Is Streaming Killing Music—or Saving It? With a Top Spotify Exec

Summary

Podcast Summary: "Is Streaming Killing Music—or Saving It? With a Top Spotify Exec"

Podcast Information:

• Title: The Town with Matthew Belloni
• Host: The Ringer (Matthew Belloni)
• Episode Title: Is Streaming Killing Music—or Saving It? With a Top Spotify Exec
• Release Date: May 19, 2025

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Introduction

In this episode of The Town with Matthew Belloni, host Matt Belloni delves into the contentious debate surrounding music streaming's impact on the music industry. Centered around Spotify's role, the discussion features an in-depth interview with Charlie Hellman, Vice President and Global Head of the Music Vertical at Spotify, alongside returning co-host Lucas Shaw. The conversation explores Spotify's royalty payouts, its relationship with artists, and the broader implications of streaming on the music landscape.

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Spotify's Growth and Royalty Payouts

Matt Belloni initiates the conversation by addressing the core issue: the tug of war over royalties between streaming services like Spotify and artists, record labels, and music publishers. He references Spotify's impressive subscriber growth—268 million paid subscribers and 678 million monthly active users as of Q1 2025, both up approximately 10% year-over-year.

Key Points:

• Royalty Growth vs. Subscriber Growth: Spotify's Loud and Clear report highlights a significant increase in artist payouts, reaching a record $10 billion in 2024, a tenfold increase since 2014 ([05:37]). However, Matt points out that subscriber growth outpaces payout growth, questioning why payouts haven't scaled proportionately given the platform's 18-fold increase in paid subscribers.

Charlie Hellman’s Response:

• International Expansion Impact: Hellman explains that substantial subscriber growth stems from Spotify's aggressive expansion into Latin America and Asia, regions where subscription prices are lower compared to developed Western markets ([06:01]). This explains why total subscriber numbers have grown faster than payout figures.

Notable Quote:

“But the price that we charge in those markets is a lot less than in developed Western markets. And so that's why the total subscriber growth outstrips the payout growth.” — Charlie Hellman ([06:01])

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Understanding Spotify's Royalty System

Matt challenges the transparency of Spotify's payout system, noting that listeners often misunderstand how royalties are distributed.

Key Points:

• Percentage-Based Payments: Hellman clarifies that Spotify operates on a percentage-based payment system rather than per-play rates, which is a common misconception ([09:16]).

Notable Quote:

“Nobody has a per play rate.” — Charlie Hellman ([09:27])

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Impact of Bundling Services

The discussion shifts to Spotify's strategy of bundling music with other services like audiobooks and its effect on royalty payouts.

Key Points:

• Legal Challenges and Resolutions: Spotify faced lawsuits alleging improper royalty payments due to bundling, but these claims were dismissed with prejudice, affirming Spotify's compliance with licensing agreements ([09:55]).
• Economic Viability of Bundles: Hellman emphasizes that bundling enhances subscription value, leading to higher retention and engagement without cannibalizing music payouts ([11:02]).

Notable Quote:

“When we add audiobooks to Spotify, it increases retention and engagement with the service and grew our total payouts because it makes the subscription stronger.” — Charlie Hellman ([11:47])

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Spotify vs. Competitors: YouTube and Apple

Matt inquires about Spotify's positioning against competitors like YouTube and Apple, particularly regarding user engagement and payout efficiencies.

Key Points:

• User Engagement Metrics: Spotify boasts that the average paying subscriber spends over 45 hours per month on the platform, significantly higher than Apple’s approximated 1-hour per user ([19:06]). Hellman attributes this to Spotify's focused user experience tailored specifically for music.
• Distinct Offerings: Unlike YouTube's broad content approach, Spotify specializes in music, podcasts, and audiobooks, allowing for a more engaging and tailored user experience ([15:40]).

Notable Quote:

“We make the experience so engaging and therefore the churn is so low, we've been able to grow our payouts and our subscriber base faster than any other service.” — Charlie Hellman ([17:07])

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International and Independent Artists' Success

A significant portion of the conversation highlights Spotify's role in empowering international and independent artists.

Key Points:

• Global Reach: Over half of the artists earning significant royalties on Spotify are from non-English speaking countries, showcasing a shift from the historically Anglo-centric music industry ([23:53]).
• Indie Dominance: More than half of Spotify's payouts now go to independent artists, a testament to the platform's capacity to support a diverse range of musicians ([23:53]).

