Streaming is an incredibly convenient (and legal) way for consumers to listen to their favorite artists as well as discover a world of new artists. For the artists, however, streaming is a necessary evil that benefits their record labels and the streaming platforms much more than it does the artists themselves.
Types of Artist Royalties
There are three types of artist royalties that streaming platforms use. The first is simply a form of royalty that is generated every time a song is played. This is known as a mechanical royalty.
The mechanical royalty rate for streaming is about 6 cents per 100 streams (or .06 cents per stream). It's important to note that the mechanical royalty rate for streaming is different than the mechanical royalty for permanently downloading a song.
The second type of royalty that streaming services use are public performance royalties, which are the fees that artists and their publishers receive every time their music is played in a public setting. This could be anything from the background music in a grocery store to a digital jukebox in a bar.
Public performance royalties are dealt with by performing rights organizations, or PROs, which collect license fees from establishments that use copyrighted music. PROs then pay songwriters and the publishers of those songs. The size of the royalties is arranged between the streaming platform and the PRO, usually no more than 7 percent of the platform’s total revenue.
Finally, there is the simple payout to the owners of a recording. This is the complete amount of money, containing all types of royalties associated with a song or songs, that will be disbursed among musicians, songwriters, producers, and everyone who is involved in the production and performance of the song (or songs).
Of digital performance royalties:
- 50 percent goes to the rights owners of the music.
- 45 percent goes to the featured artists.
- 5 percent goes to the non-featured artists (backing/session musicians).
Artists can negotiate their own deals with streaming platforms, meaning they can make up to 100 percent of the payout. Justin Bieber’s “Love Yourself,” for example, was streamed 17.4 million times when it came out in 2016, at $0.091 per stream under mechanical royalties. This means it has made $1,583,400. Streaming platforms will pay that whole sum to the Def Jam record label, which released the song. Def Jam will then disburse that sum to everyone involved in the production and performance of the song based on their degree of involvement.
How Much Money Do Artists Make From Streaming Services?
There are dozens of music streaming services online, from the big players like Spotify and Apple Music to smaller services like Deezer and Tidal. Regardless of its size or market dominance (or lack thereof), every platform has its own user base, which determines its pricing model and selling point. This means that artists earn a different share of revenue from each streaming service.
Tidal, for example, pays $0.013 to an artist per stream. For an artist to make $1,000 off a single song, the song will have to be streamed 76,924 times.
This table takes that model and explains it for the most recognized streaming services:
Across all platforms, a stream must be played for at least 30 seconds for the artist to receive their respective payout.
Some of the numbers can appear deceiving. Apple Music, for example, only pays $0.01 per stream, but with 72 million active users, it has one of the biggest per-stream average payouts compared to other platforms.
Even so, that 1 cent per stream doesn’t go directly to the artists. From the 1 cent, 52 percent of Apple Music’s ad revenue is distributed to music labels. They then disburse those profits to the producers and artists first and non-featured personnel second.
Ways to Make Money From Streaming
For artists, streaming can be frustrating. It’s a direct way of getting their music out to millions of users, but they also receive literal pennies in return.
To make more money from streaming services, artists have to get a bit creative.
Promotion on social media and real-world platforms, like short videos and fliers, can simply let fans know that the music is out there. Some artists stream release parties on Twitch and other mediums. Artists can continually remind people that they can find their music on their favorite streaming service.
Another method is to simply make more music. The more music that is put on streaming platforms, the more listeners a band will get and the more money the band will see.
Playlists & SEO
Streaming has shifted listeners’ attention away from albums and toward playlists. Getting music on a popular playlist is a guaranteed way of increasing an artist’s listener base. Spotify Artists and TuneCore (a digital distribution platform) will let a band submit a song for a playlist, which exposes the song (and the band) to a much wider range of artists than if songs are released on an album-only basis.
Using search engine optimization will combine traditional ways of getting good rankings on Google searches, with people looking for new and interesting music on their streaming platforms. Use relevant keywords to describe your music. Even using the name of recognized artists in your genre as keywords will associate you with the style of music you want to be known for.
With these methods, artists and bands can turn streaming to their advantage.
Copyright Royalty Board Asked to Approve 32% Increase on Mechanical Royalties for Physical Products, Downloads. (May 2022). Variety.
Chops: The Fight Over Music Royalties. (March 2022). Jazztimes.
Justin Bieber's "Love Yourself' Is the World’s Best-selling Single for a Second Non Consecutive Week! (February 2016). World Music Awards.
Which Music Streaming Service Pays Artists the Most? (June 2022). Louder.
Here's How Much Each Music Streaming Platform Pays Per Stream. (July 2021). EDM.
Apple Music Only Pays $0.01 Per Stream. (April 2021). Rolling Stone.
Musicians Say Streaming Doesn’t Pay. Can the Industry Change? (May 2021). The New York Times.
Modern Listeners Shifting Towards Playlists Over Albums, Study Shows. (April 2020). Mn2s.com.