Spotify’s Up Big After Dropping a Record $10 Billion on Artists (So Will The Lawsuits Finally End?)

If there’s one thing musicians love (besides auto-tune and cryptic Instagram posts) it’s complaining about getting underpaid. And, to be fair, they’re not wrong. For years, Spotify has been enemy number one, the streaming service that pays artists in fractions of pennies while executives cash in.

But this morning, Spotify dropped a big announcement…  they paid out $10 billion in royalties in 2024 (the largest payout in music history). 

If you’re a Spotify executive, you’re probably thinking, "There. Are we cool now?" If you’re an artist, you’re probably checking your bank account and still wondering why you made $12. And if you’re an investor? You’re loving life, because Spotify’s stock is up over 4% this morning.

This isn’t the first time musicians have come for Spotify’s throat. Taylor Swift famously pulled her catalog over low payouts, Eminem’s legal team might as well have a reserved parking spot at Spotify HQ, and Björk recently called Spotify “probably the worst thing that has happened to musicians.” (which is really saying something, considering we all lived through 2016).

Last year, a group of songwriters even took Spotify to court, claiming they were getting stiffed on royalties. But a federal judge dismissed the lawsuit, effectively telling the artists to go argue about it on Twitter.

So how did we get from “Spotify is stealing from us” to “Spotify is making it rain on the music industry”?

For context, Spotify's royalty payouts have skyrocketed from $1 billion in 2014 to $10 billion in 2024… a 10X increase over a decade. The company also pointed out that nearly 1,500 artists pulled in at least $1 million from Spotify alone last year. And what’s even crazier is that 80% of those artists never even cracked Spotify’s “Top 50” chart. Meaning you don’t have to be Drake or Ed Sheeran to make real money on streaming… though, let’s be honest, it still helps.

And let’s not forget: Spotify is giving back 60% of its total revenue in royalties… that’s $10 billion out of its $16.8 billion revenue pile. By comparison, the old record industry made record labels rich while artists got checks that barely covered a gas station lunch. Spotify wants you to believe that is the best deal musicians have ever gotten… at least on paper.

If Spotify is shoveling billions out the door, how is its stock still climbing? In fact, Spotify’s market cap now sits around $102 billion… more than Warner Music and Universal Music combined.

Part of the reason is that while major labels are stuck with old-school contracts and shrinking margins, Spotify is constantly testing new ways to keep more money. Its controversial move to bundle audiobooks with music ended up lowering royalty payouts to songwriters and publishers. Oh, and it’s been steadily hiking prices while aggressively cutting costs.

Spotify’s focus on profitability has paid off in a big way. Its stock has returned 97% over the past year, and even the bears are changing their tune. Redburn-Atlantic, which previously had a “Sell” rating on Spotify, just flipped to “Neutral” and raised its price target to $545 per share.

So will this finally end the complaints? Probably not. Even with $10 billion in royalty payments, the fundamental issue remains: there’s too much music, and too little money to go around. It’s simple math. The more people upload music, the smaller each artist’s cut gets.

Spotify’s strategy is simple… keep growing, stay profitable, and remind artists that they’re getting something (which, historically, is better than what they got from the labels).

So, will we see another artist uprising against Spotify? Absolutely. Give it six months, a couple of Grammy snubs, and a new viral rant from some indie band, and we’ll be right back where we started.

But for now, Spotify is playing the game perfectly.

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Stock.News has positions in Spotify.