There is no arguing, no debating, and certainly no denying at this point in time streaming has completely taken over the music world.
Every year, the number of streams on the major platforms grows immensely, and at this point, between all of the places on the internet where streaming music can take place, trillions of songs are played every year.
This figure will only continue to climb, as the public is catching on to the idea of streaming music in a very major way. There are now well over 100 million people paying for streaming around the world, and there are perhaps several times as many who do so for free in a myriad of ways.
Streaming music is a fantastic creation for the consumer, as it allows them to listen to anything they want, whenever they want, wherever they want, and often for either very small sums of money or for no payment at all.
Anything that comes for free is always good for the user, but what about the creators? The music industry and hundreds of bands and singers have been complaining about the low payout rates associated with companies like Spotify, Apple Music, and Pandora for years now, with everybody feeling the need to share their differing ideas about what’s fair, what’s going on, and how things can get better (if they can at all).
The amount of money (or lack thereof) coming from the streaming world has been a hotly-debated topic of discussion for a long time now, and while it’s not going to go away soon, there is still a lot of mystery surrounding the field. Most musicians and sadly, plenty of people entrenched in the music industry don’t understand where the money comes from, where it goes, and how it actually makes it way to the artists (if it ever does).
What exactly are these notoriously small payout rates everybody keeps talking about? Well, see, that’s part of the problem.
When it comes to streaming music, there is no one flat rate paid for every song played; that’s just not how it works. Plenty of people have shown evidence pointing to a static figure, but then others claim different numbers. A bevy of factors comes into play when money is involved, and as with everything in the music industry, the numbers and the process is extremely complicated, and plenty of people close to the situation are still trying to figure it all out.
The amount of money paid per play varies based on a number of factors, and it’s next to impossible to nail down an exact number. While it will always be less than one penny per stream, how much below this mark differs based on things like the service, where the person is listening, the terms of the deal with the record label associated with the artist, the form of the account connected to the user (are they a paying subscriber or are they opting to go for a free, ad-supported model), and many, many other items.
Someone listening to an unsigned artist on the free model of Spotify in Japan is contributing much less than a person in New York City who pays for Tidal every month and who wants to hear T.I.’s new EP in full. These artists get paid very different amounts of money for what in the end is really the same product: a listen of their work.
As I mentioned, it’s all but impossible to give an exact number, and anywhere online claiming to have the definitive figure for most platforms might not have gotten the entire story. It is, however, possible to share a range of payout figures, which should at least paint a picture of how much an artist can expect to earn from streaming on the various sites able to collect enough users to make a real monetary difference.
Here are the estimated ranges of how much one stream will earn you on all of these sites:
- Apple Music – $0.0073
- Deezer – $0.0067
- Google Play – $0.0067
- Guvera – $0.02
- Microsoft Groove – $0.0456
- Pandora – $0.0013
- Napster – $0.0188
- Spotify – $0.0043
- Tidal – $0.0125
- YouTube Music – $0.0080
Which streaming service pays musicians best?
Tidal gets the credit most often for being the streaming service that pays musicians the most per stream, and that appears to be true…at least mostly. As is the case with many things when it comes to money and especially royalties in the music industry, finding out exactly how much each company pays out isn’t easy, as it is rarely a steady figure for every play. Most numbers reported are an average, so the ranking, and those sums, can change.
In addition to Tidal, Napster is named as the top-paying streaming platform by a handful of publications, which means it’s in the running for that title. Those appear to be the two that make the greatest effort to pay artists and their teams the most for every stream.
"Fractions of a cent aren’t ideal, but they can add up quickly, and if everything on the business side of your career is arranged well, the money can make a difference."
Some of these platforms offer wider ranges than others, but from just a quick look it’s easy to see which ones are more “artist friendly.” Companies like Tidal and Apple Music pride themselves on working to up the amount paid to artists for every play of their work, while the world’s most popular video hosting site, YouTube, is known for being one of the worst when it comes to tiny royalty checks.
Websites like Pandora and iHeartRadio are beholden to government-set rates, which they can’t negotiate up or down. These rates are set by what is called the Copyright Royalty Board, which has the right to mandate these companies pay a certain amount because they operate as radio stations, more or less, and there are specific laws put in place to regulate the still-growing online radio industry.
If you missed the news, in the past year or so, the government decided to increase the rates slightly, so artists should benefit, if only a little.
It is also worth noting some platforms, such as Spotify, don’t just pay a certain amount per play, no matter who the listener is or where they are from.