Notable Quote:

“Of successful artists that are making more than 10 grand on the platform, more than half are coming from non-English speaking countries.” — Charlie Hellman ([23:53])

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The Role of AI in Music Streaming

Lucas Shaw raises concerns about the rise of AI-generated music and its potential impact on Spotify's ecosystem.

Key Points:

• Increased Uploads vs. Streamed Content: While AI may lead to a surge in music uploads, Hellman argues that audience discovery remains crucial, and human connection with fans is irreplaceable in building access and success ([22:15]).
• Quality Over Quantity: Spotify’s algorithms ensure that only music resonating with listeners gains traction, mitigating the potential dilution caused by increased AI-generated content ([22:48]).

Notable Quote:

“But it's not like great like we. When I joined Spotify in 2011... we've gone from 13 billion in revenues to the industry to 30 billion last year.” — Charlie Hellman ([14:07])

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Opportunities for Artists Beyond Royalties

Hellman discusses emerging avenues for artists to monetize their work through Spotify's platform.

Key Points:

• Concerts and Merchandise: Spotify provides tools for artists to promote concerts, manage merchandise sales, and engage directly with fans, driving additional revenue streams beyond streaming royalties ([26:01]).
• Future Services: Spotify is exploring premium services tailored to specific artist needs, aiming to offer exclusive features that can command higher subscription fees ([26:04]).

Notable Quote:

“Touring continues to be a hugely important revenue stream for the vast majority of artists. We've invested a lot in tools to list your concerts, promote your concerts, merchandise them to the right people.” — Charlie Hellman ([26:07])

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Challenges and Criticisms

Despite Spotify's efforts, criticisms persist, particularly regarding communication and transparency with artists.

Key Points:

• Communication Gaps: Hellman acknowledges that Spotify hasn't always effectively communicated the complexities of royalty distributions, leading to misunderstandings within the artist community ([27:25]).
• Commitment to Improvement: Spotify aims to enhance transparency and clarity in its dealings with artists to address ongoing frustrations ([27:44]).

Notable Quote:

“We're trying to be as transparent as we possibly can be. But this stuff is complicated, and I want us to do a better job in being clear and open with everybody.” — Charlie Hellman ([27:25])

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Surprising Insights from Spotify's 2024 Royalty Report

Hellman shares unexpected trends highlighted in Spotify's latest royalty report, emphasizing the platform's evolving dynamics.

Key Points:

• International Growth: The surge of non-English speaking artists making substantial royalties marks a significant shift in the global music industry ([23:53]).
• Independent Artists' Dominance: The increase in payouts to independent artists reflects Spotify's successful support for a broader array of musicians ([23:53]).

Notable Quote:

“More than half of our payouts go to indies. And again, there just wasn't the capacity for that in the MTV terrestrial radio days for that to be the case.” — Charlie Hellman ([23:53])

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Conclusion

The episode concludes with a balanced perspective on Spotify's impact on the music industry. While acknowledging the legitimate frustrations regarding royalty payouts and communication gaps, Hellman underscores Spotify's role in fostering global and independent artist success, expanding subscriber bases, and innovating revenue streams beyond traditional royalties. The conversation paints a complex picture where streaming services like Spotify are both transformative and challenging for the modern music landscape.

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Notable Quotes Summary:

• Charlie Hellman ([06:01]): “But the price that we charge in those markets is a lot less than in developed Western markets. And so that's why the total subscriber growth outstrips the payout growth.”
• Charlie Hellman ([09:27]): “Nobody has a per play rate.”
• Charlie Hellman ([11:47]): “When we add audiobooks to Spotify, it increases retention and engagement with the service and grew our total payouts because it makes the subscription stronger.”
• Charlie Hellman ([17:07]): “We make the experience so engaging and therefore the churn is so low, we've been able to grow our payouts and our subscriber base faster than any other service.”
• Charlie Hellman ([23:53]): “Of successful artists that are making more than 10 grand on the platform, more than half are coming from non-English speaking countries.”
• Charlie Hellman ([27:25]): “We're trying to be as transparent as we possibly can be. But this stuff is complicated, and I want us to do a better job in being clear and open with everybody.”

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This comprehensive summary encapsulates the pivotal discussions from The Town with Matthew Belloni episode, offering listeners insightful perspectives on Spotify's evolving role in the music industry and the intricate dynamics between streaming platforms and artists.

