Q3 Wrapped: Breaking down that Spotify subscription

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That’s a wrap

As we approach the end of the year, music lovers have already received one present early… Yes, as your social media feeds might attest to, Spotify Wrapped season is upon us.

While some recoil at the sheer amount of time they’ve spent on the app, averaging 118 mins per day for the typical user, others are surprised by what they’ve been listening to — so much so that 7 in 10 people are reportedly too embarrassed to share their Wrap sheets (although ‘Spotify Wrapped’ still received 400 million mentions on Twitter within 3 days of its 2022 release).

The annual ritual has become a marketer’s dream for Spotify, building buzz for a company that spends a lot of resources defending itself from critics of its low artist payouts. In Spotify's model, for every $10.99 premium subscription in Q3, the company generated another $1.69 from its ad-supported users. From that total, the company shells out nearly 74% (or $9.34 in our example) on costs related to delivering content to listeners… However, the share of the figure that ends up in the actual pockets of artists, rather than managers, record labels, or publishers, is much less clear.

Just last week, Spotify unveiled its updated streaming royalties policy, claiming it will drive an additional $1 billion towards artists and labels by cracking down on fraudulent streams. The changes will halt royalties for tracks with less than 1,000 streams, meaning that payouts to rightsholders will therefore be shared amongst more established names on the platform.

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