Spotify Executive Explains How Spotify ACTUALLY Works feat. Sam Duboff

Sam, if you only had 1 minute to give music artists the best advice you possibly could, what would you say? 1 minute on the clock. Oh, wow. A timer. This is real. Um I don't I have to say best advice I'd give is to get informed, get educated, uh and really know the ins and outs of the business. Uh in my role I talk to artists all the time. Um and even working at Spotify, there's new parts of the industry I learn about every day. It's incredibly complicated. Um you definitely can't believe everything you hear online. Uh and my best advice to artists is if you want to take control of your career, um you have to know your stuff. So, you know, look at your royalty statements, look at the um you know, uh deals you have with your manager, your label, uh you know, your lawyer. Uh look at um platforms like Spotify and make sure you understand everything that that we're doing, understand how the ad platforms work, um understand how your royalties are generated and you know, you know, uh really make sure you got the details of it because if you don't know those things, uh you're not set up to um make the best decisions that you can and uh help take your modern career to the next level. I think I was 5 seconds 5 seconds over. I am. Uh you failed, Mel. So, you're not I thought I uh you know, the first 5 seconds didn't really count cuz I was reacting to the timer, you know. No, it's all good. That was a great answer cuz like you're not you're you're right about how complicated the music industry is, especially in terms of royalties. Like everything's very opaque and a lot of things are very delayed. You know, you you upload your song to DistroKid or whatever. A lot of artists don't even realize that there's another 15, 20% of their royalties just in going on like, you know, registering with a PRO, registering with a Songtrust or their mechanical rights site. Um And then on top of that, they don't understand how streaming services even pay, right? I was you're constantly fighting the the swath of misinformation on on threads as I am. You're um And and it's it's a lot of people I've seen people say like outright that uh streaming services pay a flat rate per stream. When they don't, right? Not a single one does to my knowledge. Yeah, it's uh I appreciate you for for fighting the good fight, too. Um I I'm really happy to to finally be on your show because uh you hold us to account plenty and you've got a lot of fair criticisms for for Spotify over the years that I always like to to listen to. Um but you also really uh are engaging online in good faith and um not just going for clicks, but making sure people actually know what they're talking about. Um so, I appreciate you. Um yeah, you know, one of the biggest pieces of misinformation that I see online every day uh is people really believing that there's a fixed per stream rate paid out um on each platform. Spotify doesn't pay out that way. No streaming service pays out that way. Um and it's a great example of uh how artists can um you know, see something online over and over, think it's true without really getting into the details and understanding it themselves. Um and there's lots of really important decisions you're going to make about which platforms you want to promote your music on and how you should analyze your royalty statements from each platform that you're going to get completely incorrect if you think there's a fixed per stream rate. Um so, yeah, always a good place to start off the conversation because uh that's one of the biggest pieces of misinformation out there. And and I want to start off with talking about Loud & Clear because that is you just gave the the Loud & Clear briefing for for the 2025 stats. And there was there was a ton of information. I was typing the whole time just writing down info so that when I film my video for for later in the week when the embargo's up, I have I'm ready, right? So, uh there's a ton of cool stats and I have my own favorite. But what was your favorite stat from this year's Loud & Clear? Yeah, for your for your viewers who don't know, Loud & Clear is our annual royalty report. Um we're the only streaming service that does anything like this. We've been doing it for 5 or 6 years. Every year in March, we take all the royalty data from the year before and publish on our site uh exactly how many artists are generating each amount of revenue from Spotify, from $1,000 to $100,000 to a million to 10 million. Um we've been publishing that with full transparency and accountability uh every year since we started doing this and um I think it's really important for artists to know what the revenue opportunity on each platform is. So, that's why we do it. Uh and then we have a amazing team of data scientists who dig through the data kind of pull out some of the most interesting trends and takeaways that we publish on our site. Um so, if you don't mind, maybe I'll give you like my top three cuz it's hard to pick one. Um and they all have to do with kind of the artist ecosystem growth. You hear a lot about um superstars on Spotify and there's some really cool numbers about how well superstars are doing uh in streaming, but the story of Spotify is really one about emerging artists and indie artists and a full global ecosystem um finding success. So, the first one I love uh from this year is we take a look at the 100,000th highest earning artist. Um so, if you like, you know, stack ranked every artist on Spotify based on royalties generated, get down to number 100,000. Um in 2025, that artist generated $7,300. Um and that's up from $350 10 years ago. So, that's a 20x increase in just 10 years. Um and, you know, the majority of artists earning money on Spotify are outside the US. $7,300 in local currency, um you know, it's really starting to be a material amount and, you know, in the CD era, even in the the biggest record store, um you wouldn't have $100,000 with a CD on um the shelf, right? You like maybe had a few I also wouldn't have 100,000 artists on the shelf, period. >> Yeah. I what is there even a concept of the 100,000th artist ranking, you know, in like 1997? >> Right. Right. I mean, you know, $350 10 years ago on Spotify was like it didn't exist as a concept 20 years ago cuz yeah, you certainly didn't have 100,000 artists able to to be on on CD shelves. And so, uh yeah, that's what that's why I love I love that one. Uh second one um uh along the same lines uh is looking at the $100,000 level. So, this is where there's, you know, nearly 14,000 artists who generated $100,000 or more on Spotify last year. Um that's more than the number of artists who generated $50,000 half that amount 5 years ago. Uh so, you know, it's a bit under 14,000 artists were making 50k or more on Spotify 5 years ago. Now that's how many are making 100k. So, you're seeing this consistent growth year over year and that's why we do Loud & Clear every year. Um And then