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

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.

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])

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])

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])

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])

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])

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])

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])

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])

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])

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.

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.”

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.