Spotify is one of the most popular streaming platforms in the world. Though Spotify works on a freemium model too, signing up for paid or premium subscription has its own benefits. Out of 286 million Spotify users, 130 million are premium subscribers. In the first quarter of the year 2020, Spotify generated £1.85 billion. Out of which premium subscribers contributed £1.7 billion. But, how much does Spotify pay for its artists and contributors.
How does Spotify pay the artists?
The payouts for an artist on the streaming platforms vary based on the region, popularity of the artists, and streaming models. Spotify pays artists either directly based on the royalties model or indirectly by paying the publishing or recording labels that signed an agreement with Spotify.
In the royalties pool model, Spotify pays the rights holder or recording labels based on the share of streams earned by them. This share is between 65% and 70%. The rights holder or contributors can later divide it between everyone involved in the making of the content from recording labels to publishers.
They can also turn it into a pay per stream model. In this, the artist gets paid based on the number of streams. This pay per stream rate structure and subscription price varies in different regions. For example, the premium subscription costs $9,99 per month. However, it is different in India with reference to other streaming platforms and costs $1,7 per month.
What are the factors responsible for the difference in pay per stream?
As mentioned earlier, the pay per stream payout depends on different factors. Two most important factors are the country or region and the type of user (premium or ad-supported).
For example, if an artist is getting paid $0.002 per song when a free user plays the song, they can expect an increase in payout up to $0.004 per song when a premium member plays the track.
What are the different streaming models?
Spotify generates revenue based on subscriptions and advertisements. They divide the total revenue among the contributors based on streaming models.
There are three different streaming models for contributors on Spotify.
|Mechanical Royalty||Mechanical Royalties from Spotify are collected by Harry Fox Agency. This allows outside parties to republish, re-produce, or re-transmit the songs for digital downloads, albums, and interactive streams. The royalties owed by Spotify are paid to the publishers for use of their content.|
|Performance Royalty||Performance royalties are collected by Performing Rights Organization (PRO). The songwriter or artist gets paid directly without involving any label or publishing party.|
|Distribution model||In this model, the revenue is divided between different recording labels, and publishers. The labels in agreement with Spotify such as Sony will receive the revenue based on total streams. They will then divide it between separate artists, publishers, and others.|
The Distribution model via labels can be effective in gaining exposure and audience for the track popularity. However, self-publishing allows the artists to increase their revenue share by earning direct royalties.
How to register on Spotify as an artist?
When you sign up for Spotify, a user profile is automatically created. Nevertheless, to create an artist profile, you need a Spotify account.
- First, create a Spotify account. There are two ways to do it – either with an email or a Facebook account. It is better if you don’t choose Facebook because when you start getting followers and hits on the Spotify profile, you might want to avoid logging into your Facebook account.
- Next, update your profile, header images and other details. Your artist Pro reflects your artwork, including the profile and cover pics.
There is a separate section (Artist Profile Management) where you can manage your details. Spotify takes the content and other data from the Rovi database, they do not manage bios and other data themselves.
- You can also add tour and concert dates to your Spotify artist profile. If you use a Songkick profile to manage such information, it is automatically updated and featured on the Spotify artist profile. However, you can also use Tourbox instead of Songkick.
If you wish to sell your merchandise on Spotify, you can use Merchbar. It automatically lists and displays your merchandise on your artist profile on Spotify.
- The next step is verification. It is a necessary step to be listed among the Spotify artists. The verification criteria are changed. You don’t need to have 250 or more followers to get a verified artist profile. Spotify has changed the terms and verification is now available for all the artists.
- Start preparing your playlists. You can also display the best streaming content on the top of your profile.
- Bonus tip: Buy Spotify Plays or you can of course also Buy Spotify Monthly Listeners at our store!
New feature in the favor of artists
Spotify has introduced a new feature that will allow artists to get paid more. The users can now directly contribute to the pay per stream for their favorite artists. The royalty share of the revenue from the user subscription directly adds to their favorite artists when they play their tracks.
How much does Spotify pay per stream?
Coming to the most important question, how much Spotify pays to the artists. Spotify pays between $0.00318 and $0.00437 to the copyright holder. The pay per stream depends on the type of streams an artist gets and the contracts it has between the label, distributor, and others. Also, to be counted for the per stream payout, the user has to play the track for at least 30 seconds.
For pay per stream, the popular artists are on the brighter side than others. For example, Shape of You by Ed Sheeran is the most popular and streamed song on Spotify. With Americans spending 32 hours per week streaming their favorite tracks on Spotify, the native artists get better payouts.
How many streams does it take to make $1?
To make $1 on Spotify based on pay per stream model, it takes around 270 streams. It also depends on the region or country. However, in regions like America people pay for premium subscriptions and the payout is more. This entails you can make $1 with less streams in comparison to other countries like India.
How much does Spotify pay per 1000 streams?
As the average payout to the master rights holder is around $0.0038. You can expect a payout of $3.8 per stream for 1000 streams. You can expect to earn more in the US and UK per 1000 streams, but in countries like India and Netherlands, the pay is much less. You might only earn $1 or less per 1000 streams.
How many streams does it take to make 100k?
Given the current rate of $0.0038 per stream, you need about 26.3 million streams to make 100k. This will further be divided between different parties. Therefore, it is more like dividing pennies for a couple of hundred streams.
How much money is a billion streams?
It is not easy to reach the billion stream threshold. It took eight years for a single track to reach the mark. However, there are 25 songs that have been streamed over a billion times as of 2020. Therefore, more songs are now making it to the elite club.
Speaking of which, one billion streams can bring the payouts close to $3.8 million. “One Dance” by Drake was the first song to cross the billion streams mark on Spotify.
Let’s take a look at the most streamed song on Spotify that made the most money.
Which song made the most money on Spotify?
While there are many songs that have hit the billion dollar mark. However, Ed Sheeran holds the crown with more than 2.7 billion streams for “Shape of You”. No song has been able to cross it. Not only that, it holds the titles of being the most played song and the first song of the 2010s to cross $2 billion streams.
With that said, Ed Sheeran has earned over $10 million with this song alone. Nevertheless, the singer is not receiving the royalties anymore ascribing to the accusations that he copied the parts of the song from other musicians.
Based on the region and type of user, artists can expect the pay per stream payout between $0.003 and $0.004. If they are self publishing, this can be anywhere between $0.006 and $0.008. However, the artists consider it a paltry payout range in comparison to other streaming services that pay more.
Other platforms such as Amazon, Tidal and Napster are better alternatives when it comes to pay per stream for artists.
The Amazon average payout for pay per stream is at $0.0119.
The Tidal average payout for pay per stream is at $0.0099.
The Napster average payout for pay per stream is at $0.0106.
These are currently the top 3 rates for music streaming services. Spotify is currently in the news for its unfair payout structures for artists. However, Spotify pays more than YouTube’s pay per view model. It is making the run for introducing more features in the favor of artists, whereas artists demand three times the current payout rates.