Spotify Just Had its First Ever Profitable Year – and Paid Out 'Over $10 Billion' In Royalties

It's been a busy few days of news involving Spotify: from an immersive concert film with Central Cee and Playboi Carti's record-breaking new album, to revelations that it paid "over $10 billion" to "the music industry" in 2024 – a sum, that Spotify claims, makes it the industry's single largest contributor.

The figure, revealed last week in its annual music economics report, Loud & Clear, equates to approximately 8.6% of the company's $118 billion USD current market value – yet perhaps more surprising is that it is the single largest payout in "music industry history," according to Spotify, one that it says is "more than any single retailer has ever paid in a year, and over 10x the contribution of the largest record store at the height of the CD era."

It makes sense, then, that the 2024-25 fiscal year marked Spotify's very first profitable year as a company, a fact brought to light in its recent fourth quarter 2024 earnings report published just weeks before its marks its 19th anniversary next month. Spotify's end of year filings also revealed that its monthly active users (MAU) grew by 12% to 675 million – a number that means its user base equates to "three percent of the world’s population," Alex Norström, Spotify's Co-President and Chief Business Officer, tells Hypebeast. The company additionally saw growth amongst both its subscriber base (users who choose to pay for its services) that increased by 11% year-on-year to 263 million, as well as its total revenue which grew to €4.2 billion EUR, a 16% jump on the previous year, while also seeing record growth in its operating income that rose to €477 million EUR.

So what does this all mean for Spotify now and in the near future? According to Alex Norström, who Hypebeast caught up with in London recently, this means the brand is in "a much stronger position to delight users and better deliver for the artists, authors and creators."

A$AP Rocky with Alex Norström, Spotify's Co-President and Chief Business Officer

While it may surprise some readers than Spotify has operated at a loss for almost two decades, Norström – who joined the company in 2011 – claims this hasn't impacted the products and services it creates. "We’ve always been focused on building a great product and now we’ve shown we also have a healthy business under the hood," he tells us. "That’s why these latest results are an important milestone for our company."

"Every day, we think about how we create more value for our users and the creatives who share their work on Spotify. We want users to find and enjoy the music they love and introduce them to new experiences like watching a video podcast or listening to an audiobook."

Spotify's business model has remained relatively unchanged since its inception – that is, at least, as far as we as consumers can see. There is a basic "free" service with limited functionality that is propped up by ads; and a "premium" service that removes these and adds to the features available to users, including offline listening and the ability to listen to songs in one's preferred. Unsurprisingly, Spotify has been rumored to be testing out new ways to engage its customers for a while now, including a new "super-premium" subscription model as reported by the FT last month. While the company has yet to officially unveil any major new products, this year would seem to make sense to do so and Alex Norström acknowledges this. "We know some fans want even more and want to go even deeper," he tells Hypebeast, before adding, "We know some fans want even more and want to go even deeper. That’s an opportunity we’re keen to explore." Asked what this could look like, Norström stated: "We’re still working with our partners on this, even though I’d love to share more, it's too early to go into details."

The issue of royalties – how artists are paid for their music – is something that has been a constant in the Spotify conversation from its inception. While Spotify recently divulged that it paid the "the music industry over $10 billion in 2024", the actual amount that artists – especially smaller artists – take home is still hotly debated among musicians. So, will the company becoming profitable have any impact on artists' pay? We put this question to Alex Norström who clarified that Spotify does not directly pay artists and musicians; instead, the company pays the copyright holders, who then pay the people they are contracted to. "It’s important to make clear that all streaming services pay rights holders, so the labels and publishers, Norström tells us, "each artist or act has their own arrangement with their label or publisher; we don’t have visibility on that. For context though, we pay out roughly two-thirds of every single dollar we make back to rights holders."

Norström added that "the number of artists generating at least $1,000, $10,000, $100,000 and even $10 million per year has tripled since 2017," a statistic Spotify can glean from its latest data, before going on to say that "a healthy, growing, profitable Spotify means we’re in the best position to keep innovating and keep investing back into the product. It means we can have expert local teams working directly with artists around the world, it means our marketing efforts can continue to spotlight new releases and our playlists can reach new fans. A silent Spotify makes no sense, the success of musicians and the enjoyment of fans is what it’s all about."

Though Norström wouldn't elaborate, he hinted that Spotify will have some big news coming later this year. So, stay tuned – we'll keep you posted on what the company has to offer in 2025 and beyond.

Click here to view full gallery at Hypebeast