Transcript

[Matt Bellany]

If you care about Hollywood, and I assume you do, if you're listening to the Town, you should really be getting the whole story about Hollywood. That's what you get with Puck. I'm a founding partner Puck and I write a newsletter called what I'm Hearing. It's got exclusive news for insiders and analysis of the biggest stories. Puck has a bunch of great journalists. We just hired Kim Masters, who also covers Hollywood from the inside, plus media, sports, fashion, politics and finance. It's a must have for plugged in people. Fans of the Town get a discount on the description page of this episode or at Puck News thetown. Go further into Hollywood by becoming a Puck member today. This episode of the Town is brought to you by MAX Presenting Hacks for your Emmy consideration. Starring Gene Smart and Hannah Einbinder, the new season picks up with Deborah Vance's late night show finally in production and Ava Daniels stepping in as head writer. To Deborah's dismay, the their ever complicated relationship is pushed to new limits as they clash over creative direction and get entangled in blackmail and betrayal. Don't miss the series, Slate says has never been better. Emmy eligible for Outstanding Comedy Series and all other categories now streaming on max. Today's episode is brought to you by Peacock presenting the Day of the Jackal for your Emmy consideration. Eddie Redmayne and lashana lynch star in the original drama series Variety calls an exhilarating thriller. The series follows a lone assassin and an intelligence officer in a cat and mouse chase across Europe. The Day of the Jackal is streaming now only on Peacock. It is Monday, May 19, pretty much since the moment music became shareable online and music streaming services started popping up. There's been a tug of war over the royalties that those services pay out, with the artists, record labels and music publishers all believing those payouts should be higher. That's especially true with Spotify, which is the leader in audio streaming worldwide. They've got 268 million paid subscribers as of the first quarter, 678 million monthly active users, both numbers up about 10% year over year. Remember, the music labels were initial investors in Spotify, yet as the platform has grown, it's often been looked at skeptically by artists and their representatives. Taylor Swift famously pulled her music a decade ago over the low artist payouts, particularly on the ad supported free tier of the service. But lately Spotify has been aggressively countering that narrative. The company's recent Loud and Clear report claimed a record $10 billion in artist payouts in 2024 and that its annual payouts have increased tenfold since Taylor was so upset. Last year, 200 artists made more than $5 million in royalties, Spotify says, and the average artist is making more today than back then when the music industry had bottomed out. Still, not everyone is happy. Spotify introduced bundles last year with music and audiobooks that resulted in some lower royalty rates. And just last week, Snoop Dogg settled a long running beef with Spotify over his royalties. It's probably the biggest issue in the music industry right now. So today we've got Charlie Hellman here to talk about it. He's VP and global head of the music vertical at Spotify, in charge of everything related to its music offering and artist relations. Lukashaw, our Monday guy, is here too today. It's streaming and the artist relationship. Is Spotify paying? Enough from the ringer and puck. I'm Matt Bellany and this is the Town. All right. We are here with Charlie Hellman, who is the head of music at Spotify. We also have our returning Monday champion, as always, Lucas Shaw with us. It's a tag team interview with the head of music at Spotify. Welcome, Charlie.

[Charlie Hellman]

Thanks for having me. Great to be here.

[Matt Bellany]

We should mention at the top of the show, obviously, the ringer is a Spotify studio. The ringer produces the show. So this is a friendly.

[Lucas Shaw]

It's a house ad.

[Matt Bellany]

It's not a house ad. No. You are here in a journalistic capacity. We will grill you just like we grill any other guest on the town. But the listeners should know that ultimately the buck stops at Spotify.

[Charlie Hellman]

Well.

[Lucas Shaw]

Well, hopefully my presence helps because there are many people at Spotify who are convinced that I'm the spawn of Satan, so.

[Matt Bellany]

Oh, that's good. Well, neither of us are Spotify employees. The ringer produces this show. But I do not work for the ringer. So neither of us are on the payroll. All right, is that a good enough disclosure, Charlie?

[Charlie Hellman]

Full good disclosure there. And let the grilling begin. How about it?

[Matt Bellany]

So why do artists hate you? I'm just kidding. We're not gonna start with acquisition.

[Lucas Shaw]

Wait, wait, we really aren't starting there. Isn't that the obvious place to start?

[Matt Bellany]

All right, then let's do it. Let's start with there. Why do artists hate you?

[Charlie Hellman]

They don't. Certainly artists don't hate Spotify. Spotify, I think, has been an incredible unlock for so many artists that wouldn't have been able to be in the game in the old version of the music industry where you had hundreds of thousands of trying and only a few thousand getting Signed and being able to be on shelves in the record store. Now, with the gates being taken down, you've got tens of thousands of artists on Spotify who were able to rake millions, make real money, and find an audience and be discovered. So I reject the premise of the question.