There is a formula to dictate how much entities will be paid based on how much money was collected and how it all gets divvied up. It’s incredibly complicated to explain, but the best, simplest way to put it is if you listen to your favorite artist’s new single (which might be your new offering) 10 times one month, and then 1,000 times the next month, the artist will collect more cash, but they won’t be earning the same rate per play as they did when you only streamed the track 10 times.
The more you listen, the lower the payout per stream drops, though the end sum is typically higher than it would have been had you only clicked play a few times.
Can I earn money from Spotify?
Yes, but that’s not the question you should be asking as an up-and-coming artist, or as someone who wants to make a living from their music. The real question is can you earn enough to survive?
The quick answer is…probably not. The vast majority of artists these days cannot pay their bills from their streaming royalties, and especially not from just one platform. Payout rates are incredibly low, and even some of the biggest names in the business no longer count on the royalties they collect from their art to make them rich. With more and more music being added to services like Spotify every day and attention spans dwindling, it’s harder than ever to make real money from music.
Simply put, yes, any artist can make money on Spotify, but don’t count on it being much.
"As an artist running your own career, you need to do your best to work with a company that will distribute your music to every relevant platform on the internet where someone may want to hear your tunes."
Now, this should absolutely not dissuade you as an artist—especially an up-and-coming one—from making your music available on all of these sites, no matter the tiny numbers I just posted above. Sure, Tidal may be one of the best when it comes to per-stream rates, but the number of streams coming from this outlet is surely much smaller than those coming from a company like Spotify or YouTube.
So it’s not wise to only stick with those offering more cash since it sort of evens out in the end.
These payout rates certainly aren’t encouraging, but they don’t tell the whole story. As I mentioned, the number of songs being played every year rises dramatically, a trend sure to continue for a long time to come. Fractions of a cent aren’t ideal, but they can add up quickly, and if everything on the business side of your career is arranged well, the money can make a difference.
A trillion streams are worth a lot of money, no matter what the services are paying for each one of those. As streaming music continues to grow as a category, more money will be generated…now it’s just a matter of where does all this cash go?
One of the biggest problems facing the music industry when it comes to streaming isn’t even the actual amount of money being paid out, it’s the fact a lot of it seems to get lost. Some estimates claim up to 15% of all streaming revenues disappear or are misplaced, meaning they never get where they need to go.
Streaming music exploded so quickly, most music companies weren’t properly equipped to deal with the incredible influx of data and payments coming their way. It’s one thing to have to deal with record sales or even iTunes downloads in the millions, but when it comes to trillions of tiny figures floating in months after songs were heard from hundreds of thousands of sources, it can oftentimes be too much for any one company to handle.
How can Spotify pay artists so little?
Spotify pays artists (more like their labels, distributors, and publishers) based on how many times their music was streamed, but other factors come into play as well, such as whether those listeners were premium or free users, where they live in the world, and more. Ultimately, much of the money that Spotify brings in ends up going back out the door. Believe it or not, Spotify actually doesn’t turn a profit. Some publications suggest that the Swedish streaming giant may finally become profitable in 2022, though nothing is certain.
Spotify pays artists so little for many reasons, but the main one is that if they paid more, they would likely shutter. The same can be said for other streaming platforms. Raising subscription prices significantly would likely scare away many users, and while the business model is not ideal, it’s still better than what preceded it. Many labels signed deals with Spotify years ago when the masses were pirating music. At the time, they thought tiny royalties would be better than nothing at all, and while that’s true, the system is now constructed in such a way that it’s toughest on artists.
As more and more people pay for premium subscriptions, Spotify (and its competitors) may be able to raise their payout sums, or government intervention may change things. For now, these rates seem fairly steady.
As an artist running your own career, you need to do your best to work with a company that will distribute your music to every relevant platform on the internet where someone may want to hear your tunes.
From there, a tech-forward firm, whether it’s the same one sending your music out in the first place or another specializing in collecting these kinds of royalties, needs to do everything in its power to make sure people are paying to hear your work, even if it’s just tiny portions of cents. This is an important decision and one which requires some research on your part and on the part of your team if you have one.
While you may not be in love with streaming music as an artist, it’s here to stay, and unless you’re someone like Garth Brooks, Beyoncé, or Taylor Swift, pulling your catalog in favor of sales probably isn’t smart. You should be promoting your album and singles to both those who want to buy and to stream, and if you can create good art and share it well, you might just be able to bring in enough dough from people listening around the world.
In the end, there are ways to make money, so forget those tiny numbers I mentioned above with the zeroes after the decimal and just make the best music you possibly can.
