Report claims Apple Music pays more to record labels in royalties per stream than Spotify
Record labels are getting a better deal on streaming music royalties with Apple than major rival Spotify, according to a report, with Apple Music streaming rates claimed to be nearly double what is paid out by its main competition.
Research published by artist rights blog The Trichordist advises Apple paid out an average of $0.00735 per song stream in 2016, compared to Spotify's $0.00437 per stream figure.
Spotify's figures for 2016 are in fact down from a similar report issued in 2014, when it paid out a more generous average per-stream rate of $0.00521, a two-year drop of 16 percent.
The data is sourced from an unnamed "indie label" with a music catalog of approximately 150 albums available to stream. It is claimed the sample is made up of over 115 million streams across all services, with all royalties calculated at a gross rate before distribution fees are removed.
Apple Music is considered to be in a "sweet spot" on the chart because of its streaming rate, providing 13.35 percent of all streaming revenue in the sample with 7.18 percent of the streaming quantity total. By comparison, Spotify generated 69.57 percent of the revenue from 62.97 percent of streams in the measured period.
Spotify's low revenue figure might be attractive to potential investors awaiting the music service's IPO, thought to take place sometime this year, but record labels and artists would rather the royalty rate increase closer to its rivals. An increase in royalties will put extra pressure on the company's finances, which has seen the company endure yearly net losses, as well as weakening the IPO.
Apple's recommendation to the Copyright Royalty Board to adopt a flat royalty rate may add additional pressure to Spotify, if ratified. A flat royalty per stream could make Spotify's advertising-supported free tier too expensive to sustain, even if supported by revenues generated from subscribed users.
Google's two services, Google Play Music and YouTube, take the third and fourth places on the chart when ordered by revenue share. Google Play Music offers an average streaming rate closer to Apple Music, at $0.00676 per stream, generating 4.03 percent of measured revenue from 2.36 percent of streams.
YouTube is shown to be one of the most inefficient streaming revenue sources on record, generating 3.81 percent of revenues from a high 21.7 percent of streams due toan extremely low $0.00069 average revenue rate per stream. The video streaming site appears in the list due to it having a licensed subscription service called YouTube Red, but it is unclear if advertising-supported videos from non-subscribers are included in the figures or just subscribed users.
The report notes the top ten streaming services account for 97.82 percent of all streams, and generates 99 percent of overall revenues. Other services listed in the top ten include Deezer, Rhapsody, Xbox Music, Amazon, Tidal, and Telecom Italia.
Research published by artist rights blog The Trichordist advises Apple paid out an average of $0.00735 per song stream in 2016, compared to Spotify's $0.00437 per stream figure.
Spotify's figures for 2016 are in fact down from a similar report issued in 2014, when it paid out a more generous average per-stream rate of $0.00521, a two-year drop of 16 percent.
The data is sourced from an unnamed "indie label" with a music catalog of approximately 150 albums available to stream. It is claimed the sample is made up of over 115 million streams across all services, with all royalties calculated at a gross rate before distribution fees are removed.
Apple Music is considered to be in a "sweet spot" on the chart because of its streaming rate, providing 13.35 percent of all streaming revenue in the sample with 7.18 percent of the streaming quantity total. By comparison, Spotify generated 69.57 percent of the revenue from 62.97 percent of streams in the measured period.
Spotify's low revenue figure might be attractive to potential investors awaiting the music service's IPO, thought to take place sometime this year, but record labels and artists would rather the royalty rate increase closer to its rivals. An increase in royalties will put extra pressure on the company's finances, which has seen the company endure yearly net losses, as well as weakening the IPO.
Apple's recommendation to the Copyright Royalty Board to adopt a flat royalty rate may add additional pressure to Spotify, if ratified. A flat royalty per stream could make Spotify's advertising-supported free tier too expensive to sustain, even if supported by revenues generated from subscribed users.
Google's two services, Google Play Music and YouTube, take the third and fourth places on the chart when ordered by revenue share. Google Play Music offers an average streaming rate closer to Apple Music, at $0.00676 per stream, generating 4.03 percent of measured revenue from 2.36 percent of streams.
YouTube is shown to be one of the most inefficient streaming revenue sources on record, generating 3.81 percent of revenues from a high 21.7 percent of streams due toan extremely low $0.00069 average revenue rate per stream. The video streaming site appears in the list due to it having a licensed subscription service called YouTube Red, but it is unclear if advertising-supported videos from non-subscribers are included in the figures or just subscribed users.
The report notes the top ten streaming services account for 97.82 percent of all streams, and generates 99 percent of overall revenues. Other services listed in the top ten include Deezer, Rhapsody, Xbox Music, Amazon, Tidal, and Telecom Italia.
Comments
Youtube isn't helping at all. Almost all teens stream free and though illegal uploads.
This. And not just teens. Google likes to pretend they're doing something about copyright infringement on YouTube but they're not. The few people I know who use YouTube as their music/movie player all say the same thing: I can find whatever music or shows I want. If YouTube takes it down then someone else puts up another one. It's always available from somebody.
If you want to go by an 'unnamed indie label' with a measly 150 albums .
Their alternative is nobody ever hears about them ever or they can fork out tens of thousands to make cd's - which nobody buys anymore - tens of thousands more to market and distribute those cd's. To get what? 30 cents/disc.
There are some songs i've streamed over 100 times. The artist gets .73 cents for that.
I can think of one artist who's 9 track album I have streamed well over 100 times. Thats $6. $6 they otherwise would never have had. I've turned many friends on to this artist as well. So they have made a lot of money they otherwise would never have had with minimal investment and beholden to a record label for 6 years...
https://thetrichordist.com/2014/11/12/the-streaming-price-bible-spotify-youtube-and-what-1-million-plays-means-to-you/
Streaming is good for totally unknown bands with guys not depending on that to live on (second job) to get known, but once they get well known and have mid level success it is a totally losing proposition.
Those mid level success bands could live from touring once in a while, but now need to tour constantly (which is impossible), to get to not even close to the kind of money they had before at their peek. Bigger bands are mostly unviable as sole means of making money for all but a short period of peek fame (1-