[Matt Bellany]

Okay, well, you do have an interesting stat in your press release you put out every year. You guys do this release called Loud and Clear, where you brag about how much money you pay out to artists, and you say that the 10,000th ranked artist made $131,000 last year, and that's up from $34,000 a decade ago. So a big improvement. The thing that's interesting about those stats that you put out is that you guys say that you've increased payouts by 10 times since 2014. Right? That's your number.

[Charlie Hellman]

That's right, yeah. From 1 billion in 2014 to 10 billion in 2024.

[Matt Bellany]

Okay. But the platform has increased, by my math, about 18 times. It's gone from 15 million paid subscribers to 268 million paid subscribers. So shouldn't you be paying out nearly double that?

[Charlie Hellman]

Well, if you think about where that subscriber growth has come from, the biggest thing that people doubted was that there was going to be a meaningful paid subscriber market all around the world. So we've invested big in going into Latin America, Asia, and getting the world over to pay for music. That's huge. These are markets that people had left for debt and said there's not going to be meaningful revenue there. But obviously the price that we charge in those markets is a lot less than in developed Western markets. And so that's why the total subscriber growth outstrips the payout growth.

[Matt Bellany]

That makes sense. Okay. Yeah. The other stat that you have is that 200 artists made more than $5 million in royalties last year. Does that mean payouts that go to their labels? So not ultimately to the artists, but payouts to their labels?

[Charlie Hellman]

That's right. So the part that we can see and that we can control is of all the music revenue that we generate, we take two thirds of it and we pay it out to the owners of the music. And so you know, that two thirds. I know you guys talk a lot about, you know, YouTube and Netflix on the show. YouTube's around 55% of their payouts going to creators. Netflix, I think about 45%. So for us, it's 2/3 that go out to owners of music. And then what happens outside of that, in terms of what the deal is that an artist might have with a distributor or label, their publisher, that's hard for us to see. So we don't speak to that part.

[Lucas Shaw]

I know you rejected the initial premise of Matt's question, and I understand why, but why do you think there remains a vocal contingent in the artist community, and I'd say, especially in the songwriter community that is frustrated with Spotify and repeatedly criticizes Spotify? And I think if you ask the average person on the street, they would tell you that artists don't like Spotify.

[Charlie Hellman]

Well, I think the music industry, I think, has been a victim of the pipes that the money goes through is really complicated. And there is a lot of misunderstanding of what's coming to me and how much am I actually getting. I mean, you even reported last week, Lucas, about the whole situation with Snoop. So there is a lot of misunderstanding. And oftentimes when we sit down with an artist and talk to them about what, what's happening in detail, their frustration or their concern really is helped by that. So I think that's one part. It's just confusion about how the money flows and where it's all going. I think the second part is, I think that there's this paradox where on one hand it is objectively true. There's no denying that there's way more artists that are having success in this era than any previous era. But it's also the case that there's millions and millions who are uploading as hobbyists or to give it a shot. And so the success rate is still super low. I mean, making it in the music industry is still really, really hard. And so I think usually when people are frustrated, it's one of those two things. Understanding the overall popularity, you need to get to. To break out on one hand, or it's just, I'm big, but I'm not seeing how the money is flowing, or there's some miscommunication about how things are trickling through the pipes.

[Matt Bellany]

I mean, on that front, there's still a big misunderstanding about how people are paid. Most people, I think, think that if you have a song listened to on Spotify, you get a certain amount of money for that listen. And that's actually not how it works. It's a percentage based payment scheme.

[Charlie Hellman]

That is a vitally important point that's so important to call out because, yeah, I think most people misunderstand and think there's some per play rate that each service has. Nobody has a per play rate.

[Matt Bellany]

You guys got a lot of shit for the bundles that you put together. With audiobooks. And the songwriters in particular, claimed that bundling with audiobooks reduced the payments. The head of the National Songwriting Group, he said it appears Spotify has returned to attacking the very songwriters who make its business possible. What's the current state of play with bundling and making sure the artists are getting what they deserve in those bundles?

[Charlie Hellman]

I think the state of play is that that's mostly in the rear view at this point. There was a lawsuit brought that we were paying improperly that was dismissed by the judge with prejudice, saying it was unequivocal that we were abiding by our licenses. And we've started to strike direct deals outside of these statutory licenses with publishers directly where they feel like they're acting in the best interest of their songwriters, increasing their rates, and we get more flexibility to try to innovate and keep growing, you know, paid subscription around the world. So I think it's mostly in the rear view. I think things are on a good track. Just to recap what happened there, though, because I think it's important to understand in the US there's this process to set statutory rates in publishing, and it's a long negotiation to figure out exactly what those should be. Every year in 2022, when those rates were set, one of the big things on the publisher side was an overall rate increase, which they got. And on the streaming services side, it was about bottom bundle flexibility, where we could package music with other things, be it shopping or other entertainment services, so that we could grow the appeal.

