The way we listen to music has changed significantly in the last decade. Although some people still buy physical and digital copies of albums by their favorite artists, streaming has become the prevalent way of music consumption.
Spotify, Apple Music, Deezer, Tidal, YouTube Music, and other platforms have become not only convenient music providers for listeners but also sources of income for musicians, along with playing live gigs and selling merchandise.
However, it’s impossible to definitively say whether streaming is all that profitable since it depends on a number of different factors, including the rates set by each individual platform. Spotify, the most popular streaming service, pays musicians incredibly little, and it’s been widely criticized over artist compensation since 2006 and to this very day.
Considering all of the above and how vague most streaming platforms are about royalties, a number of consequential questions arise, like should musicians upload their music to Spotify? Which music streaming service pays artists the most? What factors influence the payout amount? Read further to find out.
3 Types of Streaming Payouts
1️⃣ Mechanical Royalties
This type of royalty is generated when a song is digitally reproduced (when a user clicks/taps the play button). As per the Copyright Act, artists are owed a certain amount of money every time their musical compositions are played. The mechanical royalty rate is 9.1 cents per stream for songs under 5 minutes and 1.75 cents per minute for songs over 5 minutes.
2️⃣ Public Performance Royalties
This type of royalty is generated every time a song from a streaming service is played publicly, for instance, in restaurants, supermarkets, and on AM/FM radio. These royalties are handled by the performance rights organizations (such as the Copyright Royalty Board) that collect fees from parties using the music and then pay artists and publishers.
Typically these royalties are discussed by a streaming service with a performance rights organization. Usually, it’s about 6% of a streaming service’s total revenue, taken out from the All-In Royalty Pool.
3️⃣ Payout to Recording Owners
This type of royalty is a sum of the whole amount of money generated by the above types of royalty. The payout to recording owners is issued to all parties involved in the creation and distribution of a song – songwriters, musicians, producers, etc.
The percentage of this royalty that goes to artists is not set in stone. It depends on their deal with streaming platforms – musicians can make from around 45% to 100% of the payout. One of the common examples of payout distribution is 45% going to featured artists, 5% to non-featured ones, and 50% to the rights owners of a song (for example, label).
What Affects Royalty Rates?
All of the pay-per-stream (PPS) rates mentioned below for each platform are averages because there is no consistent payout rate across streaming services. Different artists on the same platform are paid different rates. Many variables influence the PPS rate and have the power to drastically change the value of a play. Here are the most important factors:
🟡Listeners’ subscription tier
🟡Number of subscribers in the location
🟡Number of streams in the location per month
🟡Price of the premium subscription in the location
🟡Advertising revenue in the location
Whether the listener is a subscriber or a free user makes a huge difference. No matter how many ads are seen or heard, free users' streams aren’t as valuable as those of paying subscribers.
Price points for paid plans vary from country to country – the smaller the economy of a country, the cheaper the subscription, and thus the less the streaming value. For instance, Spotify subscription costs $15.40 in Denmark and $1.037 in India; a stream in Denmark won’t be worth the same as a stream in India.
The amount of subscribers a streaming platform has is another important factor. One platform might have a higher PPS rate but fewer subscribers while another platform paying less but have significantly more subscribers. The latter would generate more streams and therefore pay more even with its low PPS rate.
Additionally, the majority of streaming services put all of the allocated revenues from every artists on the platform into one large pot. Then it’s divided out based on the percentage of streams that artists have gotten compared to everyone else. It means that the amount one artist is earning depends not only on their own streams, but the streams of other artists on the service.
What Counts as a Stream?
A song stream is only counted if it’s played for longer then 30 seconds. Anything less doesn’t count. Spotify openly states it on the How we count streams page, and the same rule is disclosed by Tidal and other streaming platforms.
What’s more, offline streaming doesn’t bring musicians any money. When users download songs to a streaming service’s cloud and listen to them offline, these plays don’t count as streams unless listeners go online at least once every 30 days.
How Much Does Spotify Pay?
Spotify is notorious for the lowest PPS among other streaming services. Even though it’s the most popular platform, Spotify pays less than half a cent per stream. The rate fluctuates between $0.001 to 0.008 per stream, depending on different factors described above.
On average artists on Spotify receive around $0.003 per one stream, $3-4 for 1000 streams, and $3000-4000 for a million streams. In order to make $1, you need about 334 streams.
If the goal is to make a living off Spotify streams, you have to generate at least a million streams a month. Average monthly salary in the US is around $4100. Considering the cut that label, distributor and other parties take, musicians have to reach two or more millions of streams every month just to get by.
How Much Does Apple Music Pay?
Apple Music pays out $0.01 per one stream on average (essentially, 1 stream = 1 penny), $1 per 100 streams, $100 per 10,000 streams, and $1000 per 100,000 streams. It’s quite an upgrade compared to the Spotify PPS rate, but the premium subscribers count on the platforms differs a lot – Spotify has 188 million subscribers while Apple Music has 88 million.
How Much Does Amazon Music Pay?
Amazon Music, the third most popular streaming service after Spotify and Apple Music, pays out one of the highest royalties – roughly $0.00402 per one stream, around $1 per 235 streams, $100 per 23,474 streams, and $1000 per 234,742 streams.
How Much Does YouTube Music Pay?
YouTube Music PPS is hard to calculate because the platform offers a variety of streaming possibilities. Music playback on separate artist’s videos is counted, too. Reportedly, musicians make a minimum of $0.00069 per stream. YouTube Music pays out around $1 per 136 streams, $100 per 13,605 streams, and $1000 per 136,054 streams.
How Much Does Tidal Pay?
Tidal is markets as an artist-centric streaming service, so it’s no wonder that it pays almost 3 times as much as other platforms. Tidal pays out roughly $0.01284 per one stream, $1 per 114 streams, $100 per 11,416 streams, and $1000 per 114,155 streams.
How Much Does Deezer Pay?
Deezer pays out around $0.0064 per one stream, $1 per 178 streams, $100 per 17,794 streams, and $1000 per 136,054 streams.
Though not the most generous platform out there PPS rate-wise, Deezer operates on a unique and artist-friendly model. Instead of pooling all the revenue and paying out according to the percentage of overall streams of an artist, Deezer pays artists for every stream they get. If a user with premium Deezer subscription listens to only one artist, all the subscription money go to the artist rather than being divided across the board.
How Much Does Napster Pay?
Napster offers the highest PPS rate among all music streaming platforms! On average it pays around $0.019 per one stream, 1$ per 59 streams, $100 per 5,945 streams, and $1000 per 59,453 streams.