Each music streaming service has a certain streaming fee. For example, Spotify, which currently holds the record for the most subscribers (over 380 million), pays around $0.003 per stream. This means that 1000 plays of our song will bring us $3. Which in itself is a very low figure, but which, as we shall see later, is not even a real one.
Earnings on music streaming services can be classified as passive income. All you have to do is compose or perform a song and put it on a music streaming platform. In the case of Spotify, you will have to deal with a label that is responsible for taking care of the further distribution and promotion of your music content.
We talk about estimated earnings precisely because services can be paid differently depending on various factors. Suffice it to say that overall the payoff is actually a bit lower than what you initially think.
Compared to Spotify, for example, Apple Music pays more. Apple says the average is around $0.01 per stream. Thus, 1000 plays will cost about $10. However, even then, the numbers can vary, and often the real returns are much lower (even if still higher than Spotify’s). Much like paying for Amazon Music.
Great Tidal, which costs about $12 with 1,000 plays, and Deezer is a cross between Spotify and Apple Music. The platforms that pay the least are Youtube and Soundcloud with $1.75 and $1.30 per 1000 plays respectively.
At this point, one might wonder why some platforms pay more and others pay less. The answer is very simple. If we look at the services that pay the least, they tend to be the most used and popular (Spotify, Youtube, Apple Music) and have a large number of subscribers. Conversely, the least used services are the ones that pay the most (like Tidal). However, this reasoning does not always apply to all platforms.
This disparity between payments creates a sort of balance because an artist on Spotify is paid less but is more likely to get more plays on a more popular platform. Instead, on Tidal, the artist is paid much more, but the ratings they receive will be lower on average, because this is not the service that most listeners use.
We have seen how much different music streaming platforms are paying based on ratings, but the numbers analyzed do not reflect the artist’s true final income. This is because we have not yet taken into account some fundamental aspects.
For self-distribution of a song in digital stores, artists sign an agreement with a distributor who is responsible for uploading songs to streaming platforms. However, this distributor typically withholds a percentage of the income. Therefore, royalties paid by Spotify, Apple Music, and other platforms go to the artist with a deduction (usually between 10% and 40%). So, from the previously calculated figures, we need to subtract the part retained by the distributor.
This is how the streaming music market works. This cannot be if we want to have services at hand with an infinite number of songs and, above all, at a low price.