Low payout rates are the first point people make when claiming streaming is bad for artists. Streaming sites may bring in billions in revenue, but there simply isn’t enough to go around and keep the lights on at companies like Spotify and Pandora, so they aren’t able to pay musicians quite as much as they’d like to.
When I say the amount paid per stream of a song is low, I mean it is low. In fact, while record labels and music industry bigwigs are fighting to raise the financials of playing music, many of the biggest names in the streaming world are being forced to pay less and less per stream. At the same time, while more people are signing up and handing over their monthly subscription fees, those listeners are also pressing play on more music than ever before, and this pushes the price paid out per stream ever downward.
The amount paid for every song played varies from service to service, but it is always notoriously, dismally low. Spotify typically pays about $0.007 per song, while Apple Music offers a worldwide average of about $0.0056 per play worldwide. Pandora’s rate is much higher (at $0.17 cents per stream), but this is because the company is mandated by laws that don’t govern how the others operate, as it’s a radio service and not on-demand streaming.
Unfortunately for those who got excited at the Pandora number, the largest internet radio company in the world has been losing users month by month, and it seems to be shifting focus to a Spotify-like on-demand product. This will likely see it joining in on the low payout game, which may mean less money overall for artists, some of whom are already hurting because of the streaming revolution.
The number of songs being played every month does go up and overall, artists net more and more cash. But the per-stream royalty rate declines slightly the more music is listened to. So new acts must be unreasonably patient when it comes to making serious gains. The argument many make for these unavoidably tiny numbers is how all those decimal points and fractions of cents can add up quickly, but it doesn’t always work out this way for artists just beginning a musical career.
Big names like Drake may be able to pull in billions of plays (he just became the first artist on Spotify to hit the 10 billion stream milestone), but he is obviously a rare exception. If you’re not Drake or one of the few even close to his level, chances are streams will not pay the bills.
Competition has always been fierce in the music industry, and while streaming has made things slightly more democratic and arguably fairer, it’s never been harder to be heard.