Musician’s ability to make money off of streaming services is something that is widely reported about and speculated upon. While exact payouts per play for songs are not made available by streaming services, several artists have released their financial statements to show just how cripplingly little they are actually receiving from streaming services. Every few months, a headline comes out that says something like “Indie Artist With 4.3 Million Spotify Plays Receives Check for $5078”, and we are able to glean some insight in to how the payout structure from streaming services really work. While there are wildly varying reports about what the actual per play payout is from many streaming services, the commonly held opinion is that it is not nearly enough.
This infographic that just came out a few months ago does a great job illustrating what the main streaming services are and how they pay their artists.
There are some streaming services, like Jay-Z’s Tidal and the revamped Napster, that are trying to pay artists more than the norm. But the main streaming services, like Apple Music, Spotify, Pandora, and YouTube, are all near the bottom of the payout scale.
According to the most recently available data from 2017, Apple Music pays unsigned artists $.0064 per play, and signed artists $.0073 per play. This is, unfortunately, near the top of the pay scale for major streaming services. With this payout structure, and unsigned artist would need 230,000 plays per month, just to earn minimum wage ($1472). Spotify pays unsigned artists $.0038 per play, and signed artists $.0044. That’s less than half a penny for every time a song is played. At this pay scale, an unsigned artist needs 380,000 plays a month to earn minimum wage, and a signed artist needs 340,000. I have a cousin in a band (Make Do and Mend) that has music on Spotify, and I went to their artist page to do some calculations on how much an up and coming artist will actually make from Spotify. Their most-played song has 327,438 plays, which at the current price level for an unsigned artist, would bring them $1,244.26. Split among the 4 members of the band, their best song on one of the world’s most popular streaming services may have bought them each a week’s rent. For their most recent album, which has 11 songs and was released over 2 years ago, Spotify would have paid them $1,969 total.
Services like Pandora and YouTube are even worse. Pandora pays $.0011 to unsigned artists, and $.0013 to signed artists. YouTube pays unsigned artists $.0006, and signed artists a whopping $.0007. Vinyl records still pay out more in royalties per year than musicians receive in royalties from YouTube, despite songs on YouTube receiving hundreds of millions of plays. Vinyl records are about as ancient and as niche of a medium that still exists in music today. Last year, YouTube paid out a total of $385 million in royalties. Vinyl records paid out $416 million.
Now I’m not suggesting that we abandon streaming services completely, or that we should all go back to playing our music exclusively off of CD’s and vinyl records. I love Spotify way too much, and if any company were to ever ask me to pay on a per song basis or buy a full album again I would laugh in their face. The user has certainly enjoyed many benefits of streaming services, but the industry is taking a beating. Revenues in the music industry dropped from $12 billion in 2006 to $7 billion by 2010, as streaming services gained popularity and the sale of CD’s became less and less common. In 2006, record labels generated $9.4 billion from CD sales. In 2015, total revenue from streaming services was $2.4 billion. Even though we have more exposure to music and are listening to more music than we ever have before, the money is quickly disappearing from the industry.
The process of switching the music business to digital has had a major impact on record labels and artists alike. In addition, Spotify, Pandora, YouTube, Tidal, and Napster all reported millions of dollars in losses in the past year, with Apple Music and Google Play not reporting. So it’s not even as if the streaming services are robbing from the labels or from musicians and making a killing. The business model needs to change, because right now no one is making money.
Right now in the music industry, you need to be a top level artist to be making good money from streaming services. To Spotify’s credit, according to these calculation levels they would have paid Justin Bieber almost $4 million already for his song Despacito. But the money dries up not too far down the line. Artists, who usually received approximately $1.00 per CD sold at retail, used to only have to sell about 1000 CD’s per month, worldwide, to make a livable wage. Now they need 340,000 plays a month.
The music industry is a prime example of an industry that got totally flipped upside down in its switch to digital, and maybe did not adjust as well as many other industries. While there will always be glitz and glamour at the top of the food chain, second tier musicians will continue to struggle to make a profit, even with increased exposure to their music. Record labels will struggle as well, as money within the industry has disappeared. And streaming services will continue to report losses as they cut prices lower and lower to attract larger user bases. Music listeners will never go back to the way things were, but the industry must adjust how everyone gets paid as digital users clamor for more music at lower costs. How do you think the industry can adjust?