💸 The Good Thing Behind Spotify’s Tiny 0.003 USD Per Stream Rate
Spotify launches a website to explain why their per stream rate is so low, compared to its competition.
Spotify has been riding a constant wave of critics when it comes to how much it pays the artists. In an effort to become more transparent (rather than more generous), the Swedish music streaming giant launched Loud & Clear, a website filled with… figures! Data about the global streaming industry, info about the royalty system, the billions paid by Spotify as rolyalties… you know, stuff that makes you look good in any given context.
To spare you of the boring moments that could occur while reading these figures, here are a few essentials, parsed by others: the top 500 artists on Spotify generated around 1.85 billion USD in royalties (that’s a nice 37% from what the green S company paid last year 😳) . On the same note but on the other hand, 286,000 DIY artists (yeah, the ones who are musicians, digital marketing exectutives, PR assistants, graphic designers, IT managers a.s.o.) gained 1.17 billion USD in rolyalties (23.5%) on Spotify alone. And if these cold numbers don’t mean anything to you, maybe these ones would sound more down to earth: there are 184,000 artists who received 1,000 USD in royalties in 2020. Tongue in cheek: these amounts are paid to the rightsholders, not to the artist directly, and this is exactly the point Daniel Ek (Spotify’s CEO) had emphasized on in a recent tweet, replying to the critic voices complaining about the tiny 0.003 USD per stream rate (Apple Music is paying around 0.0067 USD). In Eastern Europe we call this “throwing the dead cat in the neighbour’s yard”.
On the same note, Spotify’s Loud & Clear website addresses the low per stream rate question in its FAQ section, explaining that the expansion into new territories where the ad supported subscriptions are really popular, as well as a bigger listening time per user, drive down the average payout per stream.
And if this sound like the worst possible payout you could get per stream, then check out how much is Youtube paying per stream: 0.00022 USD. Yes, you counted the zeros correctly. Just to make an idea of what this means: 51% of all the streams for a track are made on youtube, but these streams generate only 6.4% of the revenue. So maybe you should stop complaining about Spotify low payouts and start working on new ways to monetize your fanbase 🤗
To close this long read on a more optimistic note, there are some good news, also! Major labels and Merlin-represented indie labels are losing serious ground against smaller independent labels and artists direct (DIY artists). Yeah, they still account for 78% of the streaming market (!!!) but their huge market share is eroded by no less than 5% each year. The future looks independent, for sure. Spotify will continue to grow its huge 345+ million active users and artists can use this huge potential reach to their advantage, with the help of proper partners, whether it is a small label, a local PR agency or a network of influencers.