music industry gatekeepers.

It is no secret that Spotify doesn’t believe in gatekeepers. They hold the keys to the music kingdom. Without passing them, it can be difficult for anyone but an exclusive group to make the big bucks. But if Spotify’s core objectives, driving discovery and helping up and coming artists reach more audiences, could be delivered, the exclusivity and power would start to dwindle.

It seems that Spotify is making good on their promise. Or rather, heading in the right direction. Spotify has revealed that in 2020 Q2 the number of artists making up it’s top tier was over 43,000. In reality, that represents an increase of 43% on 2019’s 30,000, and almost triples the 16,000 of 2015.

What is the top tier?

“Top Tier” is the term Spotify uses to refer to the artists making up 90% of their music streams. So essentially, the Top Tier are the most listened to, and highest paid, artists on Spotify.

This huge shift in the last five years, with the number of Top Tier artists almost tripling, represents a dynamic change in earning potential. Now, due to the added variety across the top line, the domination is changing!

How is listening behaviour changing?

Recent data suggests that more than 30% of audience consumption on Spotify is now a direct result of algorithms. The curations team have been working hard to create curated playlists which suit their listeners in view of driving discovery.

With algorithms playing a pivotal role in altering the music landscape, Spotify now exhibits a large amount of control over the demand curve. After all, they sought to overthrow the Gatekeepers and are now lining themselves up to take the throne.

If the change continues at this rate, it won’t be long until streaming dominance has faded away. Then, all the great artists who are hot on their tails will start seeing spikes in listeners.

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Will this change your earning potential?

Spotify’s 2020 Q2 numbers suggest that they generated $2.05 billion during this quarter and 52% of that ($1.07 billion) was paid out as royalties.

If the Top Tier artists are holding 90% of all streams, then they are holding 90% of all royalties revenue too. This means that $963 million of the royalties payout is being shared between 43,000 artists.

According to Identity Music’s calculations, this would be an artist average of $22,395 for this quarter, and an estimated $89,851 per year. This is a massive change from if the top tier was still the 16,000 of 2015, which would have seen an estimated $240,750 per artist this year.

So, how do these figures affect you? In short, if top level streaming continues to be distributed among a wider number of artists, revenue is going to be split in a much broader way. As a result, up and coming musicians will see more royalties landing in their pay packet…

Are you looking to get your music out there? With Identity Music you can get your music all over the globe in order to gain the maximum exposure. By using our distribution and music promotion services, you’ll be able to take control while watching your music reach new heights.