[Matt Bellany]

Amazon does that. Amazon is famous for that.

[Charlie Hellman]

Yeah, it's important it reaches people that might not go for a pure play Music subscription, but you put it with some other stuff and then you get people to adopt, poll. And obviously, when you do a bundle, you need space in the economics to pay out the other parts of the bundle. Right. I think that's obvious to everyone. So last year, when we added audiobooks to Spotify, which has been great, it's increased retention and engagement with the service and grown our total payouts because of the fact that it makes the subscription stronger. It also made Spotify a bundle, we started paying out accordingly. And some people disputed what part of it was going to the audiobook side and what part was going to music. But again, like I said, the judge dismissed it with prejudice and said we were doing exactly what we had agreed on in the deals.

[Lucas Shaw]

So if we brought on David Israelite, the head of the Music Publishers association, he'd say, we're good. Love you, Charlie. No complaints with Spotify.

[Matt Bellany]

Has he Ever said that.

[Charlie Hellman]

Look, obviously when the business is this big and everyone I think wants the same thing, which is we all want this business to grow and we all want to do what's best for the creators that fundamentally power this business. Obviously emotions run high, but we're trying to look forward towards better deals that are truly a win win. We can have the rates go up and we can innovate the way that we need to to make the subscription more interesting so that more people want.

[Lucas Shaw]

To pay for it. I have one question on the growth thing. So let's agree that paid streaming has been good for music, right? I think we can all agree that it has benefited the industry even if people complain about certain features of how folks get paid in the system. But even so, if you adjust for inflation, the recorded music business is, is smaller than it was 25 years ago by a pretty good margin. Why do you think that is and how can that change? How can you get to a point where it's actually a bigger, bigger business?

[Charlie Hellman]

I mean, Lucas, you said we can agree that, you know, paid subscription's been good for music. Like it's a little bit good. I just want to just rewind the talk.

[Lucas Shaw]

Great, sure, great for music.

[Charlie Hellman]

But it's not like great like we. When I joined Spotify in 2011, we were coming off of 11 years of industry decline every year. It was like, how much is this industry going to shrink because of piracy and where's this new model coming from? And people were doing ring back tones and grasping at straws of like, how are we going to grow this business again? Getting people to packaging music in a format, in a subscription that had value that people were excited to pay for has turned the industry from annual decline to a period of unprecedented growth. And we've gone from 13 billion in revenues to the industry to 30 billion last year. So I understand what you're saying about inflation and the heyday of 1999 and CDs with one good song on it. But I don't think there's ever been a healthier time in the history of the music industry in terms of the number of artists that can succeed and the total revenues going out to artists and songwriters than ever before. So I, you know, I just say I think it's been transformative for the industry.

[Lucas Shaw]

I accept that. I still, I still pose the question right. You had 15 years of decline and now 11 years of growth and those the growth still has not caught up to the decline.

[Matt Bellany]

Lucas wants everyone to have to buy an entire CD to get the one song they like.

[Lucas Shaw]

As a user and as a. As a music fan, I love the streaming product.

[Matt Bellany]

Well, it's the same as in streaming video. Streaming video is much more customer friendly, but it's not great for the business.

[Charlie Hellman]

I think, though, that we're still mid cycle here. Like, when I look at every single person in the world has a relationship with music. Everyone listens to music. And now we're at the place where a few hundred million people around the world pay for a music subscription, which is great, but there's what, 8 billion people in the world, like, we're still at the beginning stages of making this format of paying for music commonplace in the world. And then I also think that it has been a tremendous consumer offering and surplus. You know, we didn't raise prices for many years because we were worried about backstepping into piracy. And so there's a lot of, I think, value surplus, where as we now start raising prices, revenues can continue to grow off of that. So I don't take it for granted that this 11 years of growth is the end of the story. I think we're still in that cycle.

[Matt Bellany]

Well, and you guys are making money now and you've pretty much left Apple and Amazon in the dust financially. But YouTube continues to grow and YouTube is, I don't wanna say notoriously, but I guess I'll say notoriously, creator unfriendly. And they have continued to grow. What are you doing about the YouTube problem?

