Spotify will pay out more than $9 billion to the music industry in 2023, bringing its total payments to rights holders since its inception to $48 billion, the company announced on Thursday (February 8).
At $9 billion a year, Spotify holds a significant share of the global music market. Although 2023 is too early to release global industry data, rough estimates based on existing data give an indication of Spotify's enormous value. The global value of music copyrights was $41.5 billion in 2022, according to the music economist Will Page. If the global value of music copyrights grew by 10% in 2023 – not an outlandish assumption given recent trends – Spotify would account for around 20% of record and publishing revenues worldwide.
The $9 billion in royalties — an amount paid for both recorded music and publishing rights — likely makes Spotify the largest source of music revenue worldwide. YouTube paid out $6 billion to rights holders over the past 12 months, the company announced on February 1. Apple is also a major source of revenue with its Apple Music subscription service and iTunes downloads, while Amazon is another major player with its various streaming services, store downloads and physical sales. Although Apple and Amazon are publicly traded companies, their sheer size—$383 billion in revenue and $575 billion in 2023—precludes them from breaking down the details of the music services that represent a small portion of their overall businesses.
However, Spotify's share of the wider global music business is much smaller. Through licensing agreements with companies and publishers, Spotify pays almost 70% of subscription and advertising revenue to music rights holders. But music rights are only part of a bigger pie that includes concerts, merchandise sales and licensing. Spotify has an indirect impact on this revenue through in-app concert and merchandise listings that drive users to purchase tickets and concerts outside of the Spotify app.
Amid stiff competition from numerous well-funded tech giants, Spotify is by far the largest subscription music platform. MIDiA surveys Global Music Subscription Market Report Q3 2023, released Thursday, gave Spotify a 31.7 percent share of a total of 713.4 million subscribers worldwide, up from 31.3 percent a year earlier. “So despite everything Spotify has thrown at it, it outperformed the market in 2023,” wrote MIDiA. Mark Mulligan.
The report, which has Spotify at 226 million global subscribers in the third quarter, puts the company well ahead of No. 2 Tencent Music Entertainment with 102.7 million, No. 3 Apple Music with 89.8 million, No. 4 Amazon Music with 78.9 million and No. 5 YouTube Music with 69.1 million (YouTube also generates significant revenue for rights holders through advertising on its free service). Spotify ended the fourth quarter with 236 million subscribers, according to its latest earnings results.
from our partners at https://www.billboard.com/business/streaming/spotify-2023-royalties-payouts-9-billion-labels-publishers-1235603302/