Here’s a closer look at how much your favorite artists earn every time you listen to them on Spotify.
As fans, we only want the best for the artists we love. Many of us can only support these artists by listening to their music on various platforms since not everyone can purchase physical albums. The question then arises: is that enough?
A lot of music streaming platforms do not indicate how much they pay artists, and some platforms only pay a fraction of a cent. The rates vary, however. In other words, if your goal is to support your favorite artist, you might want to choose a streaming service that pays the most.
We’re digging into the numbers to find out how much Spotify and other platforms pay per stream. Let’s dive in!
3 Types of Artist Royalties Streaming Platforms Use
Now, paid subscriptions are taking over the world. Physical album sales decreased by 30% in 2020, while paid subscriptions increased 12%.
However, artists still earn payouts (albeit a lot smaller) from royalties – just as they would from physical sales. Artists get paid to add their songs to streaming platforms. Every time a user plays an artist’s song, they will receive a certain amount of money.
To pay artists, music streaming platforms use three different types of payouts:
Whenever a musical composition is reproduced physically or digitally, mechanical royalties are generated.
If a user presses ‘play’ on an interactive streaming platform, where the user decides which songs to play, the song is reproduced digitally. Streaming platforms that are not interactive (e.g., AM/FM radio) are subject to public performance royalties.
According to the Copyright Act, artists are owed a certain amount of money every time their songs are played. Songs under 5 minutes are entitled to a mechanical royalty rate of 9.1 cents per stream, while songs over 5 minutes are entitled to a mechanical royalty rate of 1.75 cents per minute.
Public Performance Royalties
Musicians and publishers receive public performance royalties when their music is broadcast or played publicly (e.g., over AM/FM radio, jukeboxes, restaurant, supermarket, etc.)
These are handled by Performance Rights Organizations (PROs). Public performance royalties, or PPRs, are paid to songwriters and publishers by PROs when parties use music.
The streaming platform and the PRO generally discuss these royalties. The all-in royalty pool typically takes out about 6-7% of the platform’s revenue.
In the United States, the Copyright Royalty Board (CRB) establishes the public performance royalty for digital streams.
Payout to Recording Owners
On streaming platforms, 99 percent of the time you’ll be looking at the amount of payout to recording owners.
Recording owners are entitled to a payout of the whole amount of money containing all types of royalties attached to a song, which is then distributed to all parties involved (e.g. producers, songwriters, musicians, unfeatured singers, etc.).
Based on SoundExchange, the following is how the digital streaming amount is split:
- The featured artists receive 45% of the proceeds
- The non-featured artists will receive 5%
- Music rights owners will receive 50%
An artist can make anywhere from 45% to 100% of the payout depending on how they approach the streaming deal. To help you understand it, let’s look at an example.
The song Love Yourself, written by Justin Bieber, Ed Sheeran, and Benjamin Levin, was written by the three writers. The song was released by the Def Jam label.
It has been streamed 17.4 million times. With a mechanical royalty of $0.091, it should generate about $1,583,400.
Def Jam will receive the full amount from the streaming platforms. Accordingly, Def Jam will distribute the entire sum to all participants who contributed to the song’s creation.
In summary, that’s the gist of the royalty distribution explained above, but it’s overly simplified.
How Much Do Music Streaming Platforms Pay per Stream?
Streaming your favorite tunes can be done on other platforms besides Spotify, Apple Music, and YouTube Music.
In addition to Spotify, there are dozens of music streaming platforms around the world, ranging from giants with a global market to niche services like Tidal. Platforms have different pricing models, selling points, and user bases, so artists earn different amounts per stream.
We are going to discuss how much money streaming platforms pay the artists they feature in this section. In the table below, you can see how much the artist is paid for each stream and how many streams it takes to earn $1,000.
|Platform||Pay per stream||Streams to get $1000|
The music streaming platform Deezer isn’t the most popular, but it has more than 14 million monthly users, half of whom are paid subscribers.
As a result, when a paid subscriber listens to only one artist per month (with a minor platform fee reduction), their entire subscription fee will go to that artist (and not the company).
According to different sources, Deezer’s per-stream payout varies quite a lot. T-Pain, for example, once posted that Deezer pays $0.0064 per stream, while others can get down to $0.0011. However, this also depends on factors such as subscription plans and location.
Over 72 million active users are expected on Apple Music in 2020, just behind Spotify. Apple Music pays out an average of $0.01 per stream.
One-tenth of a cent may not seem like much, but Apple actually pays more per stream than any other platform.
However, that cent does not go directly to the artists. Like most streaming platforms, Apple Music distributes 52% of its ad revenue indiscriminately to music labels.
Amazon Music has 55 million subscribers in early 2020, making it one of the most popular music streaming services. Streaming platforms pay around $0.004 per play to artists, which is around the average amount.
Due to Amazon Music Prime’s lower price, streams from it have their own payout calculation, roughly equal to $0.00139 per stream.
