How Do Artists Make Money on Spotify? 3 Ways to Monetize Your Music

Spotify is one of the biggest audio streaming services in the world—both in terms of the artists it features and the number of listeners. Spotify reports that it’s the undisputed winner in the audio streaming world, with over 615 million users. Out of this number, 239 million are paying Spotify Premium listeners.

With these kinds of numbers, there’s a sizeable revenue generated by the streaming platform. So, if you’re an emerging artist, you might ask, “How do artists make money on Spotify?” How is this revenue distributed among the many artists who have uploaded their songs, albums, podcasts, and audiobooks on Spotify? Does everyone get a piece of the streaming pie? And how much does Spotify pay per stream?

If you’re curious about these questions and want to learn how Spotify can help you make money from your music career, this article is for you. Let’s look at the 3 main ways how Spotify helps artists profit from their work.

3 ways how artists make money on Spotify

Generally speaking, there are three main ways to use Spotify to earn money from your music career: publishing and recording royalties, merch selling opportunities, and promotion for your live shows.

Let’s go through them one by one.

1. Royalty payments

The most obvious way streaming services pay artists is through royalties, which musicians earn proportionate to how popular their work becomes on the platform. According to Spotify, in 2023, they paid out over $9 billion in royalties, which they claim is the highest number among all music streaming services.

Types of royalties

Spotify pays two types of music royalties:

• Recording royalties are paid to the rightsholders of the music (a record label or music distributor), who then pay artists their share of the money according to the contracts they’ve signed.

• Publishing royalties go to the songwriters of the compositions, paid through publishers, and these royalties depend on the listeners’ country.

An important thing to note here is that Spotify doesn’t pay any money directly to the artists. All the streaming payouts go through distributors or publishers. That’s why it’s difficult to say how much artists earn from Spotify with streaming royalties. It depends on their contracts with record labels, publishers, agencies, or other distributors who manage the artists’ work.

How are royalties calculated?

Spotify earns its money in two ways:

• From Premium users who have signed up for a paid subscription

• From the ads played for users with a free Spotify account

Spotify’s global revenue over the years. Source: Statista

Out of the total revenue, around one-third stays with Spotify to take care of the maintenance of the digital streaming platform, employee salaries, taxes, and other expenses. The rest, about two-thirds of the total money, gets paid out in royalties.

And here comes the most crucial part. Spotify does not pay royalties per stream.

Instead, Spotify pays out money according to a figure they call streamshare. In simple terms, this means that every month, Spotify looks at the proportion of how much a particular song was streamed to the total streams on the platform.

The royalties are distributed proportionally among the record labels and other rightsholders, who then pay the money they get from music streaming platforms to artists they work with. Spotify isn’t alone in doing it like this; other music platforms like Apple Music have the same approach, looking at the artist’s share of total streams rather than paying per stream.

How much does Spotify pay artists per stream?

Because of Spotify’s streamshare approach, it’s practically impossible to tell how much Spotify pays per stream. The same number of streams can result in different royalty payments in different months, depending on the competition and how much other artists’ music was streamed compared to others.

Another important thing to note is that as of 2024, Spotify has changed its policy on royalty payouts. Now, for a track to qualify for the royalty pool calculation, it needs to have at least 1,000 streams over the past 12 months. Plus, to prevent unfair gaming of the system, Spotify also looks at an undisclosed number of unique listeners the track needs to have to be eligible for royalties.

What if I don’t have a distributor or publisher?

Spotify pays artists only through rightsholders, like record labels or other publishers. But what if you’re an independent artist just starting out and don’t have representation yet?

In this case, you can get your music streamed on Spotify and other platforms with the help of publishing services like Ditto, Distrokid, and others. Usually, these are subscription-based platforms where you pay a monthly fee for their services but get to keep all the royalties you earn from your music if you qualify for them.

However, the 1,000-stream threshold can be tricky to clear, especially for emerging independent artists, so let’s look at other ways to earn money with the help of Spotify.

2. Selling merch

With digital music being the norm these days, many fans look for ways to get some physical keepsakes of their favorite artists. You can help them by creating and selling your merch, which will supplement your earnings from music.

Source: Spotify

While you can go down the traditional route of ordering a stock of items and selling them either at your concerts, brick-and-mortar music stores, or online, for independent artists looking to save money, there’s an even better option—a print-on-demand dropshipping service like Printful.

How it works with print-on-demand

The main appeal of print-on-demand is that you don’t need a big upfront investment to get started. Whether you design t-shirts, hats, totes, or other items, products will be made only when an order comes in. Promotion and customer care are on your side, while your fulfillment partner takes care of the printing and shipping of your merch.

Spotify offers artists the chance to display their merch on their artist profile pages on the streaming platform itself. You’ll find the Merch section at the bottom of each artist’s Spotify page, with 3 items pinned there. If you click on one of them, you’ll be taken to that artist’s merch store, where poeple can place their order and find other products.

