Spotify isn’t your friend: How the platform takes your money while artists pay the price

This article originally appeared in the New School Free Press and was edited by Zora Edelstein, Megan Liu, and Jazmin Estades. Illustration by Betesha Bloise Ponciano.

If you listen to music, you probably use Spotify. It’s the most popular music streaming service in the world, boasting over 700 million monthly users, about 40% of whom pay $6-20 a month for a Premium tier that offers unlimited streaming.  Each year their “Spotify Wrapped” marketing campaign takes social media by storm as people obsess over the public witch trial of each other’s music taste, inspiring dozens of imitations from other brands and businesses on the web. 

Spotify was founded in Sweden in April 2006 by Daniel Ek and Martin Lorentzon. It was officially launched in Europe two years later and expanded to the United States in 2011. It was a direct successor to Napster, a file sharing service that grew to be the very first large-scale digital (and mostly illegal, due to copyright law) distribution platform of music in the world. Spotify was created in response as a legal alternative to the app. While it wasn’t the first copyright-agreement music streaming service (Pandora and MySpace both predated it), Spotify quickly became, and remains, the largest. 

But this year has seen an increasing movement away from the platform, as users and artists alike bring to attention the various controversies and concerns that lie behind the iconic emerald circle. Have you ever taken a real look at where your music streaming money goes?

Where is my money going?

It’s certainly not going to the artists. Spotify pays artists between $0.003-$0.005 per stream,  among the lowest rates for any music streaming service (Jay Z’s TIDAL and Apple Music both pay more than 1¢ per stream). In 2024, the platform stopped paying for any song under 1,000 streams, instantly demonetizing an estimated 86% of music on the platform, according to music industry union United Musicians and Allied Workers. While this change was meant to dissuade individuals from uploading fraudulent tracks, it directly affected artists with smaller audiences. 

In fact, since artists are required to pay a distributor to get music onto the majority of streaming platforms, most are at a financial loss just to appear on the platform that reaches the largest number of listeners. “Spotify is frighteningly successful at their messaging,” said Clara Latham, head of the Ccontemporary Mmusic major at Eugene Lang College of Liberal Arts. “You can get your music on Spotify and anyone can hear it … but you’re never going to make any money.” 

If it isn’t going to artists, where is it going instead? This past year, some of it went to Donald Trump’s inauguration. Spotify gave President Trump $150,000 to fund the ceremony. In a statement provided to the New School Free Press, Spotify’s Policy & Corporate Communications Manager Jillian Susi said on behalf of the company that the donation was an effort “to continue expanding our presence in Washington, D.C., while we fight for the business objectives of our platform and our creators.” 

Primarily, your money is going to Spotify’s top brass. Founder, former CEO, and current Executive Chair Daniel Ek made $345 million dollars last year — more than any single artist on the platform, even mega-stars frequently breaking streaming records like Taylor Swift or Drake. Much of the concern around Spotify right now is going towards what Ek does with that money. 

Through his investment company, Prima Materia, Ek has invested hundreds of millions of dollars — nearly $700 million in 2025 alone. He also serves as the chairman of Helsing, a defense technology company that develops AI weaponry. Artists and consumers alike have been disturbed by the idea of financially supporting an individual that funds AI-powered military drones. There have also been posts circulating on social media alleging the weaponry has been used in Israel’s genocide in Gaza, but at time of publication, Helsing has released a statement that their products are only being used in Ukraine’s war against Russia. 

Where is Spotify’s money coming from?

With a user base of over 713 million, Spotify makes a lot of money from the music that drives their platform. Much of it comes from paid Premium subscriptions, but free accounts (which made up about 60% of accounts in 2023) are paid for by advertisers. One recent advertiser is the United States Immigration and Customs Enforcement (ICE). Consumers initially reported the ads appearing in October, and an industry source told Rolling Stone the agency had paid Spotify $74,000 to run them. Despite mass backlash, Spotify as of now has not removed the ads or indicated any intention to do so. 

