If you’re a musician wanting to make a living from your art, you’ll want to know how Spotify payouts work. How much does Spotify pay per stream on average? What kind of royalties does my music on Spotify generate?
In this article, we’ll break down how Spotify royalties are calculated, and how much artists can expect to earn per stream. We’ll also take a look at how Spotify is evolving as a streaming platform, and what the future of streaming payouts looks like. So whether you’re just starting out in the music industry, or you’re curious about how your favorite artists make their money, read on!
How much does Spotify pay per stream?
On average, Spotify pays artists between $0.003 and $0.005 per stream. That equals a revenue split of 70/30 for the recording owners and Spotify, which works out to be an approximate revenue share of 70/30.
That means that 1 000 Spotify streams will on average make you $3-$5
And a whopping 1 million streams will make you on average between $3000 to $5000
Though the per stream numbers are low, it is essential to remember that Spotify’s advantages for your music career go far beyond the digital royalties payouts.
You might be wondering why Spotify pay per stream isn’t always a constant amount. Let’s dive deeper into it.
How do Spotify streaming payouts work? And why streams are not equal?
Given that Spotify will increasingly shape the music industry in the coming years, it’s beneficial to understand how the company pays artists, you included.
The distribution model that Spotify and many other on-demand music streaming platforms follow is known as a “pro-rata” or “platform-centric” model.
The sales and payouts for individual artists who use the platform are distributed according to the following four criteria:
1. Streaming revenue pool in the total – total number of streams
2. The negotiated global payout as a percentage of that revenue
3. Amount of streams on the platform in total
4. The number of streams your music has generated
So, in the streaming world, think of revenue as a group of separate buckets rather than one big pool. There are different types of subscriptions (free and premium), local markets, countries, and more that all have their own bucket. This just means that some streams make more money than others.
All the subscription and advertising money from those separate buckets is collected in a single pot, and then a percentage of it is distributed to artists proportionally to their respective number of streams. ( and not the actual streams an artist got)
So the pay-per-stream rate for each artist releasing music will be in continuous change – simply because there are so many elements that influence the overall revenue.
What affects Spotify royalty rates?
There are a number of factors that impact how much Spotify pay per stream, including:
1 The total number of Spotify premium service subscribers on the platform (premium plan)
While Spotify has become one of the most popular streaming services in the world, it’s important to remember that not all users are paying subscribers. In fact, only about 45% of Spotify users actually pay for their subscription – which means that a huge chunk of streams on the platform do not generate revenue for artists and rights holders.
2 Number of non-paying subscribers (free tier) and ads revenue pool linked to them
In addition to the number of paying subscribers, there is also a pool of non-paying Spotify users who listen to music on the platform. This revenue is generated from advertising and therefore comes with its own set of conditions on how it can be distributed among artists.
3 Geographic location and market size of streams
As Spotify has rolled out to different countries across the globe, it’s important to consider the way this impacts how much artists are paid per stream. Different markets will have different rates, depending on how competitive they are and the amount of money Spotify is able to generate from premium users in that region.
A Spotify premium account, for example, costs about $18 for users in Denmark but less than $2 for users in India. Naturally, payouts from your streams generated in those regions will differ as well.
4 Type of subscription (ie. free vs paid subscription)
Another critical factor that impacts the amount Spotify pays per stream is the type of subscription a user has. Free users, who do not pay for their Spotify account, generate far less revenue than premium subscribers – so streams generated by these types of users will often come with lower payout rates.
(In some sources, you can come across information that only premium users generate artists payout. This is not true.)
5 Digital distributor of your music
The royalties paid by Spotify are not determined by any rights agreement between Spotify and the artist.
The royalty payments you, as an artist, will receive on the platform are based on your agreement with your music distributor or label – not from Spotify itself.
This implies that the amount you get paid per stream on Spotify is ultimately determined by the music company with whom you’re dealing, as well as how much of a percentage they take.
If you are signed to a record label you should also consider the cut that your label will take. Some labels can take up to 50% of your Spotify royalty payment. In addition to the type of contract you have signed, the size and prominence of your label will also play a role in how much they take. Major labels generally take a larger percentage than independent labels because they have more overhead costs. For example, a major label may have to pay for radio promotion whereas an independent label may not.
Why Spotify per stream payout is so low?
Overall, it’s important to remember that the Spotify per stream payout can be quite low – particularly for artists who do not have a large following on the platform.
This is because the Spotify royalty rates are determined by a number of factors, including the size and type of subscription each user has and how competitive their market is.
Another thing to consider is how much music Spotify actually has in its catalog. With recent numbers claiming that 100,000 songs are uploaded to Spotify daily, the competition among artists has never been higher. Not only does this increase rivalry, but it also “deludes” each artist’s share of streams. (remember, Spotify uses a “pro-rata” model)
Can an artist make living with Spotify streams?
