I’m doing a multiple-part series on how Independent Artists get paid.
Part one (iTunes) is here.
Part Two (International / Other Downloads) is here.
PART THREE: STREAMING
I started writing today with the intention of titling this “STREAMING/SPOTIFY”, but the longer I wrote, the more I came to the conclusion that Spotify is going to get its own entry tomorrow.
Let me give you the one simple reason why:
Spotify accounted for 85.89% of all my streaming traffic in 2012. So I have a lot more to say about it.
This does not count listens on Bandcamp, which I do not get paid for, because bandcamp serves as my store, so it fits more into article #2. The websites I’m talking about here today are those whose primary business plan is to stream music for profit, both to them and (ideally) to the artists.
I’ll be honest: as a listener, I love these services. I love that when I hear about a new band, I can go listen to them and decide if I want to be a fan or not. I love that if when I’m in a waiting room and Tim McGraw’s version of “Stars Go Blue” comes on, I can pull up the original Ryan Adams version and point my phone speaker at the ceiling accusingly. (true story.)
But as an artist, the jury is still out. On one hand, you’ve heard the complaints…. tens of thousands of plays, three figures of payment. We’re not used to such paltry sums for such seemingly impressive numbers! $500 for 100,000 listens? If we played 10 songs for 10,000 people, the check would be …at least three times bigger than this!
On the other hand, I like someone can hear my name and immediately listen to my music for free instead of just thinking in the back of their mind “ok, I’ll keep an ear open for him on the radio” until they forget my name and have to be told again.
Either way, streaming is here. It’s the future, and there’s no going back now. So rather than complain about it, let’s endeavor to understand it, and then figure out how to make a living anyway.
how do artists get paid for streaming services?
Unfortunately, There’s no set answer for that. It varies by service, varies within each service, and varies AGAIN, depending on how the listener uses each particular service. I’ll endeavor to give an overview, and then explain a few differences I discovered between them, but If music law is your preferred method of self-flaggelation, you can easily find about 100 million articles about the litigation and economics surrounding music on the internet.
Most services function roughly like this… they take the pool of money that comes in from subscribers, and assign a percentage that gets paid to the artists. Of that remaining pool, the amount the artist gets depends (theoretically) on what percentage-of-the-total-plays their songs get.
For example: Let’s say I built a streaming website. If there was a total of one subscriber who paid $10 to stream music from my hypothetical (and highly unsuccessful, apparently) website, a percentage of that $10 (something like $7 of it),would go to the artists.
Now let’s say my one subscriber played your song 10 times out of 100 total plays, you would get $.70, or $.07/play.
It seems like a somewhat simple process, right? Hahahahaaaaaaaaaaaaaa……..
The complication arises in the realization that there are multiple revenue streams, and each of them pays differently. The sites make money from the subscribers, but are also paid money from the advertisers that play commercials to the free users. Currently, by law, they only have to give 10.5% of the commercial income to the artists (and publishers, etc.)
When your computer technically makes a copy of a song (i.e. spotify’s “make available offline” option for a playlist), that’s called a “mechanical” royalty, and it is charged slightly differently than if the file is not copied and stays on the original server. But even this definition only applies to websites where you can choose a song, and “control” the listening experience, say by picking a song you like, or listening to it on repeat.
That definition is why Pandora is another thing entirely (article #5?). Pandora functions as radio, and pays their royalties to Soundexchange, who then pay the artists, labels, and publishers. This is why you can’t repeat songs, or pick a particular song on Pandora.
If that’s not complicated enough, iTunes has something called “Match”, another animal altogether… subscribers pay $25/year, and iTunes will scan their library to determine how many of their songs have a match on the iTunes store. Subscribers will then have access to those songs in a “cloud”-based storage system. Any songs that they have that aren’t on the store, they can upload.
