4 ms·

How Much Money Do Bands Make From Streaming Music Services Like Spotify?

14 points by SetAside 14y ago

AndrewDucker 14y ago
Seems like a fair amount. If a track gets plenty of play over your lifetime then you'll listen to it _way_ more than 99 times. If you only listen to it once, then it probably doesn't deserve more than that.
- Gustomaximus 14y ago
  I seem to recall having this conversion on a previous HN article (maybe it was reddit) where an artist was blasting Spotify for paying them a fraction of a cent per song play. But the recurring nature is the key. If a consumer likes a song it will get played 1000's of time over a lifetime and easily generate more revenue than a one time buy. So it just shifts an enduring quality vs fad element to the success (and revenue) of a song.
  - k-mcgrady 14y ago
    There is a problem with the view that "If a consumer likes a song it will get played 1000's of time over a lifetime and easily generate more revenue than a one time buy". Spotify limits free users to playing a song no more than 5 times per month. So to listen to a song 1000 times on the free account would take 200 months or 16.6 years. I don't think it's a good limitation to put on the accounts. Most people aren't going to upgrade (they'll just play the song on YouTube or download it), and artists are losing out on money from plays and potential fans.
    - rohansingh 14y ago
      Spotifier here. Just wanted to chime in on the 5 times per month limit. We actually removed that limit in all markets except the UK and France back in March. If I recall correctly, it never existed in the US.
      - k-mcgrady 14y ago
        Thanks for making that clear (I'm in the UK so didn't realise). Any specific reason it's limited in those two markets?
- SetAside 14y ago
  A cent a listen seems reasonable to me too considering how many times I listen to my favourite albums throughout the day. While it may not add up to much for small, independent bands, at least they're getting their albums out there to a much larger audience. I know I've discovered bands I wouldn't have bothered to download if it wasn't for these services.
  - k-mcgrady 14y ago
    A cent a listen would be nice but from all the data I've seen on this the average artist gets paid something more like $0.001-$0.004 per stream on Spotify (slightly higher with iTunes Match but still well under 1¢). The problem is particularly bad for independent artists as the major labels have worked out deals to get much higher rates per stream.
- RutZap 14y ago
  Let's not forget about how this helps new bands to put their music out.. and even get some money out of it. They don't need to chase a record label and they don't need to pay agents and so on. It's a great way to reward artists and a great way for consumers to find new, quality, music!
- Wilya 14y ago
  Looking at my lastfm stats, I have very few songs I listened to more than 99 times. My guess, if I try to estimate the tracks that are not counted, would be around 40 tracks making it to that level, with a distribution heavily skewed towards one or two artists. I estimated my top playing artist at 6000 listens. That's max $60 on Spotify. I have paid for more than that in albums over the years. That's just me, of course, but I'm trying to give some perspective.
  - jurre 14y ago
    What you pay for albums != what the artist receives for them.
    - Wilya 14y ago
      Yeah, I thought about that just after writing it. I'm speaking of my all-time top playing artist, though. I think the numbers are still valid for most of the rest of my tracks. I'll have to look more in detail.
chrischen 14y ago
Why the heck does iTunes Match still pay per stream royalties for songs you already paid for??? Apple pays them, but the cost is passed on to the user in the annual fee.
- manmal 14y ago
  Because you can (and most users, will) upload pirated music there. It's a possibility to white-wash illegally acquired content.
  - freehunter 14y ago
    This is akin to pirate taxes on blank CDs and DVDs because the person buying them might burn pirated media to them.
- k-mcgrady 14y ago
  Because of pirated songs as manmal says. But afaik they had to negotiate new licensing agreements to stream the songs. I guess it would be equivalent to the agreements radio stations have to work out. The cost may be passed on to the user but they get a lot for their $25 (streaming, downloading, and instant access to all their music - whether it was bought on iTunes or not - on all their devices).
earbitscom 14y ago
