[FAQ]

Hello everyone,

My band just got our first songs up on Spotify a few weeks ago, which is super exciting for us! We’re starting to see some streams come in from our friends and family.

Now we are trying to understand the money side of things, and honestly, we’re a bit confused lang. I’ve read online that payment isn’t just a simple “per-stream” rate. How does Spotify actually calculate what they owe an artist? Is it different depending on the listener’s country or if they have a Premium account? And does Spotify pay us directly, or does it all go through our distributor?

Any help explaining the process from the stream to the bank account would be amazing.

[Jeff Bullas]

Good question.

Short Answer: Spotify calculates royalties using a pro-rata “streamshare” system, not a fixed per-stream rate. Your audio content earns a percentage of the total net revenue pool based on its share of total streams for that month.

Let’s unpack how your track’s performance data generates that final payment.

First, it is crucial to understand that Spotify doesn’t pay per stream, but rather by market share. Each month, Spotify pools all the money generated from sources like Premium subscriptions and ad placements next to audio and video content in a specific country. After they take their cut, the remaining money forms the royalty pool. Your payment is then calculated based on what percentage of the total streams your tracks accounted for in that pool. For instance, if your audio tracks received one percent of all streams, you would receive one percent of that royalty pool. Finally, Spotify doesn’t pay artists directly; the money is sent to the rights holders, such as your distributor or record label, who then pay you based on the terms of your contract.

Cheers,

Jeff

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