How much does the average artist earn per play on Spotify? originally appeared on Quora - the knowledge sharing network where compelling questions are answered by people with unique insights.
Answer by Glen Sears, music industry digital strategist and web developer, on Quora:
Publications and pundits love to throw around dollar amounts, but these are false figures without context. To see why, it's beneficial to understand how streaming royalties are usually calculated and paid:
- The monthly revenue of a service (Spotify, Apple Music, etc.) is calculated.
- Record labels have deals in place to get their royalty percentage flat, right off the top, so they receive their share of revenue first.
- The pros also have flat-percentage deals in place, and they are paid next.
- The streaming companies also retain a percentage for themselves, generally 15-30%.
- The streaming services contract various back office services, who often get a percentage too, rather than a flat fee. (At this point you're looking at around 40 percent of the total revenue remaining, before artists, songwriters, and publishers have even been considered.)
- To establish the "per-play allocation," you then take remaining revenue and divide it by the total number of service plays in that month.
- Each publisher (the people who represent the compositions) then gets a lump-sum payout of per-play allocation multiplied by the total number of plays of songs publisher owns.
- The publisher then delivers royalties to artists and songwriters; it is incumbent on the publisher to figure out how to split up their lump-sum payment to individual owners, and they also take a cut for the administration service.
Clearly, the amount an artist makes is directly tied to each month's performance. Not just the performance of that artist, but of their publisher and the entire streaming service as a whole.
It is dangerous to speculate on the "average" payout because there are hundreds of ownership cases that affect those payouts. Here are a few examples, each assuming that the artist in each example gets the same number of plays:
- Artist A owns 100% of the master recordings and the compositions, as well as their publishing rights. This artist would get a high average payment per play.
- Artist B owns 0% of the master recordings but 100% of the compositions, as well as their publishing rights. This artist would get a semi-high average payment per play.
- Artist C owns 0% of the master recordings but 100% of the compositions, but has a publishing company that handles administration. This artist would get medium average payment per play.
- Artist D owns 0% of the master recordings, 25% of the compositions (this might be because there are three other band members), and has a publishing company that handles administration. This artist would get a small average payment per play.
There are many other ownership scenarios that further complicate the matter. Additionally, performing artists often get secondary payouts from labels, while the term "artist" often can refer to "songwriter" or "performer" interchangeably.
Streaming services like Spotify or Apple Music are certainly not in a legal position to normalize these payments. Their job is to fulfill the contracts as they were written faithfully.
Per-play allocation looks different to every rights holder, depending on the ownership contracts involved. This makes finding a reliable "average" virtually impossible, since every arrival at an average rate is a false equivalency. Plus, it would be rendered useless by the next billing cycle.
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