[Charlie Hellman]

Well, I think YouTube's awesome. I use YouTube every day. I don't think there's a YouTube problem. I think there isn't in terms of our service and our offering to consumers. I think it's a pretty different thing than what YouTube brings to market. And so I think there's space for YouTube to be awesome at what it does and space for us to be awesome at what we do. But I think the core of that difference is that for us, we try to lean in super hard on the formats that we specialize in. So music, and more recently, podcasts and audiobooks, we customize the experience a lot with features around what makes those experiences great, like making your perfect playlists or personalized mixes that we make for you, or being able to jam with your friends and have a queue that you're making together. Like, we get really into the specific formats and make it great around those content types. Whereas obviously YouTube is every type of content in the world fitting into a single format, which is great in a different way, but we just have a different sort of way of looking at the the user experience for that reason. I think though, what we've done really well that I'm really proud of is that because we make the experience so engaging and therefore the churn is so low, we've been able to grow our payouts and our subscriber base faster than any other service and we are still by far paying out the biggest checks to the music industry and growing that faster than anyone. So I think that's a testament to the way we're doing it for music is working well, you know, in that category.

[Matt Bellany]

This episode is brought to you by Focus Features and Indian Paintbrush Presenting the Phoenician Scheme, an epic comedy adventure from director Wes Anderson. Starring Benicio Del Toro, Mia Threpleton, Michael Cera and an all star cast follow Zsaza Korda as he races to survive assassinations, win back his daughter and pull off the scheme of a lifetime. The Phoenician scheme rated PG13 only in theaters Friday. This episode is brought to you by Netflix. Presenting the Diplomat from writer and creator Deborah Kahn. Kerry Russell and Rufus Sewell return, with Allison Janney joining in the explosive second season as US Ambassador Kate Weiler navigates high stakes diplomacy and a fraught marriage in search of the truth. The Guardian lauds the Diplomat a masterclass in storytelling, and Indiewire hails it one of the best shows of the year for your Emmy consideration. How has the podcast growth impacted music? You guys have put a lot of effort into podcasts over the past five years. Some of those have worked. A lot of them have not worked. But is that impacting the engagement on the music side or are they kind of growing on separate trajectories?

[Charlie Hellman]

Everything I've seen is that they're additive and that when we started layering on podcasts and especially audiobooks, we started seeing minutes of the day times a day that people were gonna spend with, you know, maybe a terrestrial radio experience or a podcast app. That was the stuff that was shifting over to Spotify. We haven't seen cannibalization with music and because of that we're now over 45 hours per paying subscriber on average that they spend with Spotify each month, which is just a testament to year over year over year. The engagement that people have is deepening with the service and again, that really is what drives the growth and therefore what we can pay out to the music industry.

[Matt Bellany]

Do you have a comp number with Apple? How much bigger is the 45 hours than Apple?

[Charlie Hellman]

There's a bunch of third party stuff out there I don't have like, you know, Spotify proprietary data about it, but there was a recent eMarketer report that I saw they had in the US the average Spotify user, I think this is blended across free and paid spending about 30 hours a month with Spotify and a little less than one hour a month with Apple.

[Matt Bellany]

So you're 30 times bigger than Apple.

[Charlie Hellman]

In the U.S. well, but that included also more people use us. So I think it was the average American spends something like 30 hours, not.

[Lucas Shaw]

A per user number.

[Charlie Hellman]

I think on the per user basis, like I said before, the blended averages were something like around three times more engaging, more plays, more time spent than other streaming services.

[Lucas Shaw]

And how much of that 45 hours a month is music?

[Charlie Hellman]

It's still our biggest category for sure.

[Lucas Shaw]

You talked earlier about the number of artists, like one of the reasons why you put out that report every year, right? And you say there are thousands of people who can make a living on Spotify. And the critics or skeptics will say it's still an infinitesimal percentage of the people uploading music. And that's because so many of them are amateurs.

[Matt Bellany]

Right.

[Lucas Shaw]

Have you guys thought about curtailing who can put music up there? Because I, you know that the labels would love to have Spotify be primarily a place for, quote, unquote, professional artists and limit who else can actually put in music and dilute the royalty pool and all that stuff.

[Charlie Hellman]

I don't think we need to limit anything. I think it's great that we're in a. Like I said before, 20 years ago, it was a small club, right? You know, you had hundreds of thousands trying to get signed. A few thousand actually on the shelves of the record store. I would much rather have millions dabbling and tens of thousands succeeding than going back to that. And I think that Spotify's user experience has stayed really clean and high quality, even though we allow for everyone to put their music on if they want, because the algorithms bring forward the stuff that is showing resonance with listeners and gaining traction. So I think that right now we have the best of both worlds. Everyone has a shot, and still we have tens of thousands of people who rise to the top. We have more artists in 2024 making 100,000 a year than we're making 10,000 a year in 2014. So the scale at which people can succeed is just 10xing.

