Spotify makes money mainly from Premium subscriptions, with advertising as a smaller revenue stream from its free, Ad-Supported service. In 2025, Premium generated €10.184 billion—89% of Spotify’s €11.690 billion in total revenue—while Ad-Supported generated €1.506 billion, or 11%. The free tier also helps bring some listeners into Premium, while the cost of licensing music and other content limits how much revenue becomes profit.
How does Spotify make money?
Spotify reports two revenue segments: Premium and Ad-Supported. Premium listeners pay for subscriptions; people using the free service listen to advertising. Spotify’s 2025 Form 20-F, filed February 10, 2026, reports the following full-year figures:
| Revenue segment | 2025 revenue | Share of total revenue |
|---|---|---|
| Premium | €10.184 billion | 89% |
| Ad-Supported | €1.506 billion | 11% |
| Total | €11.690 billion | 100% |
These are Spotify Technology S.A.’s reported 2025 figures, not a forecast or a measure of profit. The mix makes clear that advertising contributes revenue, but paid subscriptions are the much larger source.
How does Spotify make money from Premium?
Premium revenue comes from subscriptions sold directly and through partners. Spotify reported 290 million Premium subscribers at December 31, 2025, up from 263 million a year earlier. Subscription revenue depends on both the number of subscribers and the prices and arrangements attached to their plans.
Quick wins for a faster PC:
Scan for outdated or missing drivers - takes under a minuteDriver Scan →Repair Windows errors before they cause bigger problemsFix Now →Fix the driver behind crashes, sound loss and screen glitchesFind Drivers →#1 Best Overall
Premium generally offers ad-free music listening and offline listening. Other features and content differ by plan and market. Spotify also allows partners to bundle Premium with their own services or offer it as an add-on; according to its filing, partner revenue is based on a per-subscriber rate negotiated in the relevant agreement.
How does Spotify earn money from free listening?
Spotify’s free service does not charge a subscription fee. It provides limited on-demand online music access and advertising-supported access to other catalog content. The company sells advertising directly and through automated channels. Depending on the arrangement, ads may be priced using cost per thousand impressions (CPM) or auction-based mechanisms.
Rank #2
- Ideal for Gifting
- Ideal for a bookworm
- Compact for travelling
Ad-Supported revenue was €1.506 billion in 2025, down from €1.625 billion in 2024. Spotify’s filing attributes the decrease largely to lower direct music and podcast advertising revenue, lower fixed-CPM rates, and fewer music impressions sold. A large listener base therefore does not guarantee that advertising revenue per listener will remain constant.
The free tier is also a route to Premium
Spotify describes its services as operating independently but benefiting from one another. The company says Ad-Supported listening is a funnel for a significant portion of gross Premium subscriber additions. That is a role in Spotify’s business model, not a claim that every free listener converts to a paid plan.
Why licensing costs matter
Spotify relies on third-party rights to stream most of its content. Its 2025 Form 20-F identifies royalties and distribution as major content-related costs. Royalty calculations are governed by negotiated agreements and can depend on factors such as revenue, content type, country, product tier, users, and advertising fees or discounts. The associated liability requires estimates and complex data systems.
That is why there is no single universal per-stream rate that explains what Spotify pays or what an artist receives. Spotify’s payments go to rights holders under licensing arrangements; labels, publishers, distributors, and other contracts can affect how much ultimately reaches an individual creator.
Rank #4
Reported content costs and margins
Spotify’s 2025 filing reports Premium cost of revenue at 66% of Premium revenue, compared with 67% in 2024. Ad-Supported cost of revenue was 82% of that segment’s revenue, compared with 88% in 2024. Consolidated gross margin for 2025 was 32%. These are company accounting measures, not estimates of the portion of a stream’s value paid to a particular artist.
The filing says Premium royalty costs increased by €765 million in 2025, while certain marketplace program benefits partly offset cost increases. Ad-Supported cost of revenue fell partly because of lower podcast costs and lower music royalty costs. Segment cost ratios differ, so neither should be read as a creator payout rate.
What’s actually slowing this PC down?
Pick the symptom - the matching free tool is one click away.
Best Value
- It can be a gift option
- Comes with secure packaging
- Helpful in various ways
How does Spotify pay artists?
Spotify pays music-industry rights holders under licensing agreements; its public payout totals do not set out a per-artist payment schedule. In a January 28, 2026 statement, Spotify Head of Music Charlie Hellman said the company paid more than $11 billion to the music industry in 2025 and that independent artists and labels accounted for half of all royalties. Those are Spotify’s reported figures and characterization of its payments, not a statement that the entire amount went directly to performers.
Spotify’s 2026 Loud & Clear figures offer selected earning thresholds, not a complete distribution of artist income. Spotify said more than 13,800 artists generated at least $100,000 from Spotify alone in 2025, and that the 100,000th-highest-earning artist generated more than $7,300 that year. Neither figure is an average, and neither establishes an artist’s net income after contractual shares or other costs.
What Spotify’s scale and quarterly results show
Spotify reported 751 million monthly active users and 290 million Premium subscribers as of December 31, 2025. These counts show the scale of the audience and paid base, but audience size alone is not revenue: subscription payments and advertising sales are the revenue streams, while content and other costs affect the resulting margin.
For a separate quarterly view, Spotify reported a 33.1% gross margin and €701 million of operating income in Q4 2025. These are results for that quarter, not full-year figures. They should not be substituted for the 32% gross margin reported for the full 2025 year.
Windows Errors? Fix Them Before They Spread
Repair common Windows errors and clear accumulated junk for a smoother, more stable PC - no reinstall needed.Free scan · no reinstallOutdated Drivers Are Slowing You Down
One free scan finds every outdated or missing driver and matches the right update for your exact hardware.Free scan · exact hardware matchQuick Recap
What to compare when evaluating Spotify’s business model
- Revenue mix: In 2025, Premium supplied 89% of Spotify’s revenue and Ad-Supported supplied 11%.
- The free tier’s purpose: Spotify uses it both as an advertising-supported service and, by the company’s account, as a source of Premium additions.
- Rights and costs: Licensing agreements shape content costs, and the reported cost ratios differ between the two segments.
- Scale versus monetization: User and subscriber counts help describe reach, but revenue and margin show different parts of the economics.
- Payout evidence: Platform-wide payments to the music industry and selected artist-earnings thresholds do not establish what any one artist keeps.
Product prices and availability are accurate as of the date/time indicated and are subject to change. Any price and availability information displayed on Amazon at the time of purchase will apply.
