How Spotify ACTUALLY makes money
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The fundamental problem with Spotify isn’t necessarily its revenue or costs. It’s the core nature of its business. It’s obvious that Spotify has to pay royalties on its music since it doesn’t own it. But, how it pays for them isn’t so obvious. Contrary to what you may have heard, Spotify doesn’t actually pay artists and record labels per stream.
It pays according to what’s known as Streamshare.
Spotify calculates 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 that specific artist and music label.
So, it's not quite accurate to say that Spotify pays a certain fixed amount per stream. But, in general, about 70% of these payments go towards royalties and the remaining 30% goes back to the company.
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