[Matt Bellany]

What about AI or white noise? If you more severely limited that stuff, it might increase the royalty pool for people who are not using AI and are not just putting up Noise, the.

[Charlie Hellman]

Functional music stuff, like, you know, jungle sounds and white noise and baby lullabies, that's been pretty consistent at around 2% of our listening for as long as I can remember. And it's really dictated by kind of the listening need that people have. Like, if you need to get a toddler to nap, like you need it. And then if you're not trying to get your toddler to nap, you do not need the white noise Baby sleep podcast. So it's not really something that AI can throttle up a ton because it's really dependent on how much people are looking for it. And so for that reason, it doesn't really cannibalize, quote, unquote, real music listening.

[Lucas Shaw]

But AI will increase the amount of music being uploaded. I mean, setting aside the functional stuff, it's going to become. You're more of an expert in this than I am, but it seems like it's going to become much easier and faster to just make music as it is with all these other creative endeavors. And you'll see an increase in the amount of stuff being uploaded, which will be a pain in the ass for you guys in terms of monitoring, in terms of monetization, all these other things. I get that you want to democratize, but won't AI have a huge impact on the amount of music being uploaded?

[Charlie Hellman]

I think so. I mean, I think there's a huge difference between changing the amount that it's uploaded and actually being streamed. Right. Like, just because you can get it on the service doesn't mean you can find an audience. And I think that the challenge that music, whether it's generated a little bit or a lot with AI, is you still need to have it break out. And I actually, call me optimistic, but I actually think that what artists are able to do that's human, connect with their fans and actually build culture around themselves and be a personality, I think is going to be even more important when there's tons and tons of high quality content being put out there.

[Matt Bellany]

All right, so what are some surprising data points from your report? You've got your 2024 royalty report. We mentioned some of them. Are there anything, anything surprising to you that sticks out?

[Charlie Hellman]

Well, we talked about, I think some of the big ones, the total pie growth for the industry, the fact that we grew our payouts from 1 billion to 10.

[Matt Bellany]

Yeah, but that's like press release stuff. What's like, I want to know, like a surprising artist that is huge on Spotify, that made a ton of money or stuff like that.

[Charlie Hellman]

To me, the Stuff that always surprises me when I look at these reports because it increases year over year is the international story and the indie story. Those have always been the big trends that are moving. So now of successful artists that are making more than 10 grand on the platform, generating 10,000 in royalties on the platform each year, more than half are coming from non English speaking countries. So that's not the way the music industry looked when it was largely Anglo centric 20 years ago. So that's reached a big tipping point. The other one that's reached a tipping point is now more than half of our payouts go to indies. And again there just wasn't the capacity for that in the MTV terrestrial radio days for that to be the case. And now like I was saying earlier about the choices artists have, there's just a lot of capacity for indie success. So I think those two trends have been the biggest ones to watch.

[Lucas Shaw]

Is there a particular market or artist internationally that is was growing the fastest last year that people might not realize?

[Charlie Hellman]

Yeah, I think it's the sub genres in Latin. So electro corridos, it's like a probably the fastest growing genre right now which is like a combination of kind of musica mexicana with dance, electric music, but even like Chilean reggaeton. Like there are these genres that are able to really break out and not only be big in their home country, but crossover. The majority of artists get the majority of their royalties from outside their home market now. So most of what people are doing on Spotify is breaking out globally and crossing over to audiences that wouldn't have been able to hear them in the past.

[Lucas Shaw]

You talked earlier, this is maybe only somewhat related, but you talked earlier about all the different ways to make money from artists. And I feel like Spotify has spent now to you tell me how long, at least two years developing this kind of super premium service or whatever the name is now to help facilitate that. Like what is the biggest opportunity for artists to make money going forward that they don't have right now or that is small right now and does Spotify need to play a role in that or not?

[Charlie Hellman]

Yeah, we're thinking about calling it Spotify Max. What do you guys think?

[Lucas Shaw]

No Maxes, no pluses. Yeah.

