The last time we did this was back in 2014, so we thought it was time for an update. Not a lot of surprises but as we predicted when streaming numbers grow, the per stream rate will drop. This data set is isolated to the calendar year 2016 and represents an indie label with an approximately 150 album catalog generating over 115m streams. That’s a pretty good sample size. All rates are gross before distribution fees.
Spotify was paying .00521 back in 2014, two years later the aggregate net average per play has dropped to .00437 a reduction of 16%.
YouTube now has their licensed, subscription service (formerly YouTube Red?) represented in these numbers as opposed to the Artist Channel and Content ID numbers we used last time. Just looking at the new YouTube subscription service numbers isolated here, they generate over 21% of all licensed audio streams, but less than 4% of revenue! By comparison Apple Music generates 7% of all streams and 13% of revenue.
Speaking of Apple, they sit in the sweet spot generating the second largest amount of streaming revenue with a per stream rate .00735, nearly double what Spotify is paying. But, Spotify has a near monopoly on streaming market share dominating 63% of all streams and 69% of all streaming revenue. The top 10 streamers account for 99% of all streaming revenue.
To put this list in the context of our 2014 numbers we’re adding the chart below with the data sorted by the quantity of streaming plays required to match the revenue of a single song or album download. This is important as we work towards defining and setting a fair per stream rate and also setting an accurate economic equivalent of streams to songs and albums for the purposes of charting.
Billboard currently calculates 1,500 streams to one album for the purposes of charting, which at current streaming rates actually matches an economic equivalent. However, that is most likely a highly excessive numbers of plays to achieve that economic equivalent. But, more on that later…
Keep in mind every streaming service has a key piece of data that would allow artists and labels to set a fair per stream rate. Every on demand streaming service, Apple, Spotify, Tidal, Google Play all know how many times a song is played (per person) on average over time. This is the data that is key to setting fair streaming rates. Who will share this information? Apple, Jimmy Iovine, we’re looking at you.
- HOW WE CALCULATED THE STREAMS PER SONG / ALBUM RATE:
- As streaming services only pay master royalties (to labels) and not publishing, the publishing has to be deducted from the master share to arrive at the comparable cost per song/album.
- $.99 Song is $.70 wholesale after 30% fee. Deduct 1 full stat mechanical at $.091 = $.609 per song.
- Multiply the above by 10x’s and you get the album equivalent of $6.09 per album
[EDITORS NOTE: All of 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: $5,210 / 1,000,000 = .00521 per stream). In cases where there are multiple tiers and pricing structures (like Spotify), these are all summed together and divided to create an averaged, single rate per play.]
[royalties][streaming royalties][music royalties][royalty rates]
The Trichordist 
Thanks for compiling and publishing this information. These music services should be required to be much more transparent than they are. Your efforts go a long way toward providing a look at what is really going on.
I have many questions (and may follow up with some of them), but would like to know if you can address this one:
When a service like Spotify pays an “average” of $0.00437 per stream, does that mean that for each incremental “play” Spotify pays out an average of an additional $0.00437? If not, why not?
A Spotify Family Subscription costs just $14.99 per month, and that allows each of the family members unlimited streams. In my family, that is five users. I estimate that for the five of us we stream an average of 10 or more hours of total music per day, or 300+ hours per month for the entire family. That means that we play an average of 6,000+ songs per month. Does Spotify actually pay out $26.22 per month (6,000 x $0.00437) based on our usage, for a net revenue of negative $11.23?
All numbers are the result of taking the total amount of revenue and dividing it by the total number of streams to produce a net rate per stream. As streaming rates vary (based upon revenue vs consumption) this is the only real way to have a reasonable benchmark. Spotify pays out (they say) 70% of (recognized?) revenues to rights holders. The more streams there are, the less each stream is worth, unless the revenues grow faster than streaming consumption. But that hasn’t happened yet.
Thanks, I figured as much. I ran a retail business for 16 years. Really wish my suppliers would have let me price all my products as low as I wished, and then just send them a check for 70% of the revenues. Such a model would have worked great (until all the suppliers went out of business).
Thank you so much for this fundamental update: I inserted the first version of your “Streaming price bible” in my video on YouTube talking about the great complexity around the streaming business model (video in Italian language).
Sincerely, I can’t see a real shift towards user-centric model than pro-rata one: we must resign ourselves to these small changes?