that that's just from Spotify, too. So, like I think I saw in a lot of the the Loud & Clear uh stats at the bottom, there were there was some statement along the lines of uh typically artists will be making three to four times this from their overall like recorded royalties. So, once you factor in all the other DSPs and and then you factor in like physical media sales and other forms of like recorded music revenue, uh if you're making 100k on Spotify, you're probably making 300 to 400k overall, which is kind of insane that there's 14,000 artists doing that. That's right. And yeah, that's before uh non-recorded royalty revenue as well. So, you know, your concert, uh live events revenue, merch revenue, um certain kinds of sync revenue, uh and so on. And yeah, that's just right. Spotify is about a third of global streaming royalties. So, for all these numbers, you can triple them and that's what you may be looking at across all streaming services and um kind of awesome to see. Uh and the last takeaway I wanted to highlight um is about the DIY segment. Um and you know, DIY, do-it-yourself, we use that as shorthand for artists self-releasing through uh independent distributor like DistroKid or CD Baby or TuneCore uh and and so on. Um and you know, I think early days of streaming, people thought of that as like a niche path uh for artists and what we're seeing is especially on Spotify, um it's more and more uh viable. Um over a third of artists who are generating $10,000 or more, that's more than 80,000 artists at that level. Uh more than a third of them are DIY or started as DIY. Um which is really cool to see. Um so, you look at that $10,000 level, that's when, you know, at least in the US, that's like starting to feel you know, material as a, you know, part of your career. In other parts of the country, it's really significant. Um over a third of the artists making that amount are DIY or or started as DIY and then decide to sign to a label because of the success of the DIY channel. Um so, >> Yeah. I think that's really exciting to see. 90% of DIY royalties go to artists who started before 2024. So, these are DIY artists who um have been going at it for a few years. They're not, you know, one-off who just started. Uh these are people who have, you know, built a career over a number of years. Um and it's awesome to see that become such a kind of viable channel for artists who choose to go that path. Yeah, abs- absolutely. I really liked the breakdown of DIY versus indie because the the phrase indie music is is kind of lost all meaning. Like, for example, on Billboard, I think the indie charts allows Disney to compete because they're technically an indie label, right? Uh Um so, it's kind of silly. Uh so, I I I I love the section with the DIY cuz that is very different. Like, you can be in a pretty big label and still be considered independent. And you could be distributed through a major label's uh you know, indie distro like like The Orchard is under Sony or whatever. Whatever. Um my favorite stat Yeah, if we kind of blew my mind um is that if you could reach 1% of Spotify listeners and get 1% of their streams, you'll make a million dollars a year. Crazy. Which is crazy and it makes sense. It's it's kind of like that like a modern version of that 1,000 true fans thing. >> Yeah. You know, cuz I don't know if the math would actually pan out this way, but if you could reach 0.1% of Spotify listeners and get 10% of their streams, you'll it'll probably break out to be roughly the same. >> Yeah. Um which is is a cool stat, right? Cuz you don't need to be a Taylor Swift. You don't need to be a Drake or a or Ed Sheeran or whatever. Yeah. You can be pretty obscure and it's it's kind of shocking the the amount of artists I'll work with where you know, I see them booking a call with me or I see them coming through my agency and it's like I go to check out their music and they have a million monthly listeners on Spotify and they have a song with like 300 million streams. I'm like, I've never even heard of this artist. >> Yeah. And they're they're kind of huge. Um but like there's so many artists with like a million monthly listeners that you you kind of forget that you you really don't need to be you don't need to be uh everywhere or a household name to to actually make it in the music industry. In fact, like the vast majority of artists who are are successful are not household names. >> Yeah. What we uh um one of the stats we shared that gets at that is, you know, of those artists making a million or more a year just from Spotify, it's like 1,500 a bit over 1,500 artists. 80% of them didn't have a single song reach the top 50 charts last year on Spotify. Right? So, if you think of those charts, that kind of encompasses anyone who was like you know, big at the Grammy or Brit Awards that, you know, certainly you'd like be reading about in the Billboard chart recaps that were having the biggest tours of the year. Um right? You remove, you know, 80% of those 1,500 plus artists uh didn't have a song reach the the top 50. It's not about like a breakout viral song they had. It's about yeah, that fan base they built over time and that 1% of 1% meaning a million is really cool cuz I think artists would think you kind of need like ubiquity to make a million dollars a year from Spotify. Um that you'd have to be everywhere and have everyone know you and that's at least how I would think about it if I didn't know the data. I'd be like, a million dollars is a ton. You must really have to be uh you know, one of those artists everybody knows. Um and what we're seeing is um you know, as the royalty pool grows 11 billion plus a year paid out by Spotify, 50% of that to Indies. Um you know, if you have that sustained fan base, if you have you know, that uh you know, set of folks who are seeking out and listening to you, you can make real amounts of money. Um and maybe your goal is to then become a household name and you know, headline at Madison Square Garden, but maybe it's not and you can make a really good living um with that kind of core fan base that uh is like, you know, ride and die for for your music. I have kind of a well, I have a couple fun questions that that I'll ask. But first, before we talk about like what what do you actually do at Spotify? So, your official title that I found online is the global head of marketing and policy at Spotify for artists, which is a mouthful. Um but like what does that actually mean? Like obviously you do you do stuff like this, you do the Loud & Clear briefing. Um but what like what do you actually do outside of that? >> Yeah, this this will be a useful clip to send my family cuz no one really understands what I do. When I go to parties and my kids ask me what I do, it's like I don't I'm a YouTuber, I guess. Yeah, right. Yeah, cuz the titles are uh never that helpful. I mean, the way I define my job is um you know, my team's trying to uh do everything we can to set up artists and