The artist then gets paid a mechanical royalty when that song is played from the cloud,
since the version on the store is technically a different digital file than the one on your computer. (Artists don’t get paid when you listen to the same song from your hard drive, because part of the sale price you paid went to cover the mechanical license to “copy” that song from the store onto your hard drive.)
ADDITIONALLY, if you have a low-quality version of a song (that you ripped from a CD, say) you can download a higher-quality version from the cloud to replace it. There’s probably some kind of mechanical license paid there as well. Frankly, this is getting exhausting.
The main idea of Match is that I don’t have to store all 20,000 of my songs on my iPhone; as long as I have internet access, I can listen to my entire library. (The benefit: it’s cheaper than Spotify, by nearly $100. The downside: You can only listen to music you already own; nothing new.)
I’ll be honest: as an artist, I don’t care how low this rate is. You already paid to download the music; if I get paid additionally for you to listen to it? Sweet deal, iTunes Match.
RIGHT, SO. WHO’S THE BEST?
The answer, of course, is no less complicated than the questions that begat it. But here is the first piece of information:
Average Payment (To Me) Per Stream
XBox Music: $0.01473
iTunes Match (Aus): $0.002926
iTunes Match (Can): $0.002837
iTunes Match (EU): $0.002832
iTunes Match (US): $0.002457
Rhapsody Mechanicals: $0.002228
iTunes Match (UK): $0.002139
MySpace Music: $0.002043
But those are the averages. The amount I was payed per stream varied wildly among them. Here are two more lists (feel free to skip them and go straight to the analysis at the end.)
Highest Single Payment For Any One Stream (after CDBaby’s 9%)
XBox Music: $0.0607188
MySpace Music: $0.00598052
iTunes Match (EU): $0.00437582
iTunes Match (US): $0.00357868
iTunes Match (Aus): $0.00352867
iTunes Match (Can): $0.00334042
iTunes Match (UK): $0.00319291
Rhapsody Mechanical: $0.00290109
Lowest Single Payment For Any One Stream (After CDBaby.com’s 9%)
XBox Music: $0.0039997
Rhapsody Mechanical: $0.001729
iTunes Match (Aus): $0.00164075
iTunes Match (Can): $0.00145374
iTunes Match (EU): $0.00137403
iTunes Match (UK): $0.00124882
MySpace Music: $0.00071012
iTunes Match (US): $0.00011618
As I said earlier,I’m focusing on everything BUT Spotify right now; they will get their own article tomorrow. As for the rest, here are five things that caught my eye.
1. iTunes Match is Getting Better.
I dug into the numbers a little bit, and noticed that my per-play price consistently increased as the year went on. This leads me to believe that there are simply more people subscribing, and those people happen to be listening to me. And like I said; these are tracks they already bought, so: bonus money!
2. Rhapsody Pays a Flat Rate:
Not on their mechanicals, but on their regular streams, the price per stream is always $0.0091. Incidentally, the mechanical rate to reproduce another person’s work is $0.091/copy (I paid Radiohead’s publishers $91.00 to print 1,000 copies of my cover of “Idioteque”), so I suspect this rate has something to do with that.
3. Rhapsody’s Mechanical Royalties Can Pay Fractions. I got paid for 450.8 mechanical streams in 2012. I have no idea.
4. iTunes separated UK and Europe for these reports, even though they combined the two regions for my downloads report. Interesting to note; I made more per stream from the US version than I did the UK or Australia, even though subscribers in both regions pay more per year (after conversion rates) for the service.
5. Deezer and XBox Music are great! Check out those average per-play rates. Alternately, Last.fm is the worst. Not only do they have the lowest average payment per stream, but the *most* they ever paid me was $0.00107766. Meaning for me to make one dollar on Last.fm, I would have to get 928 plays.
To put it another way, here’s a fun conversion rate: If my only means of food were you listening to my songs, non-stop, on repeat on last.fm, I would be able to order a value menu order of french fries every 2.9 days.
Alright, that’s all for today.