The platform has experienced growth in the number of musicians earning money in recent years. And that is great! But out of the 8 million creators on Spotify last year, only 13 000 of them generated $50k or more from their catalogs.
So while it is certainly possible to make a living from Spotify streams, this will require significant success on the platform. This can be extremely challenging for newer artists – particularly those who are just starting out and have low follower counts.
If you’re an independent artist who doesn’t yet have a large following or high monthly listeners count, don’t get discouraged – there are other ways to make money with your music.
So, is Spotify a good platform to be on?
A short answer is: Yes, absolutely.
Even though this service does low payout per stream, Spotify is still undoubtedly an excellent platform for independent artists for a number of other reasons:
- Firstly, it is extremely popular, meaning that there is a large potential audience for your music. It has the biggest number of listeners.
- Secondly, it is easy to use, and you can upload your music quickly and easily.
- Finally, it has a range of features that make it ideal for promoting your music, such as the ability to create playlists and share tracks with other users.
Despite the low royalties payout, Spotify is still a great platform for independent artists who are looking to reach a wide audience and promote their music effectively. If you are an independent artist and want to reach more listeners Spotify is a place to be.
How to make more money from streams
While there are many factors that determine the amount Spotify pays per stream, there are some key strategies you can use to boost your revenue and earn more money from your music on this streaming service platform.
Get your music also on other streaming services:
We know that Spotify is a major music streaming platform and an incredible tool for musicians. But it’s not the only streaming service out there. Artists are actively using other streaming services, such as Apple Music, Amazon Music, Deezer, YouTube Music and Tidal to name a few.
For some streaming services, the average per stream royalties payout is far greater than what Spotify pay artists. By placing your music on all different possible platforms you will touch more listeners and potentially increase the amount of money your streams generate.
To give an example Tidal’s streaming royalties are on average 3 times more than the royalty that Spotify payout to artists. But streaming royalties is not the only factor to keep in mind here. Tidal has also way fewer listeners than Spotify, which inevitably will affect the volume of streams an artist can get on this streaming service.
Another streaming service to mention is Apple Music. It presents a good balance between a high market share of streams and a high average per stream rate.
Another way to reach more listeners and get more streams on Spotify is to get your music included in playlists. Spotify has a range of playlists, from those curated by users to official Spotify options and genre- or mood-based selections. Here you can find how to get your music on Spotify playlists.
What kind of royalties do artists get from streaming services like Spotify?
There are 2 types of royalties artists get from digital streaming platforms:
The money that rightsholders are owed for master recordings streamed on Spotify is paid to artists through the licensor, which is typically their record label or distributor.
Streaming platforms pay the songwriter(s) or owner(s) of the music publishing royalties. The payments for the use of a song are given to the publisher, the society that collects the payment, and the agency that procure the music based on where the song is played.
How often does Spotify pay artists?
Spotify typically pays royalties on a monthly basis, typically within the first two weeks of each month. But exactly when artists will get paid depends on their label/distributor. Some artists may receive payments sooner, while others may have to wait until the end of the month. In any case, it’s important for artists to stay in touch with their label/distributor to ensure they’re getting paid correctly and on time.
Where can I find out who to talk with if I have concerns about my royalties?
For any specific issues concerning how much Spotify pay per stream, or your recording royalties payout, you should contact your distributor or your label. Since it’s they who receive and process your royalties payments.
You may contact your publisher, performing rights organization, or collecting society for questions regarding publishing payments.
Can artists make living with Spotify streams?
To make a decent amount of money out of music streaming artist needs a lot of Spotify streams – whopping million streams on a monthly basis. For an independent artist, this is a difficult task to achieve. Even combining streams from other music streaming companies with a higher pay per stream rate (like Apple Music, Amazon Music, etc) it’s still a hard-to-reach goal.
The good news is that independent artists have other ways (a lot more than you think) to make money from their music. In this guide, we have listed 39 proven ways how independent artist can make money.
What is the future of streaming payouts?
Spotify has been attempting to reduce the per-stream payout for artists. You may learn more about how Spotify attempts to reduce royalties by reading it here in detail.
Some critics have argued that streaming platforms need to invest more in artists if they want the music industry to thrive. However, with so many different factors affecting how Spotify pay per stream, it is difficult to predict how per stream rate will change in the future.
As an artist, don’t get caught up in the numbers game when it comes to predicting your future digital streaming payouts. Instead, make great music and focus on how you can engage and connect with your fans to build a strong fanbase that will continue to support you and stream your music on Spotify.
Because at the end of the day, it’s not about how much money you generate from streaming on Spotify – it’s about how many people are listening to and enjoying your music! And if you can do that, you’ll be successful in the long run.