The Amazon Digital Music Store also offers other sources of income for artists, such as selling digital albums or singles with Amazon taking 30%.
The music streaming leader, Spotify, has a rather poor reputation for paying out to artists. It has over 200 million monthly active users.
A 2020 Business Insider report showed that artists are earning as little as $0.0033 per stream, despite the company not providing details about how much they pay per stream.
Furthermore, the artists don’t even get to pocket the entire sum. The artists receive approximately 70 percent of the total revenue. The platform itself takes the remaining 30 percent.
Union of Musicians and Allied Workers has launched the “Justice at Spotify” movement in response to the somewhat low artist payouts. They want Spotify to do several things, including:
- One cent per stream for musicians
- Introduce a user-centric payment method (like the one used by Deezer)
- Make the revenue streams more transparent
- Put an end to legal battles aimed at impoverishing artists
YouTube Music pays artists as little as $0.008 per stream, as a subsidiary of the world’s most popular streaming platform. In spite of YouTube Music’s low wages, the platform’s growing popularity and on-video advertising (for music videos streamed on YouTube) likely leads to marginally higher incomes overall.
You can expect to earn around $7-10 per 1,000 impressions from YouTube ads. Only about 30-40% of YouTube video views contain ads, so not every view counts as an impression. In reality, a music video needs around 4,000 views to earn that amount.
The most famous aspect of Pandora is their internet radio. Pandora pays music artists as little as $0.0013 per play, according to David Crosby’s report in 2017 and T-Pain’s report in 2021.
It is likely that the smaller payout is due to their decreasing number of users. There were 55.1 million active Pandora users in Q2 of 2021, which is down from 81.5 million in Q2 of 2016. The only problem is that it’s only available in the U.S., which is why it has a very limited user base.
Pandora’s free plan lets you search and play any song you want (unlike Spotify), but each time you do so you’ll have to watch an ad.
Regardless of whether the streams are interactive or not, Pandora pays artists differently.
The non-interactive tier refers to Pandora’s free tier, which works like an ad-supported radio. Performance royalties are paid to the primary artist directly via SoundExchange for streams coming from these. These streams are a fixed rate of 45%. Depending on their arrangement, they are split equally between the artist and songwriter.
Interactive streams, on the other hand, require a Pandora subscription – ad-free and on-demand. Artists and labels receive direct royalties. How much they receive depends on their contract. Some artists report receiving less than half of their royalties per stream because of this.
Although Tidal isn’t as popular as other streaming platforms, it pays the most, with artists getting up to $0.013 per stream. That amounts to $13,000 per million streams.
The Direct Artists Payout program and Fan-Centered Royalties are among the new features that Tidal has added to their streaming payout calculations in an effort to be more artist-friendly.
Through these programs, artists receive additional royalties based on their HiFi Plus tier subscriptions. There is no exact figure for this, as revenue for the HiFi Plus tier depends on subscription revenues.
How Are the Streaming Payouts Calculated?
Payout calculations are fairly simple: streaming platforms typically have a set payout rate per stream multiplied by the number of streams.
Spotify, for instance, pays about $0.0033 per stream. Spotify has not publicly disclosed its payout rate, but it should directly affect per-stream payments. Assuming your album has generated 1,500,000 streams on the platform, your payout would be like this:
$0.0033 (Platform Rate) X 1,500,000 (No. of Streams) = $4,950.00
Spotify’s payout rate generated $0.0033 in this example, which is not disclosed by all streaming platforms. From one streaming platform to another, the payout rate and setup might differ dramatically, resulting in inconsistent payouts.
Apple, for instance, has officially disclosed a 52% payout rate. In other words, if Apple made $1 million in revenue, it would distribute $520k to the artists based on their stream count and other factors such as the location of the streaming service and the type of users who stream the music.
However, the actual amount you receive may be less than what is estimated above. Streaming location and subscription type (which we’ll cover below) are other factors that can impact the actual payouts to artists.
Factors affecting Streaming Payouts
The local streaming market and the type of user are the two most important factors affecting streaming payout. Listed below is a bit more information about how a user’s type and the local market affect an artist’s pay.
Free vs. premium streams
According to the type of user who streams a certain track, the artist will receive a different amount. There is no way to generalize the payout calculation since streaming platforms use different subscription models.
A company’s payout is determined by the sum of revenue from subscriptions and advertisements when they offer ads-enabled free streaming with premium plans (such as Spotify and Deezer).
It is likely that the average per-stream pay is based on a percentage of the platform’s revenue. Artists receive more per-stream pay when a platform makes more revenue.
The average revenue per user (ARPU) for Spotify premium subscribers was $4.81 in a 2017 study, whereas the ARPU for the ad-supported stream was only $0.51. Although both paid and free users are streaming, ad-supported users do not generate revenue comparable to premium users.
Local streaming markets
Market conditions are different in all countries, so streams from different locations will generate different payouts.