Source: Spotify

The easiest way to sell print-on-demand items like tees, hoodies, flags, posters, and more is through the Printful and Shopify integration.

[YouTube video embed: https://youtu.be/oBzUIfl_6lU ]

Here’s a quick breakdown of how it works:

1. Create and set up your store on Shopify

2. Connect Shopify and Printful

3. Pick and design your products

4. Link Shopify and Spotify

5. Add your created products to Spotify

| For a full overview of this process, check out this step-by-step guide on how to connect your Shopify store with Spotify.

One of the major benefits of print-on-demand is the flexibility it offers sellers. You can quickly make exclusive content for new releases or even sell merch for a particular show. For example, Taylor Swift offers her Eras Tour fans a chance to purchase a t-shirt with their favorite era from the concert.

Source: Spotify

Since you don’t have to buy any merch upfront and each order is made on-demand, you have nothing to lose and all to gain by delighting your fans in a unique way.

| Looking for some more band merch ideas? Check out these 26 examples and pick what works for you.

How much you can make selling merch

The question of how to price your merch doesn’t have a universal answer. It all depends on how much you hope to make and how much your fans are ready to pay to own your custom merch.

As you can see, the price of a simple t-shirt can vary even among very famous artists.

When figuring out the price for your merch, there are several factors you need to take into account. With print-on-demand, there’s the base price your production partner will charge you for the order fulfillment, plus taxes and shipping. Your profit has to go on top of that.

But don’t forget about other expenses you might want to cover with the price of your merch, like platform subscription fees, the occasional sale discount, etc. To entice more buyers, you could also offer free shipping by including the average shipping fee in your retail price.

| Try Printful’s pricing calculator to experiment with different prices and profit margins.

At the end of the day, you need to find a pricing range your fans are comfortable with but that also leaves you with a tidy profit to justify all the work that goes into creating your merch line.

It’s also a question of how you position your merch and the products you pick. An embroidered t-shirt, for example, can be sold as a premium product for a higher price than a printed one.

Read more:

• What is a Good Profit Margin for Print-on-Demand?

• How to Price Custom Shirts

Now, let’s look at the third way you can use Spotify to earn more.

3. Selling show tickets

One of the most popular ways artists make money with their music has always been by selling tickets to their shows. When you release music, fans will appreciate the chance to hear it live, and getting revenue from the tickets sold at the gigs can be profitable for you as an artist. Plus, it’s a wonderful opportunity to get to know your fans.

You can use Spotify’s platform to inform your listeners about your upcoming gigs. Spotify lets you add tour dates to your artist profile. Users will see a list of future shows, and each concert has a ticket link, information about other artists participating in the event, the venue address, etc.

Source: Spotify

A concert tour can be another great way to sell your merchandise. You can either order stock to sell at the venue (take advantage of bulk order discounts if you work with Printful) or direct your new fans to your online store with QR codes and links displayed on posters at the venue, your social media channels, etc.

Ending on a high note

Streaming platforms like Spotify, Apple Music, and YouTube Music have transformed the music industry compared to just a decade ago. People are no longer eager to download music, instead preferring to stream it any time and any place.

It’s no secret that royalties for smaller artists are not very high, especially with Spotify’s recent policy update requiring at least 1,000 streams for a track to qualify for the royalty payment pool. This means artists have to come up with other inventive ways to earn money, and one of the most popular ones is selling custom merch.

Thanks to the Spotify and Shopify collaboration, launching your merch line is now easier than ever. And if you combine it with a print-on-demand service like Printful, it’s a risk-free chance to supplement your income as a musician and delight your fans with original keepsakes from their favorite performer.

So, if you don’t have your own merch yet, it’s time to change that—get started right away!

Frequently asked questions about earning money on Spotify

How do artists get paid on Spotify?

Spotify pays artists by sharing a cut of the revenue they get from paid Premium users and ads that free users get. The Spotify streaming service doesn’t pay artists directly; instead, the royalties are paid out to publishers and distributors, who then pay artists and songwriters according to what’s stipulated in their contracts.

How much money does Spotify pay for 1 million streams?

Spotify is a streaming service that doesn’t pay a fixed rate per stream. Instead, it looks at the proportion of how popular each track is compared to all other streamed songs and pays out a proportionate amount of the available revenue. As a result, it’s impossible to determine precisely how much a million streams earn. Since the streamshare is calculated every month, the amount can differ.

How much is 1 billion streams on Spotify?

Since Spotify doesn’t pay per stream, there isn’t a precise number of how much 1 billion streams on Spotify would be in royalties. There have been attempts to estimate per-stream earnings for artists, but without detailed analytics from Spotify, it’s impossible to determine exact amounts. Don’t forget that Spotify doesn’t pay artists directly—artists make money through distributors who deal with the music platforms directly.