Estimated number of streams
The recorded music industry isn’t what it used to be. The release of iTunes in 2003; followed by the later release of Spotify in 2006 forever changed the way people consumed music.
Approximately 286 million people use Spotify to consume music, with roughly 130 million of those listeners being paid subscribers. That’s an incredible amount of people, and we’ve not even mentioned other music streaming services yet!
Despite the incredible numbers of music fans taking to music streaming services, there’s still one big issue that lurks over the streaming world… Music royalties! But first, let’s have a look at the types of streaming platform…
There are two types of steaming service: On-demand and Non-interactive.
On-demand services include platforms such as Spotify, Apple Music, and YouTube. They are placed in this category for their music being ‘on-demand’. Listeners can hear any song whenever they see fit.
Non-interactive streaming platforms include services such as Pandora and internet radio websites. These platforms function much like a radio, playing songs to listeners at random, without the ability to select specific tracks.
As you can expect, the music royalties are much higher for on-demand services compared to non-interactive platforms!
Streaming royalties are the fees paid to rights holders (e.g., artists, record labels, songwriters, publishers, etc.) every time a song is played on music streaming services such as Spotify, YouTube, and Apple Music. These fees are a vital source of income for songwriters and artists. However, it’s not as simple as it sounds…
Let’s start right at the beginning with some music publishing basics. When a song is written, its writer holds the copyright to that song. That song can then either be recorded and performed by the writer or given to another artist / band for them to record and perform. No matter the outcome, the songwriter always holds the publishing rights, while the recording artist will hold the master rights. If the songwriter / artist gets signed to a publisher and/or a record label, these might also be considered as rights holders as well.
Once the song is recorded and uploaded to streaming platforms such as Spotify and Apple Music, fans are able to stream and listen to that song at their own leisure. The songwriter is then paid a fee via collecting societies such as a Performance Rights Organization (PRO) and a Mechanical Rights Organization (MRO). Instead, the recording artist is paid via record label or distributor.
The amount paid to the rights holders often depends on a few factors:
Before streaming, a singer-songwriter signed with a record label could have earned between 10-15% on each CD sold. This percentage was due to them as sound recording revenues and mechanical royalties. That’s quite a large proportion if you think about it!
A successful singer-songwriter selling millions of CDs could easily make a profitable living for themselves. However, thanks to the digital revolution, fans are no longer buying CDs like they used to. Instead, they stream their music from popular streaming services. They can hear what they want when they want.
So, why all the doom and gloom surrounding streaming royalties if so many people are using these platforms?
Knowing that on-demand streaming services (e.g., Spotify) generate sound recording revenues (sound recording royalties) and publishing royalties – both mechanical and performance royalties – for every stream received by a song, take a look at this simplified example:
Three independent members of an unsigned band write, record, and self-release a song which is later uploaded to a popular on-demand streaming service. The streaming service pays a revenue of £0.006 for every stream that song receives.
Each member of the band takes a split based on their share. It might be approximately £0.002. That income includes both sound recording income and publishing royalties. This because we supposed that all three band members had written the song as well as being the recording artists.
While sound recording revenues are collected by distributors, performance and mechanical royalties are collected by music royalty collection societies (e.g, Performance Rights Organizations, Mechanical Rights Organizations). Most of these companies take a collection fee of between 10-18% which is automatically deducted at gross.
Furthermore, some distributors take a commission on the sound recording revenues. Keep in mind that for signed artists, 50% of the sound recording income usually goes to the recording artist and the other 50% goes to the record label.
Also, the publishing royalties are usually split in half between songwriter/s and publisher. Therefore, the artist/songwriter’s streaming total income is a lot less than what he could make on CD sales! It’s no surprise artists are creating such a fuss about it all!
With very little money to be made in recorded music, bands now have to rely on other income streams such as merchandise and ticket sales just to break even. No wonder it’s become so hard to make a living from music!
It can be a bit difficult to answer how much an artist will make per stream due to the multitude of factors involved such as the “pay-per-stream” rate which can vary between countries.
