How Much Does a Successful Pop Group Signed to a Major Label Make on Spotify? Not That Much, According to a New Study

spotify royalties
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spotify royalties
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An aurora as seen from Abisko National Park in Sweden, where prominent artists have generated Spotify royalties on almost 270 billion streams since 2008, according to a new study. Photo Credit: David Becker

How much does a commercially prominent pop group make from Spotify royalties when signed to a major label? That’s one of several questions that industry researcher Daniel Johansson attempts to answer in a new “quantitative analysis of Swedish artists on Spotify.”

Johansson, a lecturer at the Inland Norway University of Applied Sciences, just recently published the almost 50-page deep dive into the economics of Spotify royalties. As part of the comprehensive study, the longtime Musikindustrin contributor analyzed “all Swedish artists that have generated more than 1 million streams on Spotify since its release,” per the report, factoring for a staggering 267.82 billion total plays from 8,339 acts in the process.

Of course, globally well-known artists accounted for a sizable portion of these streams, with the work of Avicii, Zara Larsson, Tove Lo, and ABBA having racked up about 31.89 billion overall plays during the period in question, according to the breakdown. Meanwhile, the first 10 or so pages of the resource, which Johansson is said to have spent six months crafting, explores in relative detail industry basics.

Among the latter are the composition-recording distinction, the nuances of the pro-rata Spotify royalties model, factors affecting per-stream revenue (listeners’ geography, ad-supported versus paid accounts, etc.) and payments’ multifaceted journey from streaming services and into the pockets of label-signed artists.

Regarding the methodology behind the Spotify royalties study and its estimates, Johansson ran with the long-available average recorded royalty rate of one-third of a penny to half of a penny per stream.

The researcher also went ahead and implemented a “cruel simplification of royalty agreements” in label contracts by calculating the amount that signed artists actually receive at 10% to 50%. Lastly, in terms of important background details, Johansson set a per-stream royalty rate of 8% of a penny to 13% of a penny on the composition side.

“Also, conversations with industry experts and label executives have shown that 15–25% can be regarded as somewhat standard in contemporary large label contracts,” the author summarized, likewise reiterating that he hadn’t calculated for advance recoupments or “other contractual necessities that are an inherent part of the economic relationship between a label and the artist.”

Expanding upon the points, the initially noted “pop band signed to a large label” is said to have been active in the industry for over 30 years, with around 300 million Spotify streams to its credit since 2008. (The study anonymized the name of this band and the others whose streaming data was incorporated into “simulation use cases.”)

These streams would have delivered between $900,000 and $1.5 million in total revenue for the use of the group’s recordings, per the study, or (at 20%) between $180,000 and $300,000 to the creators themselves.

And assuming that the four involved members split the sum evenly during the 14 years at hand, they’d each take home between $270 and $450 per month “with no deductions taken into consideration,” the text shows, tacking on another $260 to $420 per month for the underlying compositions.

Interestingly, a second “obviously simplified” use case, centering this time on an unsigned hip-hop artist who’s generated 580 million Spotify streams since joining the service in 2015, attached between $2.32 million and $3.65 million in royalties to the on-platform plays – or, in the absence of a label split, a comparatively substantial $27,600 to $43,500 per month.

Another of the study’s noteworthy use cases (of which there are 11 total) pertains to a six-piece metal group (“one of the most well known bands from Sweden”) that’s been signed to a sub-label of “a large label.” With 150 million on-platform streams, the group would have earned just $160 to $270 per member each month from 2008 onward at a 20% label split.

Worth mentioning in conclusion are the pertinent stats that the study disclosed to provide additional context to widely known listening preferences. Of the almost three billion streams analyzed, for instance, pop releases had a 40.9% listening share despite the responsible artists’ accounting for 36.6% of the sample. And much-replayed (and much-uploaded) dance/electronic tracks are said to have secured 27.22% of streams while the involved artists made up just 17.8% of those included in the analysis.