by trichordist

2017 Streaming Price Bible! Spotify per Stream Rates Drop 9%, Apple Music Gains Marketshare of Both Plays and Overall Revenue

We first did this back in 2014, and then again last year, so here we are again.

As we predicted as streaming consumption grows, the per stream rate will continue to drop, every year, year to year.

This data set is isolated to the calendar year 2017 and represents a mid-sized indie label with an approximately 200+ album catalog now generating over 200m+ streams annually. 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 rate dropped to .00437 in 2016, a reduction of 16%.

The current effective per stream rate at Spotify has now dropped to 0.00397, a reduction of 9% since last year. This a cumulative reduction of 24% since 2014, which is an average decrease of 8% a year of the per stream rate.

If the music business could set a per stream rate that allowed revenue growth, proportionate to consumption growth that would be a much better model. Looking at the stats below we can actually see that working for Apple Music!

An interesting change from last year is that Pandora replaces YouTube with the greatest value gap of streams at 21.56% volume with only 7.86% of revenue. YouTube drops to 8.38% of volume with only 1.70% of revenue. Again, this is just music delivered to YouTube via the distributor for the automated song generation and it does not include Content ID or Artist Channel revenues.

For the second year in a row Apple Music Streaming sits in the sweet spot generating the second largest amount of streaming revenue.  The current per stream rate seems to have actually modestly increased from .00735 last year to .0783 this year. A nominal increase but worth noting. Apple’s current effective rate of .00783 is pretty close to double the Spotify effective rate of .00397.

There’s more good news for Apple as their market share has risen from 7.18% last year to almost 11% this year. But the bigger story is that Apple Music is now accounting for over 22%+ of music streaming revenues up nearly 11% from last year. This is good news and shows the power of both Apple’s commitment to streaming, and the value of a paid only platform. Apple Music is actively taking marketshare away from Spotify.

To put this list in the context of our previous reports and 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 (at Spotify) actually sorta matches an economic equivalent. But that’s just backing out of an arbitrary rate set by Spotify, it doesn’t actually define what the cost of a stream should be.

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.

 

These numbers are from one set of confidentially supplied data. If you have access to other data sources that you can share, we’d love to see it.

  • 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]

 

6 thoughts on “2017 Streaming Price Bible! Spotify per Stream Rates Drop 9%, Apple Music Gains Marketshare of Both Plays and Overall Revenue”

    1. Well, that could give us a sense of a fair price, in absence of a free market. Currently the notion is that 150 spins = 1 track purchase, but personally I believe that metric is way off. Typically when I informally ask student how many timed they played their favorite art, looking at iTunes/Apple Music it appears to be much lower than 150. Like things too out in high 20s. Now they have other devices that play music, and it’s never clear how long they’ve had their phone. But yes that would be valuable. I’m sure it’s lower than we think.

  2. I wrote a major hit for the Dixie Chicks, Spotify in one statement logged 35000 streams of the song. I got $5.43. The insanity of this whole thing is ridiculous. We all know that the boys at the top are getting the big money. Major publishers, major record companies while the writers, indie publishers and indie writers get nothing except a token payment. I had 1500 streams on this song by another streaming company and received $.0001. HFA issued a blanket license to one of the streaming companies in 2014 on one of my songs that was a top 40 song in the Billboard country charts in the mid-90’s, and a year later in 2015, I received a check for $.01 — that’s right one cent. I was third writer and had 1/2 of my publishing. Streaming is just legalized theft. And no one in a position to do something about it is doing squat!! And there are many, many thousands, perhaps a million or more, of songwriters & publishers who have similar stories like mine.

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