The recording industry is now centered on music streaming. Whether it’s an up-and-coming local talent or a worldwide celebrity, the recording artist is likely to make most of the money from streaming, but the latter will make nearly a million times more. “We ain’t even got no CDs out,” says A Boogie Wit Da Hoodie.
Simultaneously, the music streaming market is growing increasingly complicated. There were approximately 200 DSPs with streaming capability as of 2018, ranging from regional players and specialized services to global behemoths like Apple, Spotify, and others. In our post on the Mechanics of Streaming, we’ve given out a thorough taxonomy of all streaming services, so check it out if you want to learn more.
So, how can you negotiate the streaming market’s complex landscape and maximize your streaming revenue? The music industry is brimming with potential, but where should you focus your efforts? What do the various DSPs pay the artists? Those are valid concerns for musicians of all types — after all, it is their principal source of cash on the recording side. The per-stream payout rate appears to be the first and most obvious metric for evaluating the platform’s return. However, further investigation reveals that it is not entirely trustworthy. So, here’s our take: in this article, we’ll explain what streaming rates are and why they may not be as significant as you think.
What Do Artists Get Paid by Major Streaming Services?
So, how much do streaming providers payout on average? Most of the quotes you’ll encounter on the internet come from two places: The payout rate is calculated based on the sales statistics of a mid-scale independent label in Digital Music News’ article on payout rates and The Trichordist’s 2018 Streaming Price Bible, which adds up to nearly a billion streams. We made the decision to follow in The’s footsteps Trichordist and obtained data from our friendly label for two artists: a well-known international electronic act and a mid-sized hip-hop group. Such artists generated over 500 million streams in 2018.
We used the proprietary sample and statements from Digital Music News and The Trichordist to come up with the weighted average payout rate. The whole table may be found below, but here’s a quick rundown of what we have:
Spotify paid the artists $0.0032 per stream.
The average price for Apple Music was $0.0056.
Google Play Music has a payment rate of $0.0055.
Deezer is now trading at $0.00436.
JioSaavn, Yandex and Tencent Local Services Take the Lowest Option
Local digital services on developing streaming markets occupy the bottom end of the payout split, as expected: Indian JioSaavn ($0.0013), Russian UMA and Yandex ($0,00102 and $0.0005, respectively), and Tencent’s QQ — with the lowest observed rate of $0.0004 per stream.
The Right Way to Think About Streaming Payouts
Let’s take a step back and examining situation the situation how things worked out. Digital services determine the final reward for the artist. The majority of streaming services, from Spotify and Apple to Google Play and Napster, adopt a payout distribution mechanism known as “pro-rata” or “platform-centric.” The following is how it works:
Content owners and services negotiate global payout rates (mainly the major labels and Merlin, which represents a vast share of independent catalogs). As we discussed in the Mechanics of Streaming, this rate is likely to range between 60 and 70 percent for any streaming service available. Still, for simplicity, we’ll assume 70 percent. The negotiated rate is applied to all service revenues, and the total amount paid to the right holders by the DSP is the outcome. It’s an income pool that will be shared among all of the platform’s artists. DSP will split the pie among the artists by calculating a “share of content” based on the number of artist streams divided by the total number of streams on the platform.
What is the most lucrative streaming service?
Amazon Music Unlimited pays the most per stream, $0.012 per stream, followed by Rhapsody, which pays $0.011 per stream. However, compared to Spotify, Apple Music, YouTube, or Pandora, you may expect a meager total stream count on those sites.