Music streaming services haven’t just changed the way we listen to music, they’ve also rewritten the rulebook for artists when it comes to compensation.
According to data released by streaming giant Spotify, streaming revenue alone recorded across all streaming platforms was higher in 2021 than industry-wide revenue from all forms of recorded music for each year, from 2009 to 2016.
In 2014, the music industry generated a total of $14.2 billion from streaming, downloads, vinyl and CD sales, and performing rights. In 2021, recorded streaming revenue alone topped $16.9 billion. The boxes ring to the sound of music.
But how much do our favorite artists earn when you stream their tracks? And should that determine which streaming service you subscribe to? We thought we’d investigate.
How Artist Payments Work
Typically, streaming services pay royalties based on an artist’s share of all streams on the platform. The commercial jargon for this is Streamshare. Streaming payments are largely uniform across the industry.
Apparently, artists and bands earn around $0.0032 from Spotify per stream, compared to $0.0056 per stream from Apple Music. In the scheme of things, it really shouldn’t affect where you spend your streaming money.
Contrary to popular opinion, streaming platforms do not directly compensate artists. Artists are paid by record companies, labels, copyright management companies or distributors, such as Tunecore and CD Baby. It is the labels that distribute the payments to the artists.
Much more relevant is how we interact with our favorite bands on a streaming platform.
For example, did you know that you can now actively send a portion of your monthly subscription fees directly to your favorite bands, thanks to Tidal’s innovative pay-to-the-artist feature?
How streaming compares to vinyl and CD sales
To appreciate the scale of the music streaming industry, it’s worth taking a look at the size of the pie and the value of the different ways we consume music.
The music industry body, the British Phonographic Industry, publishes an annual update on the state of play. Its latest market breakdown, published in January 2022, gives a comprehensive overview of the UK music market as it was in 2021, revealing streaming consumption and sales figures for physical formats across the country.
Overall, we are listening to more music than ever before. In the UK, we’ve accumulated 147 billion audio streams and around 2,000 artists have been streamed over 10 million times, a 25% increase in just two years.
Here’s the big thing: when it comes to artist royalties, a musician or band that had 10,000 CD sales in 2007 would need 10 million streams on Spotify to generate comparable revenue.
The BPI says this means “nearly twice as many artists are now earning meaningful royalties as in the CD era”.
The BPI would not dwell further on the question of specific payments, but Gennaro Castaldo, director of communication at the BPI, told us: “I cannot say that we have data as it tends to be. between the artist and the manager and their label according to their particular contractual conditions and the agreed royalty rates.
Which streaming service pays artists the most? :Spotify
Market-leading broadcaster Spotify (opens in a new tab) is helpfully transparent when it comes to artist earnings, and its Loud & Clear website is packed with data on the subject.
Here are some takeaways: In 2021, Spotify paid more to artists and musicians than any other streaming service, $7 billion (US) in total.
The streamer says around 1,000 artists made $1 million in revenue in 2021, while 450 artists earned over $2 million and 130 artists earned over $5 million.
The number of artists and performers reaching these milestones has doubled since 2017. Spotify also estimates that over 50,000 artists have earned $10,000 from Spotify, and likely over $40,000 across all recorded revenue streams.
Just to be clear: Spotify does not pay musicians directly. Like other music streaming services, they remunerate rights holders, i.e. record companies and distributors. They pocket a share of subscription and ad revenue, which is then split based on individual contracts and other complicated legalities.
Which streaming service pays artists the most? : Qobuz
Rival music broadcaster Qobuz (opens in a new tab) is both a music streaming platform and an online music store. Subscribers can stream in High-Resolution Audio and purchase studio-quality album downloads. It also employs teams of experts to curate playlists. Qobuz wears its musical fandom on its sleeve.
During the first lockdown, Qobuz supported artists by donating 100% of all new first-month subscription revenue to rightsholders.
Georges Fornay, deputy general manager of Qobuz, told us: “We believe in respecting the work of artists by ensuring that the quality we offer is as faithful as possible to the original. That’s why we favor studio-quality music. We believe that talented artists should have a fair chance to have their music discovered through music curation and fair compensation.
