According to the Recording Industry Association of America (RIAA), paid subscriptions have taken the place of album sales. And if physical sales weren’t struggling enough, the RIAA also reported that the pandemic decreased revenue from physical products by 23%. With that part of their income declining and in the face of industry-wide shutdowns on live events, music streaming revenue has become even more critical for artists.
Yet, it is most common that Spotify pays artists as little as $.0033 per stream. Translated, you’ll need about 250 streams to earn a dollar.
This hasn’t always been the case — Spotify’s payout rates have changed over time. In 2014, they paid $.00521 on average, but two years later, the average rate dropped to $.00437. By 2017, the average pay rate had been reduced again to around $.00397, according to artist-rights site The Trichordist.
Royalties are the payments that an artist earns from streams. Spotify royalties are specifically distributed from the net revenue collected from ads and Premium subscription fees.
When Spotify pays artists, they tally the total number of streams for each of an artist’s songs, and determine who owns each song and who distributes it. First, the rights holders are paid. Next, the distributor is paid (this may be the same as the rights holder in some cases). And finally, the artist gets paid.
“Now that there are more distribution outlets, that sector of the industry is starting to scale. Meaning the cost is starting to lower,” said Sharlea Brookes-Keyes, manager for Boston rapper Vintage Lee. “Tunecore does 100% royalties [meaning they don’t take any of your streaming revenue], but you have to pay an annual fee of $50 for an album and $10 for a single.”
More popular artists have their music streamed more, which means they earn more. So for artists to obtain more money, they need more streams.
The most surefire way to grow a fanbase, many artists have found, is by releasing music consistently and often, marketing and promotion. A new magnum opus every year is great, but a sporadic release schedule will mean a smaller pool of listeners. So now we come to the point, the more you release, the more you are active, the more Spotify supports your music.
Communicate with your Publishers how often you should release and why, prepare marketing strategy together and run promotional campaigns.
Also not all listeners are the same. Spotify Premium listeners pay more per stream than Free tier listeners. And the pay-per-stream also changes based on what country a listener is from; according to music distributor iGroove, listeners from the US pay $0.0035 per stream, for example, while Italian listeners will pay $0.0019.
The feature gives artists a choice to submit unreleased music to Spotify, for a chance at having that music put on a playlist as soon as it comes out. Once an artist chooses their track and submits it, they can tailor the song’s settings according to mood, style, genre, type of recording, and more. This helps Spotify decide which editorial and algorithmic playlists your music belongs in and how to introduce the track to more fans. Once an artist makes it to a more notable playlist, it increases the likelihood they’ll gain more followers and more streams.
And we’ve came to the point where artists can gain more listeners, if they have quality product, good marketing strategy and good team behind to lead them… But when it comes to bigger exposure, there is nothing that money can’t handle with good Spotify promotional campaigns!