Spotify also gets much of their money from their artists themselves. They take about 30% of standard royalties (the money that is earned each time a song is streamed), but if artists want their music to be pushed by the algorithm, they can sign up to be part of “Discovery Mode,” where Spotify will then take a further 30% from their normal earnings for each song added to the program. Why take this deal? Spotify has a near-monopoly on the music streaming industry. Their largest competitor, Apple Music, has only 124 million annual users. “If you want people to hear your music, it kind of has to be there,” said Latham.

Spotify also created a program to funnel money right back to themselves on their very own platform. In a viral essay by Liz Pelly in January of this year, she exposed Spotify’s “Perfect Fit Content” program, in which they had been quietly purchasing the rights to stock music to fill up their genre playlists instead of compiling real artists’ work. This means that every stream on those songs is not only giving 30% to Spotify, but everything. These editorial playlists, often used as background music, are popular and garner huge percentages of streams from listeners who want to play music without having to dig through albums. 

Fraudulent streams also abound on the platform, as Lex Walton, a Brooklyn-based independent rock artist who removed her music from Spotify a couple months ago, experienced firsthand. A song of hers was added to a bot-driven playlist that gave it numerous false streams and led to the whole album getting taken down after being flagged for stream fraud by Spotify. After much struggle to get it back, she decided to take the opportunity to do something she’d been considering for a while, and pulled her catalog from the service entirely.

Spotify has most recently come under fire in a lawsuit filed by rapper RBX that claimed billions of Drake streams were fraudulent. Spotify payouts come from a “streamshare,” which is essentially a giant pool of revenue that gets divided up for payouts between artists based on the percentage of streams they individually hold on the platform out of the total, meaning false streams directly take profits away from real ones, especially those by smaller artists. RBX accused Spotify of turning a blind eye to the fraudulent streams that occur on their platform, a business practice that would make them more money. Another class action lawsuit was filed against Spotify this November calling “Discovery Mode” a “modern payola” that allows record labels to secretly pay to promote their artists. Spotify has described these allegations as “nonsense.” 

What’s up with AI?

A research scientist employed by streaming service Deezer recently estimated that one-third of all 100,000 tracks uploaded per day are created using AI. In September, Spotify announced new AI policies: they would remove content that uses AI to impersonate real people’s voices, create a vaguely explained “music spam filter,” and push the industry towards standardizing the disclosure of AI usage as part of song credits.

However, Spotify hasn’t made any moves towards an explicit ban on the release of AI music, despite the negative effects felt by already-struggling musicians as well as the planet (and Spotify’s own press surrounding participation in “climate action”). In a statement to the Free Press, Susi on behalf of Spotify defended the use of AI in music, citing stories of AI-translated songs and the Beatles’ famously AI-assisted “Now and Then.” They also referenced “AI Labs,” a new program created by Spotify dedicated to “responsible AI research and product development.” The link they provided to learn more only led to a press release about their AI policies with no mention of “labs.” 

Spotify has also been increasing their own usage of AI. In 2023, they launched an AI-powered DJ. In February, they announced a partnership with AI software company ElevenLabs, from which they receive digitally voiced audiobook narration. After the AI Drake song controversy of 2023, Daniel Ek made a statement in support of AI, saying, “We think it’s great culturally but also benefits Spotify because the more creators we have on our service, the better it is and the more opportunity we have to grow engagement and grow revenue.” Spotify’s VP and Global Head of Music Product Charlie Hellman asserts that they’re “not here to punish artists for using AI authentically and responsibly” even as the debate over whether AI can be used ethically at all rages on. 

What’s up with Spotify Wrapped?

One of the biggest cultural events of each year is the release of Spotify Wrapped, a collection of statistics Spotify puts together based on a listener’s data collected over the course of the year. In 2020, Refinery29 dropped a bombshell article revealing that the creator of the program was an intern who was never credited or paid for her idea. When asked about this by the Free Press, Susi stated on behalf of Spotify that “Spotify Wrapped is the work of hundreds of employees across marketing, design, engineering, data, and more, who have contributed ideas and creative concepts that have shaped it into what it is today.” Wrapped has become one of the most popular features Spotify provides, going viral each winter. They know it’s powerful: when it first came out, Spotify’s head of consumer and product marketing called it a “FOMO effect” that entices new users to join the platform.

