Music streaming

How much do music streaming services pay artists in 2021?

Have you ever wondered how many streams it takes for an artist to make money? Read on to find out this year’s pay rates for artists on popular streaming platforms.

An article invited by Janelle Borg by AmplifyYou.

According to former Google design ethicist Tristan Harris, “We all live in a city called the attention economy.” While they allow artists to reach global audiences without touring or direct advertising, these platforms often grab the headlines for their payments.

But how do their payments work? And how can artists get the most out of DSP?

The basics

Platforms such as Spotify, Tidal, Apple Music, Amazon Music and Deezer do not have a fixed “pay-per-stream” price. Instead, there are a variety of different payment systems (800 systems for Spotify only). The rate depends on variables such as:

  • The country / territory of the auditor
  • Whether the auditor uses the ad-supported freemium version or the paid subscription model
  • Promotional feed
  • Negotiated distributor / label price
  • Price / currency / inflation in each territory

When taking all Considering these factors, we can conclude that all flows are equal, but some are more equal than others. That being said, there are other things that artists need to consider, rather than removing DSPs altogether.

Comparing it to the pre-DSP era, 1 million streams on an album was Actually equivalent to roughly 1,000 album sales, which wouldn’t make an artist a star in the pre-DSP era. As more artists hit 1 million streams, many of them are using these numbers and information to their advantage by actually targeting certain geographies and making the most of those stats when approaching people. Of the industry.

In addition, by bypassing the expenses associated with physical outings, independent artists can Following money by eliminating sky-high costs. 1.5 million premium streams on Spotify on an independently released album is roughly $ 5,700 in terms of physical album sales, which isn’t a lot, especially if you need to recoup some expenses. Therefore, if you are an indie artist, DSP streaming often works in your favor, as there are no label or publisher cuts in the mix.

A ton of music blogs and industry players have attempted to calculate the exact numbers. According to Forbes, “For every 1 million plays of a song, artists receive roughly the following payments from these streaming services: Amazon Music $ 5,000; Apple Music $ 5,000 – $ 5,500; Google Play $ 12,000; Pandora $ 1,400; YouTube $ 1,700. »What about Spotify? Approximately $ 3,000 to $ 6,000 (4.5 cents per stream). Additionally, there are a few streaming royalty calculators on the net that can help you gauge how much money you are going to make from streaming.

Dissect these variables

Spotify and Apple Music give more importance to an American stream than to a stream from, for example, India. This is mainly because the US subscription costs $ 10, while the Indian subscription costs less than $ 2. For the free ad-supported version, advertisers pay more for a Spotify US placement than a Spotify India placement.

In addition, the listener’s subscription level also changes the rate per stream. For example, Spotify pays more for a stream from a subscribed listener than it does for a freemium level listener. It is important to note that Apple Music does not have a free version. Therefore, Apple may pay a higher rate per stream because all users are paid users.

In November 2020, Spotify launched a new beta of a new system in which labels and artists accept a “promotional recording royalty rate” in exchange for an improved algorithm that automatically puts those tracks in front of potential listeners. . Since this feature has only been introduced in a few territories, we have no data on how much we are talking about.

Distributors and labels also affect pay-per-stream. Due to negotiations with Spotify, some distributors and labels receive more money per stream than others. The Merlin network, which includes distribution services like CD Baby, DistroKid and AWAL as well as labels like SubPop and Mad Decent, negotiated the same rate for all the distributors and labels in its network. However, that does not mean that every distribution service and every label in its network has opted for these offers. This is why some labels / distribution services, even within the same network, have a higher rate of remuneration than others.

Towards more artist-friendly payments

Apple and Spotify respond to criticism

In March 2021, Spotify launched the “Loud & Clear” microsite. This microsite aims to educate artists on the ins and outs of Spotify streaming royalties. In its official press release, Spotify claimed that “Loud & Clear” “aims to share more information on how the economics of the music industry and the payment of artists work.” The PR continues, “For this reason, Spotify will address the key issues of this site, such as Spotify’s role in the music industry, understanding how artists get paid, the value of a million streams or the number artists who make a living on Spotify. . “

The move comes amid calls from the Union of Musicians and Allied Workers, a group of musicians and music industry workers who have called for a fairer industry in general. Their “Justice At Spotify” campaign has been essential in bringing DSP issues to the fore, especially given the effect COVID-19 has had and continues to have on musicians’ incomes. UMAW’s vision includes a dime per stream for rights holders, a user-centric payment model as well as fairness in DSP transactions with majors and independent labels.

In April 2021, Apple announced (via a letter seen by the Wall Street Journal) that it pays a dime per stream for each artist whose music is on the Apple Music service. Additionally, in that same letter, Apple said they give 52% of the revenue to labels, with the rest of the money going directly to artists.

Click here to read the full letter.

Soundcloud & Bandcamp initiatives

In April 2021, Soundcloud also rolled out its new revenue model, which aims to level the playing field for independent artists by allowing listeners to “tip” their favorite artists. This fan-driven model could potentially be a game-changer, as this system will pay artists based on their listeners’ habits – the more Artist X fans listen to Artist X’s music, the more Artist X receives. ‘silver. This direct monetization system is largely dependent on whether or not the fan is subscribed to SoundCloud Go + and how many ads the fan consumes.

The move, along with Soundcloud’s partnership with Twitch (which allows artists to monetize live streams), signifies a step towards user-friendly, user-centric models that genuinely support artists. Bandcamp’s revolutionary Bandcamp Fridays (launched in March 2020) have proven to be indispensable for artists whose income depended largely on touring and live performances. This initiative continues to position Bandcamp as one of the leading artist-friendly services on the net.

The growing importance of trigger cities

Over the past two years, the concept of trigger cities has gained ground. The increasingly globalized nature of the music industry, along with the growing importance of the South and East in disruptive artists, has shifted the gaze of Western artists to these previously “overlooked” fields.

“Trigger cities” refer to cities around the world that have high rates of music consumption, coupled with low rates of advertising. The algorithm in these areas works in favour of the artist because it helps artists develop their global audience. By targeting these cities and audiences through paid ads, your fan base and stream count will grow faster than if you target audiences in Western hubs like New York or London.

According to Chartmetric, the main trigger cities in the world are:

1. Mexico City, Mexico

2. Lima, Peru

3. Bogota, Colombia

4. Santiago, Chile

5. Jakarta, Indonesia

6. Bangkok, Thailand

7. Guayaquil, Ecuador

8. Istanbul, Turkey

9. São Paulo, Brazil

10. Ankara, Turkey

Before investing any money in any of these cities, it is important to design a paid advertising strategy. Research which cities and audiences tend to favor your particular style of music and focus on those cities. For example, if you’re a rock band, target Mexico City rather than Jakarta, as the latter is more pop, hip-hop, and electronic.

Final notes

By thinking outside the box, artists can reach the global audience that is available at their fingertips. Of course, audiences in trigger cities may not have a high payout flow rate; However, by gaining a significant audience in these booming global cities, you guarantee an explosion in the number of streams, resulting in increased attention from decision makers and decision makers in the global industry. In addition, by opting for a mix of DSP rather than sticking to one, artists can diversify their audiences. more take advantage of all the recent features introduced by the different DSPs, such as Apple’s 1 cent per stream, Soundcloud’s Twitch partnership and the Spotify-Merchbar alliance. By using DSPs as launching pads, artists can craft a long-term fan strategy that reflects the demands of the modern music industry.

Janelle Borg knows a thing or two about the music industry. Involved in the industry since the age of 13, she is now involved in a variety of music related projects and is always keen to share industry tips and tricks with other musicians.

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