Artists earn less than a penny per stream on Spotify-like services

By on September 5, 2012, 8:30 AM

Subscription music services let you enjoy a buffet of tracks without the hassle or expense of buying individual songs or albums while producing billions in revenue for record labels, but the arrangement apparently isn't so great for the folks who create your favorite tunes.

Speaking on Twitter, Josh Davison of the band Parks and Gardens revealed that his group earns less than a penny for each song streamed on Spotify ($0.00966947678815, to be exact).

Although it isn't exactly in the same class of services as Spotify, Davison also noted that Parks and Gardens earns $0.0030526797710 per unit from iTunes Match, a subscription offering launched last November that lets you add songs from third-party sources to your iTunes account, making them available as high-quality 256kbps AAC files.

Because you must acquire the music -- perhaps by purchasing a CD -- before it can be imported, some believe that folks like Davison should be happy to have iTunes Match as a "bonus" income. Regardless, the underlying concern remains unchanged: artists presumably earn a fraction of the amount that Apple pays record labels to run iTunes Match.

It's estimated that the company paid the music industry about $3.2 billion in 2011 for operating iTunes, while Spotify is said to be the second-largest revenue generator for labels and could become their biggest within two years.

Shortly following Davison's tweet, HoneyBoy Dupree developer Scott Buscemi also shared figures confirming that Spotify, Rhapsody and iTunes Match pay less than a penny per stream. Songs by Parks and Gardens must be listened to between 5,171 and 15,127 times before they break even on distributing costs for iTunes Match and Spotify -- easier said than done for lesser-known artists. Davison said his band gets "very few" streams.

Davison's tweets have sparked debates about the nature of Spotify-like services. Some argue that artists should be thankful to earn anything at all from streaming services because, as with radio, they are promotional tools to drive sales of CDs, concert tickets and other merchandise. Others counter by noting that, unlike radio, subscription services let listeners control what's playing and when, eliminating the need to purchase songs and albums.




User Comments: 17

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m4a4 m4a4 said:

The rich get richer? No way!

Chazz said:

Very sad news. Goes to show you what these record labels really care about.

ghasmanjr ghasmanjr said:

Rich? Underground bands like this haven't "made it big" yet. They have a record contract and that's about it. Have you ever heard of Parks and Gardens? I have, but that's because I was a DJ for 5 years at a station that specialized in underground music. Trust me, Parks and Gardens are definitely not rich.

Guest said:

Since when did 256k aac qualify as high-quality ? It sounds crap on a good hifi.

MilwaukeeMike said:

This story is rather meaningless without knowing how many songs are streamed. $.009 cents a song, but how many songs? millions or thousands? That's a pretty important piece of info.

What about the other 'free' music we've all been listning too for years. The radio. How much does an artist make when their song is played on the radio. $5? or $.009 cents.

The real question is, do artists make more with spotify and iTunes or without it?

tehbanz tehbanz said:

Rich? Underground bands like this haven't "made it big" yet. They have a record contract and that's about it. Have you ever heard of Parks and Gardens? I have, but that's because I was a DJ for 5 years at a station that specialized in underground music. Trust me, Parks and Gardens are definitely not rich.

when he said the rich get richer, I don't think he was talking about the artist... much rather the record label fatcats, the companies running these services etc.

I do love spotify, and have been using it for years. I do think spotify plays it off that they are "all about the artists" I mean, why wouldn't they? They NEED this music to make money period. With that being said though, they should definitely pay the artists more. The music industry has always been shoddy, and I don't see a change in the near future.

MilwaukeeMike said:

Those fatcats have been losing money hand over fist ever since music went digital.

BrainSalad said:

Simple truth is: There are too many musicians.