A convincing alternative to Spotify? We think so.
Which streaming service pays artists the most? : Tidal
Tide (opens in a new tab) found a brilliant way for fans to directly help fund their favorite artists. If you’ve never considered Tidal before, we think this initiative might just sell you.
As part of its mission to create an artist- and fan-centric business model, subscribers to its Hi-Fi Plus tier (which gives you Hi-Res audio and new Dolby Atmos mixes) can enjoy Direct Connect with their favorite bands. .
Tidal’s Direct Artist Payout is a monthly program where a percentage of your HiFi Plus subscription is paid to your most streamed artist of the month, so you can truly control which artists get your money’s worth.
For example, if you had German folk metal rockers Feuerschwanz Memento Mori in hard rotation, they will receive £2 directly from your monthly Tidal subscription. Tidal also tells you through the app that gives them a tight race for your money in terms of your streams played, so you can bump them up if you want to send money their way.
In January this year, Tidal also introduced a new approach to royalty payments, with its fan-centric royalty program.
Its HiFi Plus subscribers attributed to royalties are no longer aggregated, but rather paid based on your streaming activity to better cement the relationship between fan and artist. Tidal also claims that its HiFi Plus tier pays significantly higher per-stream royalties than its competitors, “at least 50% or more over the normal rate on the four biggest streaming services,” we were told.
Which streaming service pays artists the most? : Apple Music
Apple Music (opens in a new tab) has evolved over the past few months, providing subscribers with premium audio playback quality: 16-bit/44.1kHz CD quality, 24-bit/48kHz Apple Music Lossless, and 24-bit/192kHz Hi-Res Lossless – and with the right pair of headphones, Apple Digital Master and Dolby Atmos deliver the ultimate sound experience.
When it comes to paying artists, Apple report (opens in a new tab) they pay the same 52% overall rate to all labels, explaining, “While other services pay some independent labels a significantly lower rate than they pay major labels, we pay the same overall rate to all labels. That means artists can distribute music the way they want, knowing that Apple Music will pay the same price. Sign with a label or stay independent; we believe in the value of all music.
So what does this correspond to? Well, Apple says its average rate per game is $0.01 and points out that the value “varies by subscription plan and country or region” and that the figure includes label and publisher royalties. This number is from 2020, when the Cupertino tech giant last updated its details.
Apple also reports that in 2020 they paid royalties to more than five million artists, one million more than in 2019, adding, “The number of artists whose catalogs generated recording royalties and publishing over $1 million per year has grown more than 120% since 2017, while the number of artists whose catalogs have generated over $50,000 per year has more than doubled.”
Which streaming service pays artists the most? : Amazon Music
Online shopping giant Amazon first dipped its toe into the music streaming scene in 2007 and now offers different tiers for music fans to find themselves through Amazon Music. (opens in a new tab).
It all starts with Amazon Music Prime, which gives Prime members free access to over two million songs. It’s a good starting point, even if it’s more of an appetizer than a full meal. For a bigger slice of the pie, you’ll need to upgrade to Amazon Music Unlimited which starts at $8.99/£8.99 per month. This tier opens the door to 90 million tracks and has added HD support at no additional cost. Overall, it’s quite an attractive music streaming service. There’s also a 30-day free trial so you can get a good taste of the service.
As for how much Amazon pays to artists, Producer Hive reports that they pay an average of $0.004 per stream, which puts Amazon Music in the middle of the pack.
Music Streaming and Artist Payments – Verdict
Music streaming services largely follow the same business model when it comes to paid bands and different rights holders. It’s a complicated business and any difference in pennies per stream shouldn’t influence your choice of subscription service.
As befits its market dominance, Spotify pays the lion’s share of revenue to musicians and continues to grow its business. It can only be a good thing.
But we appreciate Qobuz’s commitment to its artists, you really get the feeling that the service is made up of music lovers – it’s also a superb option when it comes to Hi-Res Audio.
However, Tidal is a really innovative streaming service here. Its direct-to-the-artist system, which lets you take direct ownership of where at least part of your sub goes on a monthly basis, is inspired. It is unique in allowing you to direct funds to specific artists.