Update 13th March 2026: Spotify has been in touch with a comment, which you can read at the end of this article.
Tell most musicians that Spotify has saved the music industry, and you'll be met with a bitter laugh.
Spotify made the claim at the launch of its annual Loud & Clear report – sort of like a more corporate version of Spotify Wrapped – that was published this week. While it's true that Spotify did provide a legal and financially viable model 20 years ago when piracy was rife, most people would disagree with the rosy picture Spotify paints of the modern music industry.
It might have saved the industry from piracy 20 years ago. But who's going to save us all from the streaming giant in 2026?
Spotify vs reality
Spotify's report makes interesting reading. The firm paid out over $11 billion to the industry as a whole in 2025, making it the highest-paying retailer in the world for the second year running.
More than 13,800 artists earned more than $100,000 a year from Spotify alone (nearly 1,400 more than in the previous year), while even the 100,000th highest-earning artist earned over $7,300 from Spotify. In 2015, they would have only earned around $350.
So everything's wonderful, right?
Some would disagree, to put it mildly. Spotify is not well-liked within the industry, and that's mostly due to the paltry amount it pays musicians. While it's true that it is paying out more than ever, this goes overwhelmingly to those top earners who need it the least.
At the end of last year, depressed by seeing other musicians sharing their Spotify Wrapped reports – or, as he puts it, "doing Spotify's marketing for them" – the founder of Welsh indie rock band Los Campesinos! published how much money he had actually made from Spotify.
At 0.29p per stream, Spotify paid less than any other major streaming service.
As he noted: "If everyone who streamed All Hell on Spotify had done so using Tidal instead, we would have received an extra £31,847.38, which would double the amount we made from streaming of the album in this time period."
Ouch.
Spotify might be the worst offender, but it's symptomatic of the wider problem of music streaming in general. The model is broken and might not last much longer. Jimmy Iovine, the founder of Interscope Records and the Beats brand of headphones and speakers, recently put it bluntly, telling the Founders podcast: "The streaming services, to me, are minutes away from being obsolete."
And Spotify looks the most vulnerable of all.
Biggest of the big dogs
But surely, as the biggest of all the streamers, Spotify is better placed than most to weather any market storms? Well, yes and no.
It might be the biggest of all the streaming dogs, but it's far from a runaway success. Despite running for nearly 20 years, it only became profitable in 2024. As the excellently-named Govert Vroom from the University of Navarra Business School points out, it spends around 70 per cent of its revenue paying royalties in order to host the music it offers, leaving it with a very narrow profit margin.
Turns out that being the highest-paying retailer in the world has its own costs.
But away from the business side of things, what differentiates Spotify from the other music services offering 110 million tracks? Qobuz has offered hi-res tracks from its inception, and lets you purchase them too.
Tidal pays its artists more fairly, while Apple Music and Amazon Music are no-brainers for those ensconced in those companies' respective ecosystems. But Spotify? It still offers a free tier, but that aside, there's nothing to differentiate it.
Plus, its hi-res offering is inferior to its rivals', and it's more expensive, too.
All of which are why Spotify gets a bad rap. We've even reached the point where a whole raft of streaming services are positioning themselves as the anti-Spotify.
Fight the power
Like every industry, the music industry is a power game. As Joel Gouveia points out, the record companies used to hold all the cards: they signed the artists to their record labels, and even owned the record pressing plants, turntable manufacturers and portable music players we used to listen to them on.
As the biggest music streamer in the world, with over 700 million monthly active users, Spotify now overwhelmingly controls the means of distribution. But – as Gouveia argues – it wants the fans to have a relationship not with the musicians they come to it for, but with the service itself. When what you offer is inferior in most ways to the competition, that's a tough sell.
Despite what Jimmy Iovine says, Spotify won't disappear overnight. But he's making a good point: the streaming model, while a godsend during an age of rampant music piracy, is broken. It only rewards those who need it the least, which stifles innovation.
Who knows what comes next, but hopefully it will provide a better experience for musicians and music fans alike. Related: Record Store Day is on 18th April this year.
Since publication, Spotify has been in touch with the following comment:
"Streaming services don't set a fixed 'per-stream rate.' Payouts come from a revenue pool, and dividing that pool by a smaller number of streams can make a service appear to 'pay more' per stream — even if artists earn less overall. What ultimately matters is total payout.
"Last year, Spotify paid out more to the music industry than any retailer in history — over $11 billion — and we're one of the only services to publicly share those numbers.
"More artists are generating meaningful income from Spotify today than could ever have been stocked on physical shelves at the height of the CD era. That's the scale and access streaming has unlocked — and we're committed to continuing to grow the pie for artists at every level."
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Down with Spotify! The streaming services that hate the streaming model
The best hi-res music streaming services around
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