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Spotify reveals how much it is paying to artists

In a bid for greater transparency, music-streaming service Spotify has a new website that explains how its royalties are distributed.

Music-streaming service Spotify has revealed how much it has paid out to artists thus far.

(Credit: Spotify)

In a bid for greater transparency, Spotify has established a website for artists that discloses how it distributes royalties. Spotify keeps around 30 per cent of its total revenue, distributing the "nearly 70 per cent" of the rest as royalties.

However, that 70 per cent goes to rights holders, including labels and publishers, who then distribute it to artists themselves. As mentioned on the site, Spotify has distributed US$1 billion in royalties since its launch in 2008, with US$500 million of that given out in 2013 alone.

The website breaks down exactly how royalties are calculated and wants to discourage artists from seeing revenue on a per-stream basis. However, the service did disclose that the average per-stream payout is between US$0.006 and US$0.0084, which covers both the free and subscription tiers of service.

Spotify and fellow streaming services have been the subject of criticism from many high-profile artists, including David Byrne and Thom Yorke from Radiohead.

Actual artist payments vs. projected earnings when there are 40 million paid subscribers using Spotify. (Credit: Spotify)

No doubt these figures have been revealed in an attempt to woo back artists who have been skeptical about earning money from music streaming. As an example of potential revenue that could be earned, based on actual figures, a niche indie album was paid US$3300 in royalties in July 2013, while a global hit album received US$425,000.