Streaming Success or Industry Scam? Spotify Exec Talks Royalties, Playlists, and AI

In an era where streaming dominates the music industry, transparency around artist payouts and platform policies remains a hot-button issue. To shed light on Spotify’s approach, Sam Duboff, the Global Head of Marketing & Policy for Music at Spotify, sat down for an in-depth conversation with Kato on the Track, a well-known producer and advocate for independent artists.

The discussion, part of Kato’s ongoing effort to educate musicians about the business of music, covered everything from Spotify’s Loud & Clear report to playlisting, fake streams, and AI-generated music.

Duboff, who has been with Spotify for over six years, brought a wealth of knowledge and data, emphasizing the company’s commitment to providing more clarity on how artists are paid. With billions flowing through the music streaming economy, understanding who gets what—and why—has never been more crucial.

A Decade of Growth: The Loud & Clear Report

Every March, Spotify releases its Loud & Clear report, which breaks down the company’s royalty payouts and overall impact on the music industry. The 2024 report marked a significant milestone—10 years since the global music industry hit its lowest point in 2014, when piracy had decimated revenue streams.

“We’ve gone from $13 billion in global music revenue in 2014—at the height of piracy—to nearly $30 billion a year now,” Duboff explained. “Spotify alone has grown from paying out $1 billion in royalties annually to $10 billion a year.”

The Loud & Clear data shows that artist earnings across all levels have more than tripled since 2017, reflecting streaming’s role in revitalizing the industry. Importantly, 50% of Spotify’s total payouts go to independent artists and labels, proving that streaming success isn’t just reserved for major-label acts.

“We don’t have the exact breakdown between signed and independent artists,” Duboff noted. “But we do know that $5 billion of Spotify’s payouts each year goes to the indie community—whether that’s through indie labels, distributors like DistroKid and TuneCore, or fully DIY artists.”

The Rise of Independent Artists

For years, the traditional music industry model favored major labels, which controlled distribution, radio play, and marketing. But streaming has leveled the playing field, allowing independent artists to reach global audiences without requiring major-label backing.

“In the CD era, you needed a huge amount of upfront capital just to record music, manufacture physical copies, and ship them around the world,” Duboff said. “Now, an artist can release music online, reach 600 million listeners overnight, and fans get to choose what they listen to.”

This shift has made it possible for DIY artists to build sustainable careers, with many making significant money solely through streaming. “There are tons of artists earning six figures a year on Spotify without ever signing to a label,” Duboff pointed out. “The key difference now is that you have options—whether that’s staying independent, signing with an indie label, or going the major-label route.”

Kato, as an independent producer, echoed this sentiment. “What I love about Spotify is that it’s the playing field where everyone—major artists and independents alike—compete. The way you approach the game might be different, but you’re still in the same arena.”

The Evolution of Playlisting

At one point, landing on a major Spotify editorial playlist like RapCaviar or Today’s Top Hits could make an artist’s career overnight. While playlisting is still a powerful promotional tool, Duboff emphasized that the role of playlists has evolved.

“It’s no longer just about the big flagship playlists,” he explained. “Now, it’s a whole ecosystem of curated and algorithmic playlists—from genre-based lists like Fresh Finds to personalized experiences like AI DJ and Release Radar.”

This diversification means that more artists than ever are getting exposure, rather than just a handful of names dominating editorial placements. “Playlists are still huge for discovery,” Duboff said, “but the majority of streams come from active listeners—fans who are choosing to play your music directly.”

The 1,000-Stream Policy: Why It Was Introduced

One of the most controversial Spotify policy changes in 2023 was the decision to stop paying royalties on tracks with fewer than 1,000 annual streams. Many small artists were frustrated, believing this policy cut them out of the revenue system.

Duboff, however, explained the reasoning: the revenue from those low-streamed tracks was being divided into tiny, nearly meaningless payments—sometimes just a few cents per artist.

“When you’re paying out $10 billion a year, even 0.5% of streams—which seems small—adds up to tens of millions of dollars,” he said. “The problem was that this money was getting split into two-cent payments for millions of artists. Most distributors wouldn’t even process payments that low.”

Instead of paying out those tiny amounts, Spotify redirected that money to increase payouts for artists with 1,000+ streams, raising earnings across the board. “It was about making sure the money actually goes to artists in a way that makes a difference,” Duboff said.

Fake Streams and Bot Farms: Cracking Down on Fraud

Another growing challenge in streaming is fake streams—where artists (or scam services) use bots to artificially inflate numbers.“Artificial streaming hurts real artists because every dollar that goes to fake streams is a dollar that should have gone to a real artist,” Duboff said.

Spotify has a dedicated team that detects and removes artificial streams, ensuring they don’t count toward royalties or artist metrics. “If we detect bot-driven streams, we don’t pay out royalties on them, and we remove them from public stream counts,” he said.

Kato shared his frustration with artists who buy fake streams: “I’ve seen artists with millions of streams on one song but only 100 monthly listeners. Something doesn’t add up.”

Duboff agreed. “If your streaming data doesn’t match up across platforms—if you have a ton of Spotify streams but no engagement on socials or YouTube—that’s usually a red flag.”

AI-Generated Music: The Next Industry Disruptor?

With the rise of AI-generated music, questions are emerging about how platforms like Spotify will handle AI content.

“We fully support artists using AI as a tool,” Duboff said, “but we don’t allow AI-generated music that impersonates real artists or spams the platform.”

This means that while AI can assist in production, songwriting, or sound design, tracks that mimic real artists or flood the platform with mass-generated content will be taken down.

“We want to protect artists from unauthorized voice clones and ensure that AI tools serve musicians rather than replace them,” he added.

The Future of Music Streaming

The conversation ended on a reflective note about how much the music industry has changed in just two decades.

“I grew up in the Tower Records era, buying physical CDs,” Kato said. “Now, everything is on-demand, digital, and data-driven. It’s a totally different game.”

Duboff agreed. “The industry has transformed, but the good news is that more artists than ever are making real money from music. Ten years ago, that wasn’t the case.”

While streaming isn’t perfect, platforms like Spotify continue to tweak their models, increase transparency, and navigate emerging challenges.And as long as artists—both independent and signed—continue to adapt, evolve, and push the culture forward, the playing field remains wide open.