Top 6 Methods to Make Money on the Spotify Platform

Music consumption and production have shifted a lot to online platforms due to the extent of variability and ease of access. The significant benefit of this advancement is that you can not only enjoy music on these platforms but can also make a handsome amount of money. So, it assists you in handling your bills, growing your career, and having satisfying music experiences.

Among the several online music platforms available, Spotify is one of the most prominent ones from which you can make money. That’s why this guide will focus on how to make money on Spotify in various ways.

Part 1. What is Spotify and How it Works?

On this online streaming platform, music lovers will find millions of songs and podcasts to listen to. You can even create playlists in it and receive song recommendations depending on your liking. An essential aspect of this platform for artists is that the songs can only be played in its app, protecting the legal rights of music creators. To understand how it all works, go through this section in detail:

1. Account Creation: To use this online platform, you first need to sign up for your account. It gives you a free hand to choose from a free or a premium plan. You will get benefits, such as ad-free listening and offline playback, from the paid version.
2. Search and Discover: Once you have signed in to your account, you can search for your desired music by artist or playlist. After learning your interests, this platform gives you personalized recommendations based on your listening history to make it more convenient.
3. Playlists and Collections: The vast library of Spotify allows you to create playlists by adding your favorite songs. Plus, you can follow the playlists created by other users and listen to their recommendations.
4. Listening Modes: This online platform offers several listening modes to suit your preferences and choices. For example, you can listen to music in shuffle mode or play songs in the order they appear on an album. Spotify also gives you control over playing across multiple devices for a better listening experience. 
5. Offline Listening: Interestingly, premium subscribers are facilitated with an option to listen to their songs and playlists entirely offline. So, it makes your enjoyment more flexible, and you don’t even have to depend on a network connection for music.
6. Revenue Generation for Artists: Spotify generates revenue for the artists based on the number of streams their songs receive. However, the exact payout can vary depending on the artist’s contract and the type of listener’s account.

Part 2. How Does Spotify Pay Money?

Not everyone aims to use this music platform just for listening and enjoyment; some opt to make money through music production and streaming. Spotify then pays these artists and the right holders based on a complex system that revolves around the number of streams their songs receive. This part will shed light on the exact system through which you can get paid using Spotify.

1. Streaming Revenue

As discussed earlier, this program offers users 2 main subscription plans, with or without the ads. For an ad-free experience, you have to subscribe to the Premium subscription and pay a monthly fee to access unlimited podcasts and music. So, this fee accumulates in Spotify’s revenue, which it uses to pay artists.

Moreover, it also generates revenue through advertisements during streaming, which free users often hear between songs. In this way, the system gets funds for the platform and contributes to paying the money to the right holders.

2. Pro Rata Distribution

Another model on which the Spotify system operates is the Pro Rata distribution. This implies that the platform’s overall revenue is distributed among rights holders based on the proportion of streams their music receives. For instance, if a song makes up a specific percentage of all Spotify streams during a given period, the rights holders would receive a corresponding share of the revenue. 

Thus, to earn more money, you have to enhance the reach of your music and get more streams. You can do this by finding the right distributor and creating several playlists to increase the chances of getting noticed.

3. Distribution of Payments

The funds collected in Spotify’s revenue are distributed among record labels, contracted artists, and independent artists. All of them share their portion according to their rights and their roles. Here’s how this distribution of money works:

• Record labels: They usually receive the largest share of streaming revenue, as they own the rights to the recordings. Also, they are responsible for distributing music to the Spotify platform.
• Contracted Artists: These artists work under a contract and get a portion of the revenue based on their recording contracts. Notably, the contract terms can vary and may include factors like the artist’s popularity and negotiation skills.
• Independent Artists: Some artists don’t rely on recording contracts and may have direct deals with Spotify or digital distributors. In such cases, they can receive a higher percentage of the revenue compared to the artists signed with record labels.

4. Mechanical Royalties

Other than streaming, this online platform also pays mechanical royalties to songwriters and publishers for using their compositions. These royalties differ from the payments made to the right holders for their recordings. Basically, this system works by paying the amount to Performing Rights Organizations, which play a role as the collection society. These PROs then distribute the money to the relevant writers and composers.

5. Streaming Rates

As a matter of fact, there is no fixed estimation of the earning rates an artist can have on this platform. The amount of money may vary depending upon various factors, as mentioned in this section:

• Listener’s Subscription Status: Whether the listener is using a free or premium Spotify account affects the overall payout per stream to the artists. Of course, the premium subscription will lead to more revenue generated to be paid, while the free version will do the opposite.
• Geographical Location: Another major aspect that impacts the streaming rates is the country where you reside. In this regard, some regions pay higher royalties than others, so good luck if you live in a high-paying country.
• Artist’s Contract: The terms and conditions while signing the contract with their record label or distributor significantly determine how much they can earn per stream. So, you should sign your contract after negotiating for a handsome amount.

Part 3. How to Create a Spotify Account and Monetize it?

Now that you know how the earning system through Spotify works, let’s move on to the section about guiding you on how to achieve it. Several queries must revolve around your mind related to becoming a member of this system and monetizing your account to start earning. Therefore, we will provide step-by-step instructions to make it easier for you:

Step 1. First, launch any preferred browser on your computer and go to the artists website of this music streaming platform. There, look for the “Get access” option at the top-right corner of the screen and tap it to reach the account-creating window.

Step 2. Afterward, select the desired option, such as whether you want to sign up as an Artist or a Label team member. For instance, choose the “Artist or manager” option to create an artist profile on Spotify.