This article is false. There are different rates for streams listened by paying customers and those listening for free. The massive majority of Spotify users are free, and those rates are significantly less. There are several articles about this and most do not report anywhere near those rates for streams. It would not surprise me to find that they don't even pay the average directly-licensed band for "free" streams. Furthermore, the question the article asked is how much money do "bands" make from streaming, yet it only included a band that has a direct relationship. The bulk of bands on Spotify are put there by the major labels and one or two collectives of independent labels. The major labels setup the licensing structure such that the bulk of it is paid up front for a setup fee, and that fee is divided evenly among their artists, even though a small percentage of those artists constitute the bulk of the streaming. 95+% of the artists they include in that setup are not recouped, which means they haven't earned enough royalties to offset the "expenses" associated with releasing their album. The label keeps your money until you are recouped. So, the label shares nothing with 95% of the artists from this massive, tens-of-millions-of-dollars fee they charge. Then they pay 5% of the fee to their recouped artists - the megastars - even though those artists will generate 95% of the listening. After the setup fee, the per stream fee that gets paid to the artists is minuscule, and even much of that is swept under the rug during shady accounting. And if that wasn't enough, the labels own 18% of Spotify (I've heard it's even protected against dilution) and will ultimately unload their stock on the public right before the licenses expire and they hike the rates up to an unsustainable level, drain all of the investment dollars out of the company, and start the cycle again.
Wilya 14y ago
Their conclusion is different from almost every report I've ever seen on Spotify. [0], for example, had some real world numbers and an interesting discussion. The example is probably heavily biased, but personally, when I see "iTunes/Bandcamp/Amazon: $82,000 | Spotify: $300", the conclusion is pretty obvious. Also, her reported rates were around $0.004/listen, on average. [0] http://news.ycombinator.com/item?id=4330920 http://news.ycombinator.com/item?id=4330920
r617dllao 14y ago
Nice affiliate links for TuneCore. This may be a subtle form of advertising for that service. Fake content? You be the judge.
comet 14y ago
Found this interesting article http://qr.ae/8WSb7 http://qr.ae/8WSb7 from Business Insider that shares an opinion that bands/artists are probably not making much. However, here's another article (http://goo.gl/FjuiN http://goo.gl/FjuiN) that predicts that the global revenues of streaming services like Spotify, Pandora, etc is set to grow 5 times faster than the revenues from downloads. So I presume streaming business is here to stay & artists would just have to deal with it. Not to sound all markety, but I've set out to address this problem & have just launched my new startup, Moshbag (http://moshbag.in http://moshbag.in). The idea really is to provide a platform for artists to launch their new releases & let subscribers download all new releases for a subscription fee on a monthly basis. We are also distributing 90% of the entire subscription fee collected to all artists. To all those who'd be interested to know more about us, here's a link to our blog: http://moshbag.tumblr.com http://moshbag.tumblr.com P.S.- I've just posted it hacker news as well http://news.ycombinator.com/item?id=4474589 http://news.ycombinator.com/item?id=4474589 Please do upvote & comment!
RexRollman 14y ago
To me, Spotify is more of a radio competitor than an iTunes competitor, so for me the comparison is: what do artists make per play on the radio vs Spotify?
ehutch79 14y ago
For those interested, this is an actual screenshot of my cdbaby dashboard for my bands album (seriously check us out, links in my profile) http://449123359ecac587d434-9396469e34eeeef2caa4cdabedda4716.r90.cf2.rackcdn.com/Screen%20Shot%202012-09-06%20at%208.41.02%20AM.png http://449123359ecac587d434-9396469e34eeeef2caa4cdabedda4716... There's some more recent ones but they're identical to what you see. iTunes match has paid out several different amounts: http://449123359ecac587d434-9396469e34eeeef2caa4cdabedda4716.r90.cf2.rackcdn.com/Screen_Shot_2012-09-06_at_8.47.56_AM.png http://449123359ecac587d434-9396469e34eeeef2caa4cdabedda4716... For those that may not know, cdbaby taks a 9% cut of what services pay out, but there's no yearly feel like with tunecore.

