If you’ve long wondered how much streaming services really pay musicians, you’re not alone. It’s a question that comes up a lot and, if you’re an artist, it’s probably something that has often crossed your mind as you try to make a living from your music.
It’s true that artists still make money from selling physical albums or vinyl records, but it’s no secret that the music industry has changed enormously since the turn of the millennium. We’re now in the digital age, which means digital music and most people listen to music online and consume music via streaming services. While this change has democratized access to music, enabling artists everywhere to easily reach a global audience, it has raised and continues to raise the question of remuneration and, above all, fair remuneration.
So let’s take a look at how much streaming services pay musicians, the factors that influence this, and the wider implications this question has for the music industry.
1. How do music streaming services work?
Let’s start at the very beginning. There are various music streaming services out there such as Spotify, Apple Music, Amazon Music, YouTube Music, Pandora, Tidal, QoBuz, and others. These are businesses and the way they make money is either by charging for their use, in the form of a monthly subscription or if they are available for free, they make money through advertising.
Some of this money is re-injected into the business, but some is distributed to the owners of the rights to the songs available on the platform and that have been streamed. These right holders can be record companies, publishers, or musicians.
While this practice seems fair, the controversial element here is the actual amount that ends up in the artist’s pocket as it’s usually very little and is influenced by a multitude of factors (more on that later). What’s more, this model widens the gap between high-profile artists who already have a large fan base and release popular music and emerging artists who are struggling to get more exposure. The latter make very little money from streams, while a small percentage of artists earn the majority of streaming revenues.
2. Understanding the payment per stream model
If you’re an artist with some music already out on a music streaming platform, chances are you’ve heard of the per-stream rate. Simply put, it’s the amount of money paid for a single stream of a song on a streaming platform to the rights holders (be it artists, songwriters, producers, and record labels).
This rate can vary across different platforms and as a guide, here’s a rough approximate of what the main streaming services pay per stream:
- Spotify: Approximately $0.003 to $0.005 per stream.
- Apple Music: Around $0.007 to $0.01 per stream.
- Amazon Music: Between $0.004 and $0.005 per stream.
- Tidal: Generally higher, about $0.012 to $0.015 per stream.
- YouTube Music: Roughly $0.00069 per stream.
- Deezer: $0.0064 per stream.
- Pandora – $0.00133 per stream on Pandora Premium.
- Qobuz: Around $0.043 per stream.
- SoundCloud doesn’t reveal how much it pays per stream, but musicians on SoundCloud make money from different sources, like revenue from ads and getting support directly from fans who subscribe to SoundCloud Go+.
Bear in mind that these figures represent averages, and the per-stream rate across streaming services can vary significantly due to several key factors.
These factors include the popularity of the music service which may be visible through its user base and especially, the number of active users it has. There’s also the size and diversity of its music catalog, as well as the effectiveness of its music discovery features like personalized playlists and recommendations, as this can influence user engagement.
Another thing that can affect the rates is whether the music service offers premium-quality audio options, such as high-fidelity or lossless audio quality options as this may convince people to pay premium prices.
To elaborate on this point, subscription type also plays a role, with premium subscribers who pay per month to listen to music ad-free and offline and have unlimited streaming, typically generating higher payments per stream than free ad-supported users due to stable subscription revenue.
Additionally, location can influence rates, as they may vary based on licensing agreements and market conditions in different countries. Contract terms between artists, labels, and streaming services also impact per-stream rates, as does the total revenue generated by the streaming service, which determines the amount available to be shared between rights holders.
3. Where do the major labels and distribution services fit in?
To get a better idea of the money chain, here’s another breakdown of the revenue-sharing model used by streaming services.
The streaming platform collects money from users (subscriptions) and advertisers, then divides it between artists and other rights holders according to how often their music is played.
The important thing to remember is that there can be several rights holders. And if you signed a contract with a record label, they will most likely be a right holder and will take a share (which in the current recording industry, is usually quite high). So signing with a major label may be your dream, but it really is a double-edged sword, and that’s particularly apparent here. Indeed, a major label can get higher rates per stream when negotiating with streaming services and has marketing and promotional power that can influence the number of streams a song receives, but because of this, it will take a large chunk of the revenue and the artist might only receive 15-20%.
On the other hand, independent artists who use distribution services can keep a larger percentage of their streaming income. This depends on which distributor is used and any distributor who operates on a royalty model will also take its share. But there are some distributors which take no royalties but just an upfront payment.
4. Other sources of income for an independent artist
Depending on whether or not you’ve managed to make it big, you may not yet be able to make a living from your streams. But you’re not alone: current streaming fees are unsustainable for most artists, especially independent artists who haven’t grown their fanbase yet. For this reason, many efforts are being made to argue for a better remuneration structure for artists on streaming platforms, and organizations such as the Ivors Academy are arguing for higher per-stream rates and more transparent pricing practices.
In the meantime, most artists who cannot yet rely solely on income from streaming their music have to find other sources of income. Digital download platforms such as iTunes can be a more reliable source of income for artists, as they generally offer higher revenue per sale than streaming royalties and this can be particularly beneficial for emerging artists who may have a smaller but dedicated fan base ready to pay to support them.
Licensing music for various media purposes can also be a lucrative source of income for artists and involves allowing others to use their music in films, television programs, adverts, and video games, in return for licensing fees or royalties.
Live performances, including small concerts, tours, and music festivals, are also important sources of income for many artists. Not only do they bring in money, but they also allow artists to connect with their audience and build a dedicated fan base.
To conclude, streaming services have fundamentally altered how music is consumed and how musicians are compensated. And while they give artists access to a global audience, it’s important to pay attention to their impact on the sustainability of a music career.
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