songwriters to succeed on Spotify. Um and uh you know, specifically we're working on all the products, resources, educational materials, policies um that we offer to the music industry, whether that's artists, labels, publishers, songwriters, producers, um you know, anything Spotify's you know, providing to the music industry. Um my team's working on how can we help build them, make sure it's serving artists the most, how can we market that so they know what tools to use and you know, things like Spotify for artists that I'm sure all your viewers know Spotify for artists and you know, that's a a huge portion of what my team works on, kind of marketing and building those features um through to educational materials, uh things like Loud & Clear and uh Me to Be Found if your viewers have seen that where it breaks down discovery on Spotify uh or education, you know, our masterclass series where we dive into things like playlisting or artificial streaming, um songwriting and how publishing works. Uh so, we build all those materials and then on the policy side we're trying to think about how can we make Spotify as fair and rewarding as possible to emerging and professional artists. So, that's royalty policy, AI policy we can get into issues around spam, artificial streaming, infringement, uh lots of really thorny stuff. Um so, my work's on a kind of whole hodgepodge of stuff. The the through line of it is we're really trying to like help artists and songwriters and the industry get as much out of Spotify as they can. Totally. Totally. Now, does that include the the ever-talked-about online 1,000 stream threshold policy? Like was was that part of your like your team's initiative? Because like the well, I'll let you talk about it, but that that 1,000 stream policy, a lot of people were were very upset about it online because they they from from their perspective, they were making something from their music uh and then they they weren't and I've talked about it a few times on my channel. Uh but I've had people come up with extreme cases where they're like, we have 100 songs that we've released over the years, we've never really been active and we had, you know, 50 of our songs were getting 800 streams a year. So, we're we're losing out on like $100 a year or something. Um but what what is the I guess, you know, in your own words, what was that policy made for and then like what did that actually translate to on the back end of like what problem did it solve? Yeah. I mean, let me say first, I very much get where artists are coming from. Uh you know, most of my family are are in creative fields and I'm talking to artists all the time. I know how hard it is to be a creative person on the internet today and in society today. Um and so, you know, I think where a lot of artists are coming from is um uh you know, uh they're trying to make a career in music. A platform like Spotify, you know, makes a new policy like this and changes the way things work and you got used to things one way and um you know, any sort of policy is going to, you know, help some people and be harder for other people and you're trying to weigh those tradeoffs. And so, I really get where anyone's coming from when they're asking questions about it or feeling upset about it. Um the principles of where the policy came from and what it's trying to do, um I think it's really aligned with what emerging and professional artists um are looking to get out of Spotify, which is how can we make sure as much of the 11 billion dollars that we pay out every year uh goes to emerging and professional artists. Um there's a whole wide range of um uh you know, aspects of our royalty system that were set up, you know, 15 years ago, 20 years ago. We're approaching this year is the 20th anniversary of Spotify. So, a lot of our royalty rules were set up 20 years ago in a very different time. Um and for the first, you know, decade and a half of Spotify, we really just wanted to focus on growth. You know, how do you just like keep growing the royalty pool? Let's put all our focus on that. We were able to 10x from 2014. We're paying out a billion a year. Now, we're paying 10x that, you know, 10, 11 years later. Um Uh at the same time, you know, things that would be um uh you know, little uh questions and inefficiencies in the the royalty system, um you know, once you're paying out 11 billion a year, they become uh you know, a lot bigger and they really can impact how much money artists are making. So, with the um 1,000 stream kind of eligibility requirement, the the way it works is um you know, for each song uh that you release, you need 1,000 uh annual streams to be eligible for um recorded royalties. Um you know, there's over 100,000 songs released on Spotify every day. There's a lot of music out there. Um about uh 99.5% of streams go to songs with over 1,000 annual streams. 0.5% um goes to songs under 1,000 streams. So, you know, uh 10 years ago when we're only paying out a billion a year, something that's about 0.5% of the royalty pool, maybe you wouldn't um think about. Now, 0.5 of the royalty pool is tens of millions of dollars a year. Um and what we have heard from distributors, what we see in our own data is a ton of that money uh gets lost in the pipes. So, on average, the songs that are below that 1,000 stream um level generate 2 cents a month. So, we're paying out 2 cents a month for tens of millions of tracks. Um and for, you know, any distributor, um pretty much any distributor, there is minimums to withdraw the money or to take the money out, which makes sense cuz distributors take on a lot of infrastructure to be able to handle the finances. So, like you'll see like I don't even wait for like $20 to $50 even sometimes as like the minimum to take money out of the distributor. Uh and, you know, you'll see like two, three, four, five, six dollar fees. Especially outside the US, the fees and minimums are way higher. So, what is happening Or if you're using if you're using PayPal. Yeah. Um 3.5% plus 30 cents or whatever. So, if you're cashing out $6, it's it's kind of a brutal. Right. So, you you lose money on doing that. So, you know, artists don't do it, which makes sense. So, you know, tens of millions of dollars we're hearing from distributors is just sitting there. So, it's not reaching anyone. Um and so, you know, we're trying to, you know, think about how do we get ahead of things like AI technology generating mass uploads of songs. Um how do you try to, you know, get ahead of um wide, wide droves of music being released online and, you know, maybe a bunch of it is getting 50 streams, five streams, you know, 150 streams, enough that it's like, you know, below what um make it notice, but you're able to release enough of it that it adds up. You know, that's the sort of thing where whether it's, you know, bad actors trying to game the system that way or just money that doesn't reach those levels is just sitting there in distributors. We saw this