14 points by SetAside 14y ago

Seems like a fair amount. If a track gets plenty of play over your lifetime then you'll listen to it _way_ more than 99 times. If you only listen to it once, then it probably doesn't deserve more than that.

Gustomaximus 14y ago
I seem to recall having this conversion on a previous HN article (maybe it was reddit) where an artist was blasting Spotify for paying them a fraction of a cent per song play. But the recurring nature is the key. If a consumer likes a song it will get played 1000's of time over a lifetime and easily generate more revenue than a one time buy. So it just shifts an enduring quality vs fad element to the success (and revenue) of a song.
- k-mcgrady 14y ago
  There is a problem with the view that "If a consumer likes a song it will get played 1000's of time over a lifetime and easily generate more revenue than a one time buy". Spotify limits free users to playing a song no more than 5 times per month. So to listen to a song 1000 times on the free account would take 200 months or 16.6 years. I don't think it's a good limitation to put on the accounts. Most people aren't going to upgrade (they'll just play the song on YouTube or download it), and artists are losing out on money from plays and potential fans.
  - rohansingh 14y ago
    Spotifier here. Just wanted to chime in on the 5 times per month limit. We actually removed that limit in all markets except the UK and France back in March. If I recall correctly, it never existed in the US.
    - k-mcgrady 14y ago
      Thanks for making that clear (I'm in the UK so didn't realise). Any specific reason it's limited in those two markets?
SetAside 14y ago
A cent a listen seems reasonable to me too considering how many times I listen to my favourite albums throughout the day. While it may not add up to much for small, independent bands, at least they're getting their albums out there to a much larger audience. I know I've discovered bands I wouldn't have bothered to download if it wasn't for these services.
- k-mcgrady 14y ago
  A cent a listen would be nice but from all the data I've seen on this the average artist gets paid something more like $0.001-$0.004 per stream on Spotify (slightly higher with iTunes Match but still well under 1¢). The problem is particularly bad for independent artists as the major labels have worked out deals to get much higher rates per stream.
RutZap 14y ago
Let's not forget about how this helps new bands to put their music out.. and even get some money out of it. They don't need to chase a record label and they don't need to pay agents and so on. It's a great way to reward artists and a great way for consumers to find new, quality, music!
Wilya 14y ago
Looking at my lastfm stats, I have very few songs I listened to more than 99 times. My guess, if I try to estimate the tracks that are not counted, would be around 40 tracks making it to that level, with a distribution heavily skewed towards one or two artists. I estimated my top playing artist at 6000 listens. That's max $60 on Spotify. I have paid for more than that in albums over the years. That's just me, of course, but I'm trying to give some perspective.
- jurre 14y ago
  What you pay for albums != what the artist receives for them.
  - Wilya 14y ago
    Yeah, I thought about that just after writing it. I'm speaking of my all-time top playing artist, though. I think the numbers are still valid for most of the rest of my tracks. I'll have to look more in detail.

chrischen 14y ago

Why the heck does iTunes Match still pay per stream royalties for songs you already paid for??? Apple pays them, but the cost is passed on to the user in the annual fee.

manmal 14y ago
Because you can (and most users, will) upload pirated music there. It's a possibility to white-wash illegally acquired content.
- freehunter 14y ago
  This is akin to pirate taxes on blank CDs and DVDs because the person buying them might burn pirated media to them.
k-mcgrady 14y ago
Because of pirated songs as manmal says. But afaik they had to negotiate new licensing agreements to stream the songs. I guess it would be equivalent to the agreements radio stations have to work out. The cost may be passed on to the user but they get a lot for their $25 (streaming, downloading, and instant access to all their music - whether it was bought on iTunes or not - on all their devices).

