Spotify claims to have saved the music industry – but who will save us from the streaming model?
Update 13 March 2026: Spotify has linked to the comments, which you can read at the end of this article.
Tell most musicians that Spotify saved the music industry, and you’ll be met with a snarky laugh.
Spotify made the claim at the launch of its Loud & Clear annual report – sort of like the company’s version of Spotify Wrapped – published this week. While it is true that Spotify provided a legal and financially viable model 20 years ago when piracy was rampant, many people disagreed with the positive picture Spotify paints of the modern music industry.
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Spotify vs reality
Spotify’s report makes for interesting reading. The company paid more than $11 billion to the industry as a whole by 2025, making it the highest-paying retailer in the world for the second year running.
More than 13,800 artists earn more than $100,000 a year with Spotify alone (about 1,400 more than last year), while even the 100,000th highest-paid artist earns more than $7,300 from Spotify. In 2015, they would only get about $350.
So everything is good, right?
Some would argue, to put it bluntly. Spotify is not very popular in the industry, and that is largely due to the small amount it pays artists. Although it is true that it pays more than before, this goes more to those who earn more and need less.
At the end of last year, I was saddened to see some musicians sharing their Spotify Wrapped reports – or, as he put it, “doing Spotify’s marketing for them” – the founder of the Welsh indie rock group Los Campesinos! published how much money he had actually made on Spotify.
At 0.29p per stream, Spotify paid less than any other major streaming service.
As he said: “If everyone broadcasts Everything is Hell had Spotify done that using Tidal instead, we would have received an additional £31,847.38, which would have doubled the amount we made from streaming the album this time. “
Wow.
Spotify may be the worst case, but it’s symptomatic of a wider problem with music streaming in general. The model is broken and may not last long. Jimmy Iovine, founder of Interscope Records and the Beats brand of headphones and speakers, recently put it bluntly, telling The founders Podcast: “Streaming services, to me, are minutes away from being down.”
And Spotify looks the most vulnerable of all.
The biggest of the big dogs
But surely, as the largest of all broadcasters, Spotify is better placed than most to weather any market storms? Yes, yes and no.
It may be the biggest of all the dog breeds, but it’s far from a runaway success. Despite operating for almost 20 years, it only became profitable in 2024. As the brilliantly named Govert Vroom of the University of Navarra Business School points out, it spends almost 70 percent of its revenue paying royalties to host the music it offers, leaving it with very little profit.
It turns out that being the highest paying salesperson in the world has its costs.
But away from the business side of things, what separates Spotify from other music services that offer 110 million tracks? Qobuz has offered great tracks since its inception, and lets you buy them too.
Tidal pays its artists more fairly, while Apple Music and Amazon Music are no-brainers for those included in those companies’ ecosystems. But Spotify? It still offers a free tier, but that aside, there’s nothing to set it apart.
Also, its hi-res offering is less than its competitors, and it’s more expensive, too.
All of this is why Spotify gets a bad rap. We’ve even gotten to the point where a bunch of streaming services are setting themselves up as the anti-Spotify.
Fight with power
Like all industries, the music industry is a power game. As Joel Gouveia points out, record companies used to hold all the cards: they signed artists to their record labels, and even had record pressing plants, dynamic producers and the portable music players we used to listen to.
As the largest music distributor in the world, with over 700 million monthly active users, Spotify now has incredible control over distribution channels. But – as Gouveia says – it wants the fans not to have a relationship with the artists they come to, but with the service itself. If what you offer is inferior in many ways to the competition, that’s a tough sell.
Despite what Jimmy Iovine says, Spotify will not disappear overnight. But he makes a good point: the streaming model, while a godsend in a time of rampant music piracy, is broken. It only rewards those who need it least, which prevents innovation.
Who knows what’s next, but hopefully it will provide a better experience for musicians and music fans alike. Related: Record Store Day is April 18th this year.
Since publication, Spotify has been in touch with the following comments:
“Streaming services don’t set a fixed ‘rate per stream’. Payments come from a pool of revenue, and splitting that pool into a smaller number of streams can make a service appear to be ‘paying more’ per stream – even if the artists are earning less overall. What’s important is ultimately full payment.
“Last year, Spotify paid the music industry more than any retailer in history – over $11 billion – and we’re one of the only services to share those numbers publicly.
“More artists are getting more revenue from Spotify today than ever before that could have been stored on physical shelves during the height of the CD era. This scale and streaming access is now open – and we’re committed to continuing to grow the pie for artists at all levels.”
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