opportunity to modernize the royalty system alongside alongside some other policies rolled out. Take the tens of millions of dollars a year and use it to increase the payments to the other 99.5% of uh of activity. And so, uh one of the stats we uh are releasing this week with Loud & Clear is that 3 and 1/2 million artists uh reach that eligibility level of 1,000 streams uh annual streams for a song. So, it's a really accessible um uh um level for tons and tons and tons of artists. It's like a huge number of artists. Um How many artists are on Spotify period? Do you know? >> there's like 12 million artist profiles. It It might be more than that now. Um What what are are getting or have at least one song? Yeah, I mean, a huge number of those profiles have like one or two songs and never release again, but Um Yeah, yeah, dragging Yeah. I have like probably 10 music projects over the years and only like four of them have more than, you know, a couple hundred monthly I think I have several that have like three monthly listeners cuz I got I just released music over the years and I never once promoted it. It was just like a fun thing before I started, you know, actually trying to get people to listen to my music. So, um I I definitely get that and I went to ADE a couple years ago, which is a big music conference in Amsterdam. And I I met someone who worked in music industry and he was like a software dude. And he was explaining me this like complicated like automation system he made where he uses some API to call this um this AI music tool. And then he uses this other API to go make like artwork and stuff for it at scale. And then this other API to creation distribute it. So, he was explaining how he's he's distributing like uh I think it was quite literally thousands of songs a month. And And this was, I think, three years ago that he was walking through this. And so, as when I first heard of this policy, I was like, oh, that guy can't do that anymore. Um cuz >> Sorry. you know, on one hand he's explaining I'm like, oh, that's like that's really like clever. Cuz he's talking about how he'd make a SEO thing so that people would search something and find it. >> Or he would use song names that matched popular artist song names. I'm like, that's really clever. I was like, that's kind of messed up because you're basically stealing money from actual artists, but um that did actually solve that problem. Yeah, that's the just like the fix for the the white noise and functional music that happened like a a year before that. >> That's right. Yeah, it's part of a set of policies um uh trying to tackle a lot of these sort of schemes people have. Once you're paying out, you know, 11 billion plus dollars a year, there's such a big revenue opportunity on Spotify that people do try to game the system on the margins like that. Um And it's tough cuz I totally get where an artist is coming from where, you know, you maybe like generate a dollar on a song, but that's your dollar that you generated and you want to be in a world where you get to have that. Um and uh I, you know, totally get I think there's a reason, you know, most tech platforms uh kind of across industries have ended up with some sort of eligibility floor cuz it's really tough to, you know, especially in modern times with the sorts of AI tools out there to allow anyone to monetize from day one from any level of activity. Um you know, it's really important to us to keep it as accessible as possible. You release music on Spotify, everyone has the same chance of monetizing, same rules for everyone. Um you know, uh any song gets to 1,000 streams, it's going to be eligible. Still a pretty accessible floor, 3 and 1/2 million artists reaching it. Um uh versus, you know, uh in other fields outside of music, you often see way more restrictive floors until you can start earning. Um so, we tried to really keep it accessible. That's one of like the great things about music streaming. Um but uh I totally get where artists are coming from when they're upset about it. And then I hope that as artists learn more about why we did it, they can come to understand, you know, this isn't money that Spotify's keeping in any way. All of it's used to increase payments to the 3 and 1/2 million artists who are earning royalties. Um so, it's, you know, tens of millions of dollars extra going to those artists making more material amounts who will actually get to see that money cuz they can withdraw it from their distributor um and, you know, keep it, use it to pay the rent, reinvest it in more music, right? Like those are the sorts of payments we're trying to increase. Um and sometimes the tradeoffs can be really hard. Um but that's the principles behind why we did it. Yeah, and on a similar note, there's a huge problem with with AI music getting uploaded on all music streaming platforms now and and no one really knows how to handle it yet just cuz it's so new. Um Deezer has been taking a lot of stances around AI music, right? They they label it um with an automatic system they have for flagging it. And they don't push it out in their their algorithm. Um and and I I know some people and ironically most of them are artists um who have AI music side projects and some of them have hundreds of thousands monthly listeners. And you see people on social media talk like they'll they'll accidentally listen to an AI project like it would recommend it to them on radio, for example. And and they're they're mad because they feel like they're being misled. Um And I I feel like there's some there has to be some system that that comes into place. I know Spotify has has something that they've they're working on with regards to manual uh declaration of AI use, but is there any consideration on, you know, automatic detection or how do you treat AI music differently in the algorithm so that there isn't like an unfair advantage for AI, you know, AI artists versus human artists? >> Yeah. Um It's a great question. Feels like the issue of the decade for music and everyone to figure out and it's one of our top focuses. Um you know, AI artists, AI music, like when you're talking about entirely prompt generated um sort of projects, you might read a lot about them in the press. There's a lot of like novelty artists where they have a spike when everyone's talking about them for a few weeks and then aggregators. Um you know, that sort of artist, even if you read about it a lot, there really isn't significant streaming on Spotify. Um uh at all. Um uh and, you know, maybe I'd say yet, but I still don't think there ever will be. Um you know, low effort music isn't new. Think what's new is um yeah, to your point, some of the ways AI can like create deceptive synthetic personas where you'd see an artist profile, think it's a real person, you can like go see live and be a fan of, and then you find out um it's AI. You know, that sort of deception, we it's a hard problem to solve. We're working on a bunch of things to