Furthermore, most platforms don’t specifically announce how much they pay to rights holders per stream. How annoying! To further complicate matters, there are different breakdowns for artists signed with indie labels, self-releasing artists, and artists affiliated with a major label.
However, we’ve done our research and have found the closest estimates possible for some of the most popular streaming platforms out there. We’ve also created our very own music streaming royalty calculator to help you calculate streaming royalties of your own.
You must all be asking it by now… If Spotify is the largest streaming platform of them all, how much do you earn from Spotify streams?
It is estimated that Spotify pay £0.0031 per stream. That means an artist would need roughly 366,000 streams on a track just to make minimum wage. That’s crazy!
We at Music Gateway have created our very own Spotify royalty calculator to help you estimate how much you can earn per stream on your own songs. Access it above!
Apple Music pays roughly £0.0050 per stream. That’s more than Spotify – Great news for those of you that have a strong presence on Apple Music! This is likely due to the fact that Apple Music doesn’t offer a free subscription membership, unlike Spotify. This allows more money to be paid to the artists.
However, Apple Music has a considerable lower subscription rate than Spotify at just over 60 million people. You may receive more money per stream at Apple Music but that may be overshadowed by the volume of streams you may receive from Spotify.
Take a look at our Apple Music royalty payment calculator below to see how much you could earn from your music.
Although it’s not the biggest streaming service when compared to the likes of Apple Music or even YouTube; SoundCloud is still a contender for making music royalty income.
Paying roughly £0.0019 per stream, SoundCloud is placed very low on the comparison table. It’s also more difficult to receive royalties from this platform as artists have to be part of the SoundCloud partner program in order to even start monitoring their music. That being said, this platform does have its place in the streaming world, proving very popular with indie artists and beat makers.
Use our SoundCloud music royalty calculator below to estimate how much you could make from this platform.
YouTube is the second largest search engine in the world. That’s staggering to think; especially when its content is solely video based! There’s no doubt that people of all ages use this platform to digest music and other forms of media on a daily basis. So, it would be silly not to have your music thrown into this mix!
However, YouTube only pays a small £0.00046 per view. Furthermore, your YouTube account must have at least 1,000 subscribers and 4,000 watch hours in the last 12 months before you can even monetise your account. Roughly speaking, you’d need 2.1 million plays on your video before you even make minimum wage.
But, fear not! There are plenty of other ways to make money utilising YouTube. Artists can also receive a royalty thanks to YouTube’s Content ID algorithm. Basically, every time your song is played or used on a video, the rights holders is eligible for a small royalty. Every little helps!
Our music royalty calculator can help you calculate streaming royalties from YouTube with just a few clicks of a button. Check it out below.
Pandora is a form of non-interactive streaming. It works similarly to an internet radio station by playing songs that match specific traits. The basic idea is to introduce the listener to new music by playing songs that sound alike / from the same genres that the listener has preselected.
This growing platform currently holds 66 million subscribers yet only pays £0.00085 per stream. As previously mentioned, this lower payout is largely due to the platform being non-interactive. Listeners can skip songs but they don’t have the privilege of choosing what they are listening to.
Try our Royalty calculator to see how much you can earn from Pandora streams.
It can seem a little depressing, putting your heart, soul and money into your music for very little return when it comes to streaming. However, keep your chin up! The royalties paid to artists by these platforms are always increasing due to increased platform popularity and higher subscription rates.
Calculating your royalties using a royalty stream calculator can be a great way to estimate your monthly income from various streaming platforms. Ideal for budgeting your next single release!
Streaming isn’t the only way artists can generate income. There are hundreds of ways modern artists can captivate the modern digital industry. As I said earlier, every little helps!
If you’re looking for other opportunities to make money, have a look at our sync licensing service, which helps you get your music in TV, films and more. You can also send your music to music publishers, record labels and more directly with our demo submission tool. Try all this and more for free now, simply sign up.