Spotify Per Play Rates Continue to Drop (.00408) … More Free Users = Less Money Per Stream #gettherateright

Down, down, down it goes, where it stops nobody knows… The monthly average rate per play on Spotify is currently .00408 for master rights holders.


48 Months of Spotify Streaming Rates from Jun 2011 thru May 2015 on an indie label catalog of over 1,500 songs with over 10m plays.

Spotify rates per spin appear to have peaked and are now on a steady decline over time.

Per stream rates are dropping because the amount of revenue is not keeping pace with the  number of streams. There are several possible causes:

1) Advertising rates are falling as more “supply” (the number of streams) come on line and the market saturates.

2) The proportion of  lower paying “free streams”  is growing faster than the proportion of higher paying “paid streams.”

3) All of the above.

This confirms our long held suspicion that as a flat price “freemium” subscription service  scales the price per stream will drop.  As the service reaches “scale” the pool of streaming revenue becomes a fixed amount.  The pie can’t get any larger and adding more streams only cuts the pie into smaller pieces!

The data above is aggregated. In all cases the total amount of revenue is divided by the total number of the streams per service  (ex: $4,080 / 1,000,000 = .00408 per stream). Multiple tiers and pricing structures are all summed together and divided to create an averaged, single rate per play.

3 thoughts on “Spotify Per Play Rates Continue to Drop (.00408) … More Free Users = Less Money Per Stream #gettherateright

  1. David,

    With regards to your hypothesis “The proportion of lower paying “free streams” is growing faster” you are correct: freemium revenue was 14% of gross revenue in January 2014. By December 2014 it was 23%. That’s over a 50% increase in the free:paid ratio.

    Some other thoughts to consider:

    1. Even if we leave Freemium completely out of it, the revenue per subscriber is dropping. A review of the section 115 disclosures shows that revenue per subscriber *among just premium subscribers* dropped precipitously throughout 2014. See here:

    2. This revenue per sub slippage is impacting the price per stream among premium subscribers (dropping from $0.00906 to $0.00747 in 2014), even though the average stream per subscriber stayed relatively constant at ~722 streams per month per premium subscriber.

    3. I asked Spotify for comment (I went through both proper and back channels). I know for a fact they saw it (you can observe visitors to a google spreadsheet, and when I invited them to review they were the only ones besides myself who had the link), but I got no comment from them either on or off the record.

    4. I suspect the driving factor in this revenue per subscriber slippage is a combination of 30-day free trials and a rapidly expanding subscriber base. By adding these back in, you can account for a lot of this slippage.

    5. However after running the numbers it was clear that even if you add back in the free-trial subscribers you still come up short roughly 5-6%. It’s not a ton of revenue but it was $1.6M in December alone. Possible explanations include free-trials not converting, bad debt (i.e. users not paying/chargebacks), and fraud.

    6. One thing I’m unclear on: is the price per stream “blended” at a macro level (i.e. country/region), or are the tiers paid separately per rightsholder? In other words if I am an artist who has a high paid:free ratio will I be paid the same per-stream rate as an artist with a low paid:free ratio?

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