In the United States, premium Spotify costs $9.99 a month. In smaller markets like Indonesia, however, Spotify’s premium membership is only around $3.99 per month.
In order to compete with local streaming services like Joox, Spotify had to lower its subscription price. It is not just Spotify that has adjusted its prices in different markets, but other streaming platforms like Apple Music and YouTube Music as well.
Because of the platform’s overall revenue, the payout that artists receive per stream directly depends on the total revenue of the platform. Artists receive a smaller payout per stream if the subscription price is lower.
For Spotify’s premium plan, there are at least 12 different pricing schemes, ranging from $13.12 in the U.K. to as low as $1.7 in India.
With Spotify’s Discovery Mode, artists and labels who are willing to pay may be able to increase their streams and popularity. It helps artists’ music appear at the top of the list when listeners look for new music.
Consequently, artists can select which songs they want to be heard the most. Those picks will then be added to Spotify’s algorithm (which determines how personalized playlists are created).
It is beneficial to use the pay-for-play feature to expose an artist’s song to more users who may not otherwise have heard of him or her. The artist might gain more fans, more streams, and more revenue this way.
This technique only works if the listeners enjoy the song. As soon as users stop engaging with the song, the algorithm stops recommending it to similar listeners and stops boosting it.
It’s also important to note that this feature can be very expensive. Discovery Mode does not have an upfront fee. Spotify will instead take a higher commission from your per-stream rate.
Spotify hasn’t made this fee public. Still, some musicians claim that Spotify charges them up to $0.50 for each click they make.
As compared with the average per-stream rates we discussed earlier, this commission seems excessive. There’s no guarantee that artists will get more streams with the feature, and they may lose money trying to promote their songs. As such, while this feature seems promising on the surface, some artists have expressed concerns over its risks and benefits – not just for the artists, but also for the users.
Can Artists Live Off Music Platform Streams?
Because streaming platforms pay different amounts per stream, answering this question can be tricky. The stream payout depends on the type of user account, label agreements, and the country of the artist.
Several different ways can be used to put how much money streaming platforms pay artists into perspective.
If the minimum wage is $15 an hour, that would mean an annual income of $31,200.
A musician would need to generate 10,400,000 streams per year (or 865,000 streams per month) to make minimum wage on Spotify at an assumed money-per-stream rate of $0.003.
And that doesn’t even include marketing expenses and other fees that would come from the artist’s income.
To put this in perspective, to earn $1,000, an artist would need 333,000 streams. This is also based on a Spotify money-per-stream rate of $0.003. In addition, artist fees are not included, so this number is likely to be higher.
Musicians have been financially crippled by streaming platforms because of their seemingly small payouts – even superstars like Paul McCartney have signed petitions to change the streaming economy. Most of the payouts go to major record labels. Likewise, only a small portion of the money goes to musicians.
How Can Artists Increase Earnings From Streaming Platforms?
Even the best-paying streaming platforms aren’t paying enough to fill artists’ pockets, as discussed above. However, there is hope. It is possible for artists to earn more income from streaming platforms by trying several different things.
Consistently release new music
Growing your fan base is the first and most obvious step to take. Using highly-available social media platforms to promote your new releases is also an excellent way to generate first exposure for your music.
Release music internationally
The second thing you can try is by releasing music in internationally-spoken languages, like English. For example, listeners from the U.S. generate $0.0035 per stream on Spotify, whereas Italian listeners only pay about $0.0019. By releasing music in popular languages (or making beats without lyrics), you’ll have a better chance of getting streams from high-paying regions. Learn more about the best social media marketing tips.
Get your music to curated playlists
The third method involves climbing to the top of curated playlists. User-generated playlists are common on streaming platforms, with some being more popular than others.
Rap Caviar is one of Spotify’s most popular hip-hop playlists. This playlist will boost stream counts for every track that finds its way onto it. With popular playlists in your genre, you’re pretty much set to have a steady stream of per-stream revenue.
Use SEO tactics to get more streams
The importance of SEO is not only in terms of ranking, but also as an income-generating tool.
How does SEO work? SEO, or Search Engine Optimization, is a handy way for artists to spread their music to a wider audience.
Through SEO tactics, artists are able to manipulate Spotify’s algorithm by using keywords. But what are keywords? These are the terms people use when searching for specific music. For example, if a listener wants to find new rap music, their search term will be “rap music.”
The most straightforward SEO tactic is to pick an artist name that fits your genre. You want your rap music to be found when listeners search for rap music, for example.
You could use an artist name that includes “rap” for increased visibility in searches. Spotify will automatically rank your content higher when people search for your genre.
Since you now know how much each streaming platform pays its artists, you can choose the platform that shows your favorite musician the most appreciation. It is generally accurate to say that the per-stream payout mentioned in this article is generally accurate, but many platforms do not disclose how they calculate the payout.
What is your favorite streaming music platform that we haven’t covered? Comment below.