Music streaming

• Graphic: The unbalanced music streaming model

Music streaming providers have been known to keep the details of their royalty models close to their chests. The only notable exception in recent months has been tech giant Apple, which released a statement regarding its payment model in June. According to that document, its average price per read is $ 0.01, which means each feed counts as a penny toward payment to the publisher owning the rights to the material. Even though this is a relatively low rate overall, it still puts Apple Music at the top of the payments rankings.

As our chart based on data collected by Digital Music News, The Trichordist and Forbes shows, French streaming service Deezer ranks second with around 185 plays needed for a $ 1 payout. Apple’s GAFAM competitor Amazon comes in third with around $ 0.005 per stream, which equates to around 200 plays for $ 1 earnings on the platform. Market leader Spotify ranks fourth with a per-read rate of around $ 0.0032 and an average of 312 plays needed to make $ 1. Although this rate is only slightly below average by comparison, the Swedish music streaming service has almost three times as many paid subscribers than any of its direct competitors, calling into question the fairness of its business model. CEO Daniel Ek has consistently played down these criticisms and cited the artist’s lack of engagement as a possible reason for the low payouts. Instead of only releasing a new album every two years, Ek told music consulting firm Music Ally in July 2020 that “it’s about working, telling stories around the album and keeping it going. an ongoing dialogue with your fans “. .

This dialogue with fans of course depends on those fans who wish to support specific artists, a model which has been adopted by the Chinese streaming service Tencent Music. While the streams themselves don’t contribute much to the actual payment, the streaming platform has introduced micropayments such as tips to further support artists. It not only makes most of its income through a commission on these one-off payments, but also opens up another avenue for artists to make money on streaming platforms. This model is not as easily adaptable as you might think, with the online tipping culture known as “da shang” being common in China, but relatively unusual in Western countries.

Although the mechanisms and payment models still need improvement, music streaming has become the most important source of revenue in the recorded music segment. In 2020, 62.1% of revenue came from streaming services, with physical recordings and downloads accounting for 19.5% and 5.8% respectively.

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