really like make sure artists have to be authentic and transparent, whether that's, you know, new rules around artist verification we're working on. Um uh you know, uh a new feature that is actually, you know, rolling out today to artists called Song DNA where um uh is rolling out now to artists. Listeners will get it um soon and it lets you dive into your credits and see the humans behind the music. Like, you know, who's the producer, who's the guitarist, who's the mixing engineer. Um uh you know, who's the lyricist. You can click any of them and see their body of work. You know, really trying to like foreground the creative process and make sure listeners are falling in love with that music. Uh we announced we'll be supporting AI credits um so that for good faith good faith authentic artists who are incorporating AI in their workflow, you know, whether it's like using an AI plugin or using AI in post-production um or, you know, experimenting in a intentional artistic way, you know, those sorts of artists we want to be able to succeed, but uh represent themselves transparently. What we really are against is people using AI in these low effort inauthentic ways. Um so, we've been fighting a ton against spam, impersonation, deception. Uh there's even more to come. Um but, you know, right now, uh you know, I think UMG in their uh earning statement last week, you know, their estimate from their best data is, you know, maybe 0.5%, you know, under 0.5% of streams might be from AI artists and uh maybe there was like up to 10 artists in the top 92,000. Um I'll have to like add in the YouTube notes the exact link to it, but uh you know, it's something in in that space. Based on what detection software you use or what proxy metrics, you know, there's no great single detection system that can figure out what's entirely prompt generated and and what isn't. Um we're definitely using a few detection services so we can understand when, you know, spam or certain kinds of bad behavior are more likely to be happening. Um but, you know, with all these systems, you've got a bunch of false positives where music that isn't prompt generated get flagged as prompt you know, prompt generated or false negatives where, you you know someone's using detection so you make some alterations to your prompt generated song to try to evade detection. Um What we're really focused on is, all right, how do we like stamp out spam with our new music spam filter, stamp out impersonation. We made it, you know, illegal to use a voice clone and audio voice clone of any artist without their permission, that'll get taken down. How do we go against deception? So, features like song DNA that bring credits to the forefront, um plus, you know, new forms of artist verification, making sure, you know, soon other artists can't uh spam your profile and get on your profile, which is something we're urgently working to fix. Um uh and, you know, for good faith artists who are using AI in their creative expression, uh you know, how do we allow them to you know, apply AI credits so listeners understand who they are. Um so, that's our focus, you know, enable artists and producers and songwriters to be in control of if and when they want to use AI, but make sure that they have to represent themselves authentically, uh without spam, without impersonating anyone, without deceiving anyone. Uh and when that happens, they'll have a chance to succeed. Um you know, no extra benefit, but um you know, we think listeners expect at least, you know, that minimum standard. Mhm. Absolutely. Um yeah, cuz it's it's I guess it from from your perspective it's you the use of AI Spotify is agnostic towards. It's more so just on things that aren't uh authentic, essentially, or things that are trying to exploit the system. It's less about like, oh, you use AI, it's just like, are you exploiting? Um and I think when you when you did all the removal of uh AI music tracks recently, I think it was last year, um the the language used was specifically something along the lines of spammy revenue-extracting tracks. So, it wasn't like, we're removing AI tracks. >> That's right. >> It was we're removing spammy, deceptive, revenue-extracting slop. That's That's right. Yeah, we we took out we took down 75 million tracks um that uh were spammy, exhibiting those sorts of bad behaviors. I mean, call call on me if you you disagree, you know, we feel like we're uh trying to follow the lead of the artists, songwriters, producers that we talk to, um which is that a lot of people are experimenting with AI as part of their workflow. Um you know, uh I saw uh a panel last year with Harvey Mason Jr. who um runs the Recording Academy that, you know, runs the Grammys and uh MusiCares and lots of great services. And, you know, he said in his last 12 months, he hadn't been in a studio session where AI wasn't being used in some way, not a single one. And so, you know, we're talking to artists, songwriters, and producers who are in control of their artistic vision and their of their own volition, you know, testing out different AI technologies to, you know, uh express themselves, maybe it's um you know, to enhance vocals like the Beatles did, or, you know, uh you know, Image and Heap and Grimes have really interesting AI projects with authorized voice clones, uh maybe some artists are just using it for post-productions or certain, you know, plug-in, maybe you're just using it for a demo, uh you know, to try to have a songwriter help pitch an artist. Um You know, we don't think Spotify or any platform should be in the position of telling artists, songwriters, and producers, you can't use AI tech at all and we're the ones who are going to tell you what your creative tools can be. Um instead, we think our role is set up a system where you have to present yourself authentically, make sure that when things reach the level where it would feel deceptive to listeners, that's when we step in. You can't use AI to spam. Um you know, spam existed before AI, AI can do it a different level. You can't use it to impersonate. You could try to impersonate an artist uh with your voice, you know, pre-AI, AI makes it really easy, we don't allow that. Um you could try to deceive people, pre-AI, maybe like Photoshop a fake image to make a fake identity, but now you can kind of generate that pretty easily with a lot of AI tools. So, AI is accelerating these things, and so we're trying to stay a step ahead. You'll see us invest way, way more even this year in all those things where if you're using AI in good faith as part of your process, you have a chance to succeed. Our role is spam, impersonation, deception, making sure that you can't use AI to get ahead of artists doing things the right way. So, pivoting from AI, I actually probably talked about AI for too long I have uh >> [laughter] >> It's kind of a hot topic, um but uh going a little bit hypothetical, perhaps, um is there a path towards Spotify and and/or every other