Users have also doubted the reality of the statistics Spotify Wrapped claims in the first place. Sites like statsforspotify.com or receiptify.herokuapp.com provide consistent Spotify-sourced statistics that don’t always align with the ones displayed in Wrapped, even when they’re dealing with the same data prompt. 

What’s been going on recently with artists removing their music from Spotify? 

In 2025, there’s been a mass exodus of artists from Spotify — unlike anything before. The movement began with indie artists, and has reached larger musicians such as King Gizzard & the Lizard Wizard in July and Massive Attack (the first major-label artist to join) in September. While it’s impossible to get an exact count of the participating artists, it’s certainly the biggest opposition force we’ve seen in Spotify’s history. Why have artists removed their music?

In the past, it’s been used as a form of economic or political protest. Taylor Swift famously pulled her entire discography for three whole years out of frustration with Spotify’s financial devaluation of the art form. In 2022, Neil Young and Joni Mitchell both removed their work from the platform in protest of Joe Rogan’s spread of misinformation about COVID-19 through his podcast, at the time exclusively streamed on Spotify. Mitchell and Young both returned their catalogs to the platform in 2024, when Rogan signed a new, non-exclusive deal that launched his podcast onto all major streaming platforms.

Lex Walton cited, like many, Ek’s investment in AI weaponry startup Helsing as a major motivator for the decision to withdraw music catalogs, as well as Spotify’s lack of pay for artists. Additionally, Ek has come under fire in the past for the way he speaks about musicians on his platform. With a net worth of $8.3 billion, he’s massively separated from the musicians his platform serves, the majority of whom make under $5,000 per year from the service (and are often forced to work other part-time jobs to make ends meet). Walton steered toward a quote from Ek in 2020, where he said, “You can’t record music once every three to four years and think that’s going to be enough.” While the typical time between an artist’s releases is two or more years, it’s difficult to keep up with the speed demanded by consumers and CEOs as artists struggle to make money in the current economy and have to spend more time on stage (or selling merchandise at live concerts) than in the studio. Ironically, this is a direct consequence of streaming services like Spotify reshaping the standard royalty pay to be as low as it is today. 

Why should I care?

In an era where music discovery is controlled more often by algorithms — both on streaming services and social media apps like TikTok — than by human choice, it’s important to consider which algorithms are making those decisions, by whom they’re designed, and whom they might be benefitting.

Latham laments the devaluing of music brought about by the streaming era. “It's like if you had a restaurant and somebody said, ‘Hey, do you want to come and cook food for my party for free, and then everyone will get to eat your food, and you'll be really happy?’ I mean, that'd be crazy,” she said. 

“In an ideal world, there would be no exploitation,” Walton said of what the most ethical music world could look like. In her dream, “None of it would cost any money, because we would get living wages from it. I don't need to bring out the old, reliable ‘no ethical consumption under capitalism,’ right? But it’s true.”

What can I use instead of Spotify?

While no streaming service is perfect, there are a number of alternative platforms more popular within the music industry. One of them is TIDAL, which provides the highest per-stream payout of the major services (≈ $0.0128) and considers themselves an “artist-first” platform — it was majority owned and operated  by Jay-Z from 2015-2021. Another is qobuz, an independently owned service that has been rising in popularity among music industry workers, which provides an even higher payout than TIDAL ($0.01873) and is “opting for an alternative path to AI” for personalized music recommendations. The best for the musicians is Bandcamp, a platform that allows users to digitally purchase music directly from artists to build their library rather than opting for a subscription-based model. 

Another alternative is getting back to basics — go vintage. Support your local record stores and buy physical media, go see concerts, pay attention to local artists, or listen to the radio. Walton discussed how music is an art form driven by the connection between creator and audience, and the more intentional that connection is, the stronger the art. The initiative required of actually going out and buying an album “makes you more engaged with the work,” she said. And what’s the biggest difference since she removed her music from Spotify? People are actually buying her records, whether physically or on Bandcamp.

Next year, as you open your Spotify wrapped and squeal with joy (or horror) at the cartoon character listening crew it assigns you, take a moment to recall the men behind the magic. Spotify’s bright, splashy aesthetic comes off less cute when dulled by the knowledge of the corruption that lies behind its colors. And perhaps as you click the share button to spread your top five songs of the year to the world, ask yourself whether this is the kind of company you want to support.