I use emusic.com and even though it's a smaller online music store, every week they have several thousand new albums/singles. I guess if all of a sudden 99 out of every 100 artists would drop dead almost nobody would notice. I love music but that's the sad truth, imho.

howzz1854 said:

" Some argue that artists should be thankful to earn anything at all from streaming services because, as with radio, they are promotional tools to drive sales of CDs, concert tickets and other merchandise."

who buys CDs. that's a messed up argument for the 21st century. whoever made that argument should be shot, and clearly don't respect artists. it is well known fact that no one buys CDs anymore, and MP3s are the main distribution media. paying your artists by the old business model while operating on new business model is just hypocritical. seriously, whoever made that statement should come out.

Littleczr Littleczr said:

Or you can buy Replay Media Catcher and record music straight from your sound card. Which means any song on youtube any radio stream.

Guest said:

Many of the music I've discovered via Spotify, I would never be able to do it through the old fashioned system. As a result, no money whatsoever would go to the artists. I've seen certain artists I like complaining about Spotify, but I only discovered them thanks to their service and then bought the albums, ten years old some of them. I would never have heard of them otherwise, maybe they prefer to go back to the old days when their music would only reach a few selected, but they would feel "hipper" for that. And they get rubbish money from cd's, you'd think they are getting more people going to concerts thanks to exposure, and that's where the real money is. Lack of vision, as always.

tehbanz tehbanz said:

Many of the music I've discovered via Spotify, I would never be able to do it through the old fashioned system. As a result, no money whatsoever would go to the artists. I've seen certain artists I like complaining about Spotify, but I only discovered them thanks to their service and then bought the albums, ten years old some of them. I would never have heard of them otherwise, maybe they prefer to go back to the old days when their music would only reach a few selected, but they would feel "hipper" for that. And they get rubbish money from cd's, you'd think they are getting more people going to concerts thanks to exposure, and that's where the real money is. Lack of vision, as always.

Hear Hear! I've discovered so much new music via spotify through the related artist section. If I hear a band that's really awesome, I'll check out their website to see if they're playing a show nearby, since using spotify I've been to nearly 75~100 shows, about 25 of those are from bands which I have discovered through spotify. If I like them enough, I'll buy their merch directly from them, or from their website. Yea a lot of bands make their money from merch/ticket sales and rarely rely on music sales, but it would be nice if they at least got a little bit more per stream.

I wish every recording label was run like "Sympathy for the Record Industry" was, they had an awesome run, ran by one of the coolest people ever. He was solely for the musicians and never signed a contract in his 9 year run.

1 person liked this | Guest said:

What can we say? It's a brutal era of technology with all sorts of entertainment available in a million different ways. There are lots of potential problems.

tonylukac said:

That's better than what they did before as they earned a penny on each single ONCE.

Guest said:

As others have stated above, I use streaming services as a sort of gateway to a lot of bands and their material. I will often still go to Amazon or whatever and buy the hard copy as I like to have the CD versions ripped to my PC in FLAC. I use Rdio as my streaming service, seeing as they have a windows 7.5 phone app and I like the interface.

Having said that, if a band wants to see more from their music they should be making a bandcamp page. That website is the best possible way to see a return and have useful information about your customers who do purchase your music. You can even sell merch on there!

howzz1854 said:

Maybe I am just a "casual" listen compare to some of you. but do bands really make most of their money from concerts? I just think that for the rest of the population, purchasing the MP3 is about as far as many go to contributing. I personally have only been to a concert once, and it just really wasn't my thing. and I know not everyone goes to concerts. and a lot of people never been. so for bands to really make money, and if they really do make the majority of their money through concerts, then I think the business model of music need to change. because there're so many more that DONT go to concerts and only go as far as listening to their MP3. and I can see how this can put the artists in a disadvantage, as they could be making so much more money by taking a bigger cut from their MP3s.

PinothyJ said:

Those fatcats have been losing money hand over fist ever since music went digital.

They have not been losing money, more like making less than they were. At the end of the day I have zero sympathy because it is akin to being butthurt over the fact no one buys cassettes any more - adapt or die.

Not saying; just saying...

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