streaming platform uh paying a penny per stream? This This is a number you hear all like online all the time, stream should pay out a penny. And it's so no platforms actually pay out a flat rate per stream, it's all done in the royalty pool system, but is there like a path towards that? And, you know, even just hypothetically, like what are the the the levers that Spotify or other platforms can pull to to make that happen? Yeah, we could do an hour on a per stream rate, too, probably. Uh yeah. The um uh yeah, as we talked about at the at the top, certainly one of the biggest misperceptions in music is people thinking there's a a fixed per stream rate. When you see artists share a per stream rate online, that's just an average after the fact where they're taking their paycheck from a platform, dividing it by streams. It really makes sense that artists do that cuz that's like the two most accessible numbers. I get why artists share it. Um and uh you don't get access to stream share, which is how royalties are actually calculated. So, if you get 1% of streams in a given month, you get 1% of the royalty pool. Um so, you know, if you get one in every a million streams on Spotify, that's $11,000 last year. Um so, that's the way royalties are actually calculated. Um uh when it comes to average per stream rate, it is kind of, you know, one of the few metrics that feels available to artists, and especially if you don't realize it's paid out by stream share, you might think it makes sense. Per stream rate, it's a very simple calculation. It's just, you know, the price that's being charged for the service divided by the number of streams per user. Um Spotify subscribers listen to three to four times more songs every month than subscribers of other services. Um and so, the most active fans, the most, you know, engaged listeners are on Spotify. Uh three to four X more streams per month uh for listeners on Spotify versus other services. So, you think about that calculation, every service is paying uh you know, they charge around the same amount, plus or minus a dollar, that stays consistent, you divide by streams per user, um and for Spotify, you've got three to four X more streams per user than other platforms. So, that's making the average per stream rate lower. Uh the thing is, having a high streams per listener rate is a really, really good thing for artists and for the industry. Um uh you know, we grew our payouts more than 10% last year at a time where other uh the rest of recorded music revenue grew around 4%. The reason we're able to grow the most is because we have the highest engagement with the most engaging product. Right? Like, when you're on the free tier and you're thinking about if you're going to upgrade, the number one predictor of upgrading is that you're using the service a lot. Um if you are uh already in premium, uh we want to make sure you keep paying to the royalty pool every month cuz two-thirds of that money is going to go back to artists uh and the rights holders, and um if you're using the product a lot, that's when you're discovering more artists, getting more value, uh and you're retaining. So, you know, that fact that listeners on Spotify stream the most, it's a good thing. That's why we're growing the royalty pool so fast. So, it's it's not going to buy Sam his second yacht. And and that's unfortunately not. Um but >> Well, and and you you mentioned the number in passing about two-thirds of the money that you collect goes directly back to the rights holders. >> Yeah. Um that number is is pretty standard across other streaming platforms, too, right? >> Yeah, identical as best I know. Um Okay. But yeah, I want to make sure your viewers don't think I'm evading the question about how we would get per stream rate up to a penny per stream or or anything else, but that that context uh was kind of needed to explain the sorts of things you would do to get per stream rate up. Um you know, for us, we're focused on maximizing the paycheck to artists. Um like you said, two-thirds of the money we make from music goes back to artists. So, when we make more money, artists make more money, when artists make more money, we make more money. Uh incentives are aligned. So, we're trying to maximize our revenue, that maximizes the paycheck. So, if there are things we could do that would make the paycheck higher for artists, the royalty pool higher, we would do it cuz it would come along with us making more revenue. So, you can believe me when I talk about these things. The sorts of things we would do to make the average per stream rate go up uh would be, you know, first and foremost, could we get people to listen to less music? Um so, we could, you know, cap the number of streams you can do in a certain month, like let's say, you can only play 100 800 songs in a month, and then you have to pay more to top it off. That would get per stream rate up a bunch. Way fewer people would sign up for streaming services because what people love about it is that unlimited access where you're not thinking about each song uh paying more, you know, after you love a song, you might buy vinyl, might go buy it on Bandcamp. Um but the premise of streaming is that unlimited access where you can, you know, play your playlist and not think about it, but that'd be one thing to do, cap the number of streams. Uh you know, another thing we could do would be, you know, charge way more. Uh like, you know, if we tripled how much it cost to um buy a subscription service, if all services did it, so everyone had to do, you know, uh uh you couldn't just like go to the cheaper one if everyone tripled their amount. That's kind of what's what's been happening over the last couple of years, like every every couple quarters Spotify nudges up a dollar, and then six months go by, Spotify nudges up a dollar, but also, since it's in these increments, like Apple's also incremented a bit, and they're not all going up at the same, but Spotify has been incrementally increasing and it was it was $9.99 for like forever. Now it's $12.99 in the US, so Which we're trying to do it thoughtfully. I mean, you've got some services who, you know, brag about not raising the price a dollar. Um, you know, to us it's a good thing to thoughtfully raise prices as an industry cuz 2/3 of that money goes to grow the royalty pool for artists. That's a that's a good thing. That helps artists get paid more. Um, and so we're trying to do it thoughtfully at the scale of, you know, maybe a dollar at a time. Uh, in music obviously the music catalog is the same on every service, so if your price is higher, um, it can be easier for our subscribers to think about other alternatives, so, you know, there's a a bit of a a dance there. Every service, whether it's us or any other one, you can trust they're trying to maximize their revenue and they're going to, you know, find the right intersection of price with how many people sign up. Um, uh, and when they increase their revenue, 