[Charlie Hellman]

But jokes aside, I would say there's two things I would give you on that. One is as we've tried to grow the pie and like I've been saying, the beautiful thing about working in this business is for every dollar we make, two thirds goes out to music owners. So I genuinely believe like growing our business is good for everyone. And as we've done that, you know, historically, it's been about reaching new people to get them to pay for premium, charging the highest fair price for premium. And then I think the third thing that we're now adding and trying to think about is are there some things that some percentage of the premium base would be really into that most wouldn't care about, and can we charge more for those things? And so that's an important thing that we're working on and working to align the industry about the second thing I would say is touring continues to be a hugely important revenue stream for the vast majority of artists. And we've invested a lot in. In tools to list your concerts, promote your concerts, merchandise them to the right people, get the word out to real fans instead of scalpers. And we drive hundreds of millions of dollars in concert tickets by referring people out to ticketers. And so that's also a really important thing that we try to help artists earn beyond just the royalties that we're generating from Spotify.

[Lucas Shaw]

What is the most valid criticism of Spotify from the music industry that you.

[Charlie Hellman]

That I think that we haven't always done a good job of communicating. I mean, even the fact that we're talking about misunderstandings about royalties this late in the game shows that we're doing our best. We're trying to be as transparent as we possibly can be. But this stuff is complicated, and I want us to do a better job in being clear and open with everybody.

[Matt Bellany]

All right, well, you did it on this show. Appreciate you coming on. Thank you very much, Charlie.

[Charlie Hellman]

Thanks for having me.

[Matt Bellany]

We are back with the call sheet. Craig, a new development in the saga of the Paramount sale. Are you following? I don't want to be, but I am. This is one of those where you have to follow it for the business, but it's not fun. I mean, this is a pretty bad situation. Wendy McMahon, who is the head of CBS News, CBS TV stations and the syndication arm of CBS, she resigned today, saying it's become clear that the company and I do not agree on the path forward. This is yet another sign that Paramount, which owns CBS News, is about to pay Donald Trump a ton of money to settle his bogus or likely unwinnable lawsuit over the Kamala Harris interview on 60 Minutes. The head of 60 Minutes already resigned because he saw the writing on the wall here. Shari Redstone, who owns Paramount, has been meddling, inquiring about what CBS News is doing. 60 Minutes, et cetera, which is her right. She is the owner, but in the journalism world, 60 Minutes is the pinnacle of television broadcasting and a lot of people there are very upset. Now, Wendy McMahon following Bill Owens out the door. Never a great sign when respected news producers are so ashamed of their company that they would rather resign. But also, you mean you can make the case that Paramount is in an extremely sticky situation. Like, I mean, what are their options really? No, that's the thing is that Sherri Redstone cares about one thing and that is getting this deal over the finish line to sell to skydance. It's an $8 billion deal. Her family is going to get a couple million dollars personally from this sale, and she's going to do what she's going to do. And that's actually my prediction today, is that this is a sign, the Wendy McMahon news. I think this settlement is coming in the next week or two. I think this is very close and Wendy McMahon is getting in front of this and the 60 minute season just ended with Sunday's episode. So it's the right time for her to step down. And I think this settlement is coming very quickly. Don't know what it's going to be, but it's going to be tens of millions of dollars and everybody at CBS is going to be shocked. Trump will declare victory and his FCC will approve this deal, I think. And what does that do to the.

[Charlie Hellman]

Timeline of the, of the Paramount deal?

[Matt Bellany]

Well, once the FCC approves, then it's pretty much done. They can close the transaction. That's the transfer of the license, the CBS broadcasting license to Skydance that needs to be approved by the fcc. So, I mean, there's, there's still some corporate stuff, but they have already extended the deadline on this deal once, actually twice. And they need it to happen before October. So sometime this summer. I think it's gonna close. Well, I can't wait for it to be over. I know you're less interested in this than I am. Listen, I saw the Good Night and Good Luck play on Broadway last week with Clooney. It's amazing how much it is resonant in today's news climate. You know, it's all about how CBS News dealt with the McCarthy hearings in the 1950s and some of the pressure the government put on CBS over its broadcasts. And it's just as relevant today. It's crazy. Yeah, everyone's talking about that play and how good it is. I need to see it. I know. We'll see how Clooney does at the Emmys, but they're going to broadcast it on cnn, so we'll see how that does. You can watch it there. So, yep, CBS News, tough situation. People are going to resign right and left. I think it'll be interesting to see if some of the 60 Minutes correspondence resign over this. I could see that happening, but we'll see. All right. That's the show today. I want to thank my guests, Charlie Hellman and Lucas Shaw, producer Craig Horbeck, our Jesse Lopez. And I want to thank you. We'll see you a couple more times this week.