Do Music Streaming Platforms Pay Good Money?
Not All Streams Are Created Equal
Not all streams are created equal. Spotify pays artists anywhere between $0.002 to $0.0084 depending on a few factors, including popularity. That's about $1 per 500 streams on the lower end. And what a lot of people may not know is that Spotify & Apple Music both distribute payments via the "pro-rata" model. Pro-rata is sort of like a pool of streaming money that Spotify pays from. Most people assume that Spotify pays on a user centric model in which you listen to a specific artist and they alone gets a certain amount of money for your every stream. But it doesn't work that way. Instead Spotify totals all the streams from all the artists on its platform in total. Then, the money is split between everyone, like coffee shop employees with a shared tip jar. However, larger artists get larger shares of the pie.
According to Quartz, about 70% of Spotify / Apple streaming revenue goes to record labels and their artists (Dan Kopf). Out of that, the top 0.4% artists get about 10% of the whole pie. And you may only see about 12 or 15% of your streaming profits if you're signed to a label. At this point, an artist is receiving a cut, of a piece, of a slice. And Spotify offers an artist dashboard to look through streaming data. However, it is a bit difficult to get the exact numbers when it comes to streams and pay outs to know exactly how your revenue is calculated to the last penny.
Streaming Payments Are Changing Listening Habits
The streaming model is also making music shorter. And it pushes musicians to put the chorus right up in the front of the song. Artists are afraid to lose listener attention in the first few seconds. Plus if the song is under 3 minutes, listeners are more likely to repeat songs. This means more streams & more money for the artist. People now consume music by mood rather than album. They end up hopping and skipping through playlists of many singles from a variety of artists, rather than complete concept albums. This may limit artistic creativity a bit.
The ease of trusting a playlist makes it less likely for users to learn about an artist or remember them. Unlike age old radio, there's no DJ in between to say the name of the last played artist and song. Listeners may be driving, dancing or cooking to background music. They may not stop to look at an artist, song or album name because they can just save the playlist or like the song. Once saved in the library they can quickly skim through their library without really looking until the desired song pops up. A listener can stream one of their favorite songs 100 times a week because it's at the top of their recent likes and never know the composer's name. This phenomena is great for streaming numbers, but not for the building of relationships or the 1,000 fans you need to change your life.
Listeners in this case are less likely to find future releases from that artist without a name. Unless users leaves the comfort of the automated playlist to find and follow an artist, they may never receive updates on an artist's work. Even then, the user would be relying on Spotify to send notifications when there's a new release.
Not Everyone Is Subscribed to Your Streaming Service
Furthermore, not everyone has Spotify, Apple, Tidal, etc. Often times it's difficult to share music with a fan because music isn't on this or that platform. Even when uploading from a popular distributor like Distrokid, a song may be available on Spotify up to 2 days before it can be found on Apple Music. To share a song from Spotify, or Apple music, one must have the app to get a link for specific song, or use the clunkier desk top / guest version.
This also makes it difficult for an artist to share the link to a specific song of theirs if they do not have the same streaming app as their fan. And on these services, artists compete for listener attention among over 1 million other similar artists in playlists made for particular "moods" and types of sounds that can make one's music seem a little less unique and or special. And then there are countless ad interruptions if not on a paid account.
Streaming Add-Ons & Alternatives
There are alternatives but they're still in the works. The service Resonate is developing a "Stream to own" model for a fan to stream music at a fractional cost. With each stream, money goes toward a final total price to own the song. Resonate offers to pay $.006 per stream which is a little better than the starting streaming rates of Spotify. But there's no way to know how this will or won't catch on until time tells. Then there's Band Camp, established in 2008, which many artists have thrived through with merch and sales of digital downloads. It's just not as easily streamlined as searching any name and immediately streaming in Spotify. But it definitely offers more for an individual artist in regards to control and individualized, unlimited profit.
But multiple streams of income is the move. Establish a couple additional ways to monetize your music. Especially if you're not yet famous or signed. Because until you hit 1 million streams, repeatedly, you won't be living off your music. But if you can get even 100 people to come to your local show for $15 each, that's $1,500. If only half of them buy your T-shirt at $20 each, that's another $1,000. You can double that if you they also buy more memorable merch like Tiny Tapes from you too.
People definitely still find value in merch like physical Vinyl's, digital downloads, & Tiny Tapes. Take it a step further and put your Spotify code on a Tiny Tape with unreleased music. This way you can make money from people with this product they've never seen. Plus you'll profit a little more money when they scan the Spotify Code printed on it to stream more of your music. This way an artist can control all their profits and receive 100%. An most importantly, fans get an uninterrupted listening experience with no ads and a physical memento.