HOW MUCH MONEY MUSIC STREAMING SERVICES ACTUALLY PAY RECORD LABELS
The biggest red mark on Spotify thus far is that they haven’t been completely transparent about their payout rates. There was the whole Lady GaGa fiasco which turned out to be fake, and there’s been little bits from artists here and there. But so far the service has been mum on how much they’re actually paying labels every time someone streams a track. What the fuck, Spotify? Tell us.
Today we get to learn at least a little more about what Spotify and other streaming services actually pay labels. Metal Insider points us to a month-old post on The Trichordist in which an anonymous independent label details their streaming service revenue between July and December 2011. And it paints a pretty interesting picture. Check it out:
$0.028 per song
25:1 Itunes Song Download
$0.016 per song
43:1 Itunes Song Download
$0.013 per song
53:1 Itunes Song Download
$0.005 per song (half of one cent)
140:1 Itunes Song Download
So what can we glean from this?
Obviously Spotify’s per-stream payout is low compared to the other services; this we already knew. But at half a penny per stream it’s not nearly as low as many people speculated. And Spotify, unlike the other three services shown, is free to the majority of its subscribers so there’s no direct revenue to pay out for every stream.
We also learn that relative to Spotify, music fans don’t give a flying fuck about Zune, Rhapsody or Napster.
What isn’t shown in the numbers is Spotify’s Facebook integration — in addition to the direct per-stream revenue, an artist gets indirect advertising via listeners’ Facebook stream every time their friends stream the track. That’s invaluable promotion. And since Spotify’s total number of streams at the above label dwarf those of the other services, that’s a significant presence. That kind of promotion is near impossible to quantify with a dollar figure but it’s incredibly valuable in the long run.
Of course, it’s important to remember that the above payouts represents what’s paid TO THE LABEL, not the artist. Each label is then responsible for paying the artists according to the terms in their record deal. So if an artist’s royalty rate is 20% (which is actually considered a pretty good rate), that artist would only receive $0.001 per stream (1/10th of one cent).
Let the debate rage on.