Thanks to music streaming services, record labels reported record revenue last year.
Despite growing streaming revenue, how much do artists really earn?
A report published last year found that Napster had the highest payouts. After just 90,000 plays on the platform, artists would earn the US monthly minimum wage of $1,472.
By contrast, Spotify and YouTube, arguably the biggest music streaming services, had the worst payouts. The Swedish music platform had a per-stream rate of $0.0026. With more than 1.1 billion users, artists would receive just $0.0006 per play on YouTube.
Factors to bear in mind when measuring the payout per stream
Subscription tier: any service with a free tier (Spotify) earns less than a subscribers-only service (Apple Music). In other words, if most of your streams come from a service with a free tier, you earn less money.
Interactive or one-way: a radio-style service (Pandora) earns much less than an interactive service (Spotify).
The country where the plays happen: if you have a lot of plays in a country where the subscription costs only $3.99 a month, compared with the US at $9.99 a month, your earnings will be lower.
Market share: many services pay out based not on plays but on market share (Spotify). This means that the more often you are played, the more you will earn per stream.
Advertising rates: on platforms that generate much of their revenue through advertising (YouTube), the type of advertiser you attract makes a big difference. For example, high-end brands like Mercedes pay much more than, say, Pizza Hut. The time of year can also make a big difference to what advertisers pay (holiday season vs summer).
Your record deal: if you are an independent artist, you will see those full amounts. But if you are with a label, you will see roughly 18% to 30%, depending on your contract.
These are just some of the variables that influence the average rate per stream, so as you can see, the figures can vary a lot.
Although the figures mentioned are a very good guide, there can still be a considerable margin of error, as there are no references as to how the numbers were derived.
Spotify
Spotify has the largest number of paid subscriptions. Ahead of its Wall Street listing, the company’s valuation soared to $19 billion. Spotify’s top executives reportedly earned seven-figure salaries.
So how are artists doing on the platform? Not very well.
