Bigger artists signed to major labels go through an in-house process. A study conducted by Digital Media Finland in focused on the pro-rata system used for Finnish Spotify Premium subscribers. This system pays rights-holders according to how their streams hold up against popular songs during a set amount of time.
More popular artists have their music streamed more, which means they earn more. So for artists to obtain more money, they need more streams. The most surefire way to grow a fanbase, many artists have found, is by releasing music consistently and often.
A new magnum opus every year is great, but a sporadic release schedule will mean a smaller pool of listeners. Not all listeners are the same. Spotify Premium listeners pay more per stream than Free tier listeners.
The role of Spotify's 4 billion playlists shouldn't be sold short either. RapCaviar, curated by Tuma Basa, is one of the most popular editorial playlists. His strategic curation has helped propel artists towards a wider audience and showcased underground music, with Vulture even dubbing it "the most influential playlist in music.
Once an artist makes it to a more notable playlist, it increases the likelihood they'll gain more followers and more streams. In , Spotify also introduced their playlist submission tool.
The feature gives artists a choice to submit unreleased music to Spotify, for a chance at having that music put on a playlist as soon as it comes out. Once an artist chooses their track and submits it, they can tailor the song's settings according to mood, style, genre, type of recording, and more.
This helps Spotify decide which editorial and algorithmic playlists your music belongs in and how to introduce the track to more fans. For you. World globe An icon of the world globe, indicating different international options. Get the Insider App. Let's look at the Spotify and Apple Music respective payouts:. Does that mean that Apple Music is paying artists more than Spotify?
Well, maybe. However, the average payout rate alone is not enough to make this conclusion. According to the latest reports, Apple Music has 56 million subscribers worldwide. Spotify claims 96 million paying users as of December Of course, you could argue that the presence of an ad-supported version itself diminishes the overall artist revenue since those free users would otherwise have to pay for subscriptions — but that is a topic for a separate debate. The payout dilution is not just about Apple Music and Spotify.
The second big differentiator of the value of the stream is the market where it has originated. As of late, most of the prominent global streaming brands, from Spotify and Amazon to YouTube Music and Deezer have entered a number developing streaming markets. The global expansion of the market is one of the main trends in the streaming business — and that alone is bound to bring down the all-around global per-stream payout.
Take an example of Spotify. The Swedish streaming giant has recently entered the Indian market. However, if in the U. That approach is not new: streaming services prices vary around the world.
Such spread is not only a Spotify thing: Apple Music , YouTube Music , you name it — every global streaming service has to keep the local prices flexible to stay competitive across the globe.
That has a massive impact on the value of the streams that are coming from those regions. So, instead of looking for universal, international payout rate, we might be better off asking ourselves: where do the streams come from? To be precise, they split the overall revenue pool into dozens of smaller ones. However, that is just the first part of the problem. The minor fluctuations are possible but not to the extent that can explain the overall spread.
Instead, the problem lies in the third part of the calculation — the average streams per users. The formula above means one simple thing. For premium subscriptions with a stable ARPU, the per-stream rate goes up as the user's engagement with the platform, expressed as the average streams per user, goes down.
Imagine that every customer would stream just one song per month. The only change is that their music would be played less. In that sense, when Spotify releases a new retention feature and raises average listening on the platform — introducing autoplay or enhancing its playlist experience — it inevitably brings down the per-stream payout rate.
However, since there are more total streams to go around, the total payout stays the same. If, on the contrary, a streaming platform does a poor job keeping its customers engaged, the per-stream payout grows.
Disclaimer: This article was written before Deezer introduced its user-centric payment system. The data you'll find below is a reflection of the old, content-centric Deezer payout — although you could argue that the new payout system won't actually change much.
But which one is closer to the truth, then? The per-stream payout rate is a metric that tries to summarize dozens of cash flows based on a biased sample. Why Songtrust? General Publishing Questions. Royalty Collections. Publishing Partners. Music Industry Misc. Wondering how much you are paid each time your song is streamed on Spotify?
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