Step 3. Once you do that, you will be asked to claim an artist profile. Simply hit the “Continue” button to proceed to the next window.

Step 4. Now, Spotify will ask you to either search for an artist or paste a link for an artist to claim your profile. If you are new on this platform and your music is not live, tap the “Music not yet live on Spotify?” option.

Step 5. After that, you have to connect to a distributor that handles the payment of streaming royalties. To select a distributor of your choice, click the “See our preferred and recommended distributors” option.

Step 6. Here, you will see a list of recommended artist distributors, each with a brief description. Choose any of them you deem fit and go to the next page for account creation.

Step 7. Finally, you must fill in your details to create an account for connecting with the distributor. After signing up, you will then have to pick a payment plan to start your journey as a Spotify artist.

Following the steps provided, the platform will enable you to utilize its music streaming features. However, to ensure it becomes a source of income, you must monetize your account. For this purpose, we will provide you with a few more steps that will be needed.

Step 1. Start by accessing the “Monetize” tab and log in with your Spotify creator account. Then, select the “Set up Spotify Payouts” option to connect your account with it.

Step 2. Once connected, choose “Go to Payouts” and then hit the “Get Started” button. After that, you will be asked to fill in the required information in the provided boxes.

Step 3. After entering your tax identification number, confirm all the given answers. Lastly, click the “Save and complete” option, and you will receive confirmation about the activation of your Spotify Payout account in a while.

Part 4. 6 Alternate Ways to Make Money in Spotify

In the previous sections, our focus was to inform you about the mechanism this music platform uses to generate revenue and pay the right holders through streaming royalties. However, it’s not all you can do on Spotify to earn money; there are also several other ways available. To benefit from those ways, take a good look below:

1. Merchandise Sales

As an independent artist, you can feature merchandise directly on your artist profile and generate sales. To do so, you will have to integrate with some third-party platforms supporting this function. Among the merchandise, you can go for a variety of items, like T-shirts, hoodies, and more. 

2. Concerts and Ticket Sales

Spotify offers an amazing feature to artists that allows them to promote their upcoming live shows to fans through some assistive tools. Also, they can list tour dates and venues directly on their artist profile, which makes it easy for the fans to discover and purchase tickets to the concerts. 

Another benefit is that artists can estimate the potential concertgoers based on their listening preferences, maximizing ticket sales and attendance.

3. Sync Licensing and Placements

This method involves licensing music for use in various media projects, including film or TV commercial making. In this scenario, Spotify serves as a platform for showcasing artists’ music to relevant clients, who may discover their tracks and reach out for licensing opportunities. Artists can negotiate with those clients for licensing fees and royalties to allow them to use their songs in specific projects.

4. Brand Partnerships and Sponsorships

Nowadays, brands are increasingly looking to collaborate with musicians to reach their target audience. So, artists on this platform can showcase their music and attract brand partnerships. This collaboration may include sponsored content or branded events, providing artists with additional earning sources.

5. Songwriting and Production Work

Not only can you earn money from music streaming, but you can also write songs for other artists to get paid. In this regard, Spotify offers to create a portfolio of artwork, which allows artists to showcase their talent and attract new opportunities. By networking with industry professionals, artists can effectively secure songwriting and production gigs and diversify their income streams.

6. Music Education and Workshops

Being a skilled artist with some expertise in the music production field enables you to develop education courses and workshops for aspiring musicians. Therefore, you can use the Spotify platform to promote educational music content to reach a broader audience of students and music enthusiasts.

Part 5. Beneficial Tips to Use Spotify for Earning More Money

Although you are now aware of all the ways that can be implemented to make money on Spotify, there are some additional tips required to follow to maximize your earning experience. This section will cover those useful tips and take your career to the next level.

1. Promote Your Music on Spotify

Try to be persuasive in encouraging your fans to follow you and listen to your streams daily. Other than this, use social media and other online platforms to promote your artist profile, which can attract more listeners.

2. Optimize Your Profile

It’s highly recommended and essential to make your artist profile optimized and engaging. For this purpose, you can use high-quality images, appealing bios, and links to your social media profiles.

3. Create and Share Playlists

As an artist, you can create playlists and feature your music as well as songs from other artists. By doing this, you can attract new listeners to your profile and increase your visibility. Also, share your created playlists on various social media platforms and engage with your fans by asking their suggestions about song selection.

4. Find the Right Distributor

One of the most important tips for being a successful Spotify artist is to choose the right distributor. Keep in mind that you should look for the best distributor available who charges a lesser fee and offers more resources for your growth.

Conclusion

In conclusion, the innovation of online music platforms has become a great asset for song lovers. Spotify has revolutionized the way musicians earn money, allowing them to maximize the reach of their fans and generate more revenue. Overall, this guide has provided you with all the necessary details on how you can make money through Spotify in the best ways.

FAQs

To further assist you in understanding this system, we have listed some of the commonly asked queries along with their answers. Have a brief look at this section for your own clarification.

1. Is it necessary to monetize my Spotify account to earn money?

If you are looking for a way to earn money through streaming royalties, it’s obviously necessary to monetize your Spotify account. However, earning through the alternative ways on this platform doesn’t require monetization.

2. How much do artists earn per stream on Spotify?

As we mentioned above, the exact amount artists earn per stream can vary widely, depending on several factors. However, users who want to estimate their earnings can expect anything between $0.003 and $0.005 per stream.

3. How can artists increase their earnings on Spotify?

The best approach to increase the earnings for artists is promoting their music across multiple platforms. They can try to create playlists abundantly to enhance their visibility and explore alternative revenue sources along with streams.