earbitscom 14y ago

This article is false. There are different rates for streams listened by paying customers and those listening for free. The massive majority of Spotify users are free, and those rates are significantly less. There are several articles about this and most do not report anywhere near those rates for streams. It would not surprise me to find that they don't even pay the average directly-licensed band for "free" streams. Furthermore, the question the article asked is how much money do "bands" make from streaming, yet it only included a band that has a direct relationship. The bulk of bands on Spotify are put there by the major labels and one or two collectives of independent labels. The major labels setup the licensing structure such that the bulk of it is paid up front for a setup fee, and that fee is divided evenly among their artists, even though a small percentage of those artists constitute the bulk of the streaming. 95+% of the artists they include in that setup are not recouped, which means they haven't earned enough royalties to offset the "expenses" associated with releasing their album. The label keeps your money until you are recouped. So, the label shares nothing with 95% of the artists from this massive, tens-of-millions-of-dollars fee they charge. Then they pay 5% of the fee to their recouped artists - the megastars - even though those artists will generate 95% of the listening. After the setup fee, the per stream fee that gets paid to the artists is minuscule, and even much of that is swept under the rug during shady accounting. And if that wasn't enough, the labels own 18% of Spotify (I've heard it's even protected against dilution) and will ultimately unload their stock on the public right before the licenses expire and they hike the rates up to an unsustainable level, drain all of the investment dollars out of the company, and start the cycle again.

Wilya 14y ago

Their conclusion is different from almost every report I've ever seen on Spotify. [0], for example, had some real world numbers and an interesting discussion. The example is probably heavily biased, but personally, when I see "iTunes/Bandcamp/Amazon: $82,000 | Spotify: $300", the conclusion is pretty obvious. Also, her reported rates were around $0.004/listen, on average. [0] http://news.ycombinator.com/item?id=4330920 http://news.ycombinator.com/item?id=4330920

r617dllao 14y ago

Nice affiliate links for TuneCore. This may be a subtle form of advertising for that service. Fake content? You be the judge.

comet 14y ago

Found this interesting article http://qr.ae/8WSb7 http://qr.ae/8WSb7 from Business Insider that shares an opinion that bands/artists are probably not making much. However, here's another article (http://goo.gl/FjuiN http://goo.gl/FjuiN) that predicts that the global revenues of streaming services like Spotify, Pandora, etc is set to grow 5 times faster than the revenues from downloads. So I presume streaming business is here to stay & artists would just have to deal with it. Not to sound all markety, but I've set out to address this problem & have just launched my new startup, Moshbag (http://moshbag.in http://moshbag.in). The idea really is to provide a platform for artists to launch their new releases & let subscribers download all new releases for a subscription fee on a monthly basis. We are also distributing 90% of the entire subscription fee collected to all artists. To all those who'd be interested to know more about us, here's a link to our blog: http://moshbag.tumblr.com http://moshbag.tumblr.com P.S.- I've just posted it hacker news as well http://news.ycombinator.com/item?id=4474589 http://news.ycombinator.com/item?id=4474589 Please do upvote & comment!

RexRollman 14y ago

To me, Spotify is more of a radio competitor than an iTunes competitor, so for me the comparison is: what do artists make per play on the radio vs Spotify?

ehutch79 14y ago

For those interested, this is an actual screenshot of my cdbaby dashboard for my bands album (seriously check us out, links in my profile) http://449123359ecac587d434-9396469e34eeeef2caa4cdabedda4716.r90.cf2.rackcdn.com/Screen%20Shot%202012-09-06%20at%208.41.02%20AM.png http://449123359ecac587d434-9396469e34eeeef2caa4cdabedda4716... There's some more recent ones but they're identical to what you see. iTunes match has paid out several different amounts: http://449123359ecac587d434-9396469e34eeeef2caa4cdabedda4716.r90.cf2.rackcdn.com/Screen_Shot_2012-09-06_at_8.47.56_AM.png http://449123359ecac587d434-9396469e34eeeef2caa4cdabedda4716... For those that may not know, cdbaby taks a 9% cut of what services pay out, but there's no yearly feel like with tunecore.