2/3 of it is going back into the royalty pool. Um, you know, to get the per stream rate, you know, uh, way, way, way higher than it is now, that average calculation, you'd have to be like, you know, three xing, um, uh, you know, how much is charged, you're going to get way, way fewer subscribers. Total paycheck goes down, but average per stream rate goes up. Um, you know, we could stop investing in markets like India or emerging markets where there didn't used to be much of a recorded music revenue opportunity. We're trying to make that a viable, um, place for our local artists to release music and, um, that brings the average per stream rate down, uh, because you charge less based on local, uh, kind of currency. Um, but it's helping recorded music that's monetizable reach these new markets. So, there's a bunch of things we could do that would lower the paycheck size. You know, we could cut off our business in emerging markets, uh, and the average per stream rate would go up, lose out on all this money that artists could be making from those markets. Um, and so, that's why we focused on maximizing paychecks, not maximizing uh, average per stream rate. A high per stream rate just means you have really unengaged users and you're probably not going to be growing your business as fast. Yeah, and and in the in the the actual, I mean, just talking to artists that I that I know and my own music and label, etc. Um, it's very rare that I see an artist who makes more from a different platform than Spotify. I'd say 95% plus of the artists I talk to, Spotify is their biggest DSP by pretty gigantic margin. Every so often I'll meet someone where it's iTunes or Apple Music or in the it's in one of these case Pandora. Uh, it's usually because those artists have a very particular fan base and and the the average vast majority, uh, most artists that I know make most of their streaming money from Spotify. And it's because of that that fact. The the amount per person per per listener is less or per per stream is less, but you know, it might be they're making $1,000 a month and like 700 of that's from Spotify alone. And that's typical, I would say. Yeah, that's pretty that's pretty typical for for an indie artist. Um, absolutely. I mean, uh, and please, you know, I'll I'll check out the comments on your show, uh, later. I hate sometimes when I'm on these if I sound like I'm I just like shouting the party line. If there's anything I'm saying you want a link to or you think is actually true, please let me know in the comments and, uh, I'll try to kind of share share some context for it. But, uh, yeah, what you say is definitely usually the case for for indie artists. Uh, as we talked about earlier, Spotify is about a third of, um, streaming royalties globally, but, uh, on average we're over 50% of what indie artists and labels make. Um, that came from a third-party study uh, Media did where they uh, did a survey of thousands of indie artists and labels, over 50% of their streaming revenue is coming from Spotify typically. So, you compare that 33% of the global average versus over 50% for indies, and what it tells you is that Spotify majorly over indexes to indie artists and indie artist discovery. Um, and so, you know, uh, when I talk to artists and they want to break down with me how much they make on each platform, they'll often point out the average per stream rate and say, "Oh, it's a lower average per stream rate than these other ones." And I say, you know, "All right, think about that metric if you want to, but spend as much time thinking about why is it that you're over indexing on your Spotify revenue by so much? Spotify is a third of global streaming payouts. Why is it that over 50% of streaming royalties for, you know, almost any indie artist are from Spotify? Um, and why does no other streaming service break out how much money is being paid to indie artists like we do? It's 50% of our, um, $11 a year. There's a reason other platforms haven't shared what their split is. Uh, what Spotify is really good at, it's related to that high streams per listener thing we were talking about. We get people to discover a lot of music they wouldn't listen to otherwise. Um, the average Spotify subscriber listens to 200 artists a month. Uh, nearly half of them are new artist discoveries each month. Um, and when you're discovering more music, that's when you're discovering indie artists, artists that aren't in the mainstream. When you're trusting our personalized recommendations, that means you're going to try out new artists that you might not otherwise. That's the story of of Spotify. Uh, and that's why, you know, almost any indie artist, I'm sure in the comments I'll hear from that, you know, 5% it's not the case for, but typically you're going to see over 50% of your your revenue from from Spotify and that's because our model and our product really shifts to artist discovery and engagement. Um, and, uh, yeah, per stream rate may be interesting to look at, but, um, you really should be looking uh, more, if not at least equally as much at the total paycheck you're getting, uh, and which services are over under indexing uh, what you're earning. Yeah. Yeah, and then, a lot of people like to like, "Why why do you talk so much about Spotify on your channel, Andrew?" And it's like, well, that's really the answer is like biggest market share, biggest it's the platform artists typically make the most in. It has the best discovery algorithm. Um, you know, and and actually one thing you you might be able to clear up for me in the couple minutes we have left here is uh, a lot of people accuse me of being a uh, secretly paid by Spotify to say good things about him. So, can you confirm that you are not paying me? And then both confirm that we're not paying you and I can confirm that you DM me plenty of things you don't like about Spotify often on top of your audience. Uh, and so, uh, um, yes, we can clear up that rumor, uh, for sure. >> [snorts] >> Awesome. Uh, let's do some quick rapid fires, uh, just because we we don't, you know, we don't have unlimited time, unfortunately. But, um, fun one. You were interviewed back in 2014 and you were asked, "Where will you be in 10 years?" I found that article. Oh, okay. It's been 12 years since this article. Um, are you still unable to be decisive about where you want to get a drink on your birthday? Wow. I Now, this is how you made it where you even found this. You know, I am. I I still am. That was that was the case then. This is a walk down memory memory lane. Uh, yeah, I'm pretty decisive in professional life and famously indecisive in in personal life. Uh, so, I'm more of a go with the flow guy. Uh, um, uh, so that that hasn't changed. Yeah. Gosh, wasn't it actually metal? You worked at at Meta, I think, back when you interned or something at Meta back when I read this article. Oh, funny. Yeah, yeah, never never worked there. Did a uh, internship there. Internship. Got you. Got