It’s tough to make money in the music industry—especially since music streaming services have supplanted physical media (like records and CDs) as the primary way that people consume songs. With 626 million users, the most popular of these streaming services is Spotify, although it has plenty of competition from platforms like Apple Music, YouTube Music, Amazon Music, Tidal, and Deezer.
As the largest streaming service, Spotify is subject to a lot of scrutiny. Spotify is a streaming service for hundreds of thousands of independent and major artists. Plenty of these musicians want to know how they can monetize their Spotify presence. The short answer: Making money on Spotify isn’t easy, but it’s possible.
Here’s a primer to help you generate revenue on Spotify—with tips that can apply to other streaming services as well.
How do Spotify payments work?
Spotify artists earn money through artist royalties, with the platform paying out according to the number of streams per song. In the past, fans supported artists by buying copies of an album. By contrast, your Spotify followers simply stream your song or album without actually owning it. The more streams that artists receive, the more money they make.
How Spotify makes money
Before your music on Spotify can generate revenue for you, it has to generate revenue for Spotify. Spotify makes money from three main sources.
1. Premium subscriptions: Users pay Spotify a monthly fee for ad-free listening and other benefits.
2. Advertisements: Free-tier Spotify users must listen to periodic ads, generating ad revenue for the platform.
3. Sponsored links: Spotify increasingly displays outbound links—often selling tickets for live shows—within its mobile apps and browser-based applications. When users make purchases via these links, Spotify gets a cut.
Spotify collects all the revenue from subscriptions, advertisements, and commissions, and then puts the money into a pool. Not all of the money in this pool goes to artist royalties, however. It also goes to record labels, songwriters (if they aren’t the same as the performing artist), corporate partners, and Spotify itself.
How Spotify calculates royalties
Several factors influence how Spotify divides up royalties, including:
- Number of streams. This is the total number of streams across the Spotify platform in a given period.
- Pro rata share of streams. This is the share of streams attributed to each song. For instance, if a song receives 1% of the total Spotify streams in a reporting period, it gets 1% of the royalty pool.
- Country-based royalty rates. Royalties can vary by country and market due to differing subscription fees and ad rates.
How Spotify distributes royalties
There are three main categories of royalty recipients on the Spotify platform. Here’s who qualifies for each category:
Direct artists
You’re a direct artist if you don’t use a record label to get your music on Spotify. Instead, you use platforms like DistroKid, CD Baby, or TuneCore to distribute your music to various streaming services (including Spotify). Independent artists receive royalties directly from these services, which take a commission.
Record labels
A record label doesn’t play the same role on Spotify that it does with physical media, but it still gets money from the royalty pool. All of the major labels have direct deals with Spotify entitling them to a significant portion of platform royalties. Independent labels typically band together and share distributors or aggregators to license music for Spotify and other streaming services. These intermediaries take a cut from the revenue pool before passing payments along to artists.
Songwriters and publishers
Performing rights organizations (PROs)—most notably the American Society of Composers, Authors and Publishers (ASCAP) and Broadcast Music Inc. (BMI)—represent songwriters and publishers. PROs collect royalties for songwriters and publishers when users stream their music. Organizations like the Mechanical Licensing Collective (MLC) in the US collect mechanical royalties, which cover the reproduction of recorded music.
How and when Spotify pays artists
Spotify typically pays out revenue shares on a monthly or quarterly basis. The exact timing can depend on the agreements between Spotify and the rights holders or intermediaries. Here are several factors to note about Spotify’s revenue generation:
- The more streams a song receives relative to others, the higher its royalty share.
- Premium streams typically generate higher royalties than ad-supported streams.
- Streams from countries with higher subscription fees and ad rates yield higher royalties. In other words, your revenue from a listener will hinge in part on that listener’s country.
- The per-stream payout on Spotify can vary, but reportedly falls between 3¢ and 5¢.
How to make money on Spotify
- Embrace Spotify playlists
- Integrate Spotify into your social media posts
- Solicit listener donations
- Try podcasting
- Utilize the Spotify Ad Studio
- Team up with other artists
- Create music for a target audience
- Monetize non-musical skills
It may not be easy to make money on Spotify, but you’ll increase your prospects by thinking strategically. Here’s how to monetize your Spotify account and potentially make good money from both music and ancillary activities:
Embrace Spotify playlists
Playlists are king on Spotify. The platform has cultivated a large community of playlist curators, and these curators are always looking for new music. Build a strong Spotify profile with high-quality music and follower engagement to increase your chances of making it onto playlists.
You may choose to utilize promotion services like PlaylistPush to submit your music to Spotify playlist curators. Having your music on more popular playlists means more streams—and more royalties.
Integrate Spotify into your social media posts
Having a strong online presence can bring people to your Spotify page. A great way to get the word out about your music is via your social media accounts—Facebook, Instagram, TikTok, YouTube, and more. Remember that organic growth is key—and as you grow your platform, you’ll make more money.
Use social media campaigns to announce new releases and run promotional campaigns to drive listeners to your Spotify artist profile. You can also use your artist profile to link back to social media, completing the circle. If you have new tracks to share or tour dates to announce, you’ll have no shortage of ways to promote the news.
Solicit listener donations
Your Spotify account comes with something called “fan support tools,” which you can use to create a fan support link—essentially a donation link like you might see on Patreon. Realistically, this may pad your bank account more than revenue from streams.
Try podcasting
Spotify has invested in the podcast business. For many creators, podcasting offers a clearer path to getting paid than music streams do. That’s because you can sell ads on podcasts. If your show is popular, you can also tour and sell tickets to your live events.
Utilize the Spotify Ad Studio
If you decide to get into the podcast business, you can use the Spotify Ad Studio to insert targeted ads into your episodes. Revenue will vary based on ad impressions or clicks, and only shows with thousands of listeners will end up making money this way. You’ll need to grow your fanbase before selling ads.
Team up with other artists
By combining audiences with other bands, you can tap into new listeners and boost your Spotify income potential. This can involve creating music together or cross-promoting each other’s work on your Spotify profiles. Choose bands from a similar genre or one whose fans would most likely appreciate the kind of work you’re doing with your own group.
Create music for a target audience
If your goal is to make money, consider making tracks for a clearly defined target audience. For instance, the children’s music genre always needs new content, and many creators pass it over as they chase adult listeners, whose musical tastes are likely more varied.
Monetize non-musical skills
There are multiple ways to make money on Spotify beyond music streams. You can offer paid services on your Spotify profile. If you’re a critic, you can charge artists to review music. If you have a large following, you can charge to include tracks on curated playlists. You could also focus on selling merchandise. Artists can sell branded t-shirts, mugs, and other items directly through a Spotify profile description or artist bio.
How to make money on Spotify FAQ
Can I earn money from Spotify?
Yes, you can earn money from Spotify through royalties, fan support, podcasting, or selling merchandise.
How much does Spotify pay per 1,000 streams?
Your Spotify payout will vary based on many factors, including your home country and what type of listener account (paid versus. ad-supported) streamed your song. In general, you can expect to make between 30¢ and 50¢ per 1,000 streams.
What does Spotify consider as a stream?
Spotify counts a song playback as a stream if a user has listened to it for at least 30 seconds, although Spotify founder Daniel Ek insists the payment algorithm is more complicated than this.