you. Um, did your team work on Discover Mode? Yeah, definitely. Can uh, everyone seems to have no idea if it's better to have their whole catalog in Discover Mode or to opt in a super selective list of songs. Like I know some artists with hundreds they're all kind of like a label that hundreds of songs in their catalog. We've experimented putting like 800 songs in Discover Mode versus putting in 100. I've had other artists who experimented putting in their whole catalog of 20 versus three. Is there any like decisive words of wisdom you can give for Discover Mode other than just try different things? Uh, yeah, definitely definitely not your full catalog. It is absolutely not made for that. Um, so that would be a bad idea. You know, maybe you try that once as an experiment, but that's certainly not how you're going to optimize performance. Um, uh, but, you know, for artists, our approach with Discover Mode is provide all the data transparently after each campaign, uh, break down different types of goals, and then I know this is the most annoying answer, but it's up to that artist or label. So, we give you, um, metrics based on growth, engagement, and streams. Growth, the biggest one to look at is new listeners. Um, we do that song level and campaign level. For engagement, um, we look at like saves, playlist adds, um, intent rate, streams per listener. So, that's getting at like, are they just listening to you once in radio and that's it, or do they like save it and go listen to you later outside of Discover Mode context? Um, and then streams. For some people they might just like want to make sure it's ROI positive and we show stream lift in two ways. We have stream lift and historical stream lift we can get into. Uh, but both kind of help you just make sure that you're making more money from that song after Discover Mode than you would have without it. Um, and so, based on your marketing goal, you're going to use that data differently. If you're pre-release, maybe the most important thing is new listeners cuz you're trying to warm up a brand new audience before your new album comes out. If you are on cycle and, um, you're trying to figure out what like your next single to promote might be, uh, or you're trying to make sure that you like turn your listeners into fans and all that thing, you might look more at engagement and be like, "Which songs are actually clicking with people?" Uh, and then for some people, you know, maybe you're managing a back catalog and it's more of just a financial operation for you and you want to make sure you're getting, you know, more royalties now than you would have without Discovery Mode. That's when you might look at the the streams reporting we give. So, annoying answer, I know, but that's how I would think about it. Start with your goal, you know, think about whether growth, engagement, or stream metrics are what you're optimizing for at different points in your career, you may focus on different ones and then absolutely turn it off the next month for songs where it's not working. Don't keep your whole catalog in. Got you. That's That's good advice. Um does Spotify look at active or I guess what I've heard referred to as lean-in versus lean-back streaming or active versus passive listening and weight that differently when it comes to the algorithm? Like we've all we've seen a lot of data on on our end just tracking stuff manually that it suggests like active streams are kind of weighted better, so to speak, than like if you just get paid paid to get thrown on some third-party playlist. Yeah, that's fair to say. Um yeah, but can you give any like definitive answer that that's actually the case? >> That is the case. Yeah, um you know, in Spotify for Artists, if you go to the segments section um in the audience tab, uh um we'll break out what we call your audience segments. So, you can look at your active audience versus your programmed audience. And active audience are those like real fan listens. It's in you know, listeners intentionally seeking you out from their own library, from your profile page, from your album page, from search, uh from their own playlist. Programmed are really good for discovery, but they're less about fandom. So, that's Spotify editorial playlists, uh Spotify algorithmic programming, third-party playlists, you know, user playlists someone else made. Um the you know, real thing you should be looking at, you know, monthly listeners is a nice vanity metric, but your monthly active listeners and that active audience, all our data shows that's actually the thing that signals you have a real sustainable fan base and you're going to start to grow your royalties every year like we talked about in Loud and Clear. Um and within active audience, you can even see all the way through to like who are your super listeners and what percentage of their streams do they represent? I've seen you screenshot your segments uh section sometimes where you know, on average, I think 2% of your monthly listeners are super listeners, they're usually 28% of streams. I've seen some of your screenshots where it's way higher than 28%. Um and that's a really good sign. Uh in today's modern music economy, you want as many super listeners and active listeners um as possible cuz attention is really hard to get. So, if you're just counting on programming over and over, that's not a healthy sign of a sustained fan base. So, you know, when you're thinking about if your marketing strategy is working, active audience, super listeners, that's what you should be using to make decisions. And there's definitely parts of our algorithm where if songs in programming aren't turning into active streaming, that tells us the song isn't resonating. Um and so our system optimizes for the types of music that people uh save, listen to again, and end up, you know, falling in love with that artist. Brilliant, Brian. Well, Sam, uh thanks so much for coming on, answering questions, and also just generally being so open on the internet. Um it's great to see, you know, that you're you're kind of like the face of transparency at Spotify in my opinion. So, uh thanks for thanks for being you. But uh is there anything you want to leave the people with? Well, for now, yeah, I'm blushing now. Yeah, it's it's it's hard. Um but I definitely represent a a much larger team at at Spotify um working on all this stuff. Um I try to be transparent. I promise I'll come check out the comments on YouTube uh so you can yell at me in the comments if you want to or or ask me questions. Uh hopefully better than yelling, but whichever you choose to do, all good. Um uh and yeah, I guess I'll plug our Spotify for Artists uh social channels. Um if you're not following us on uh Instagram, we've got a broadcast channel on Instagram where we blast out like, you know, just everything you need to know um uh straight to your Instagram inbox. That's one of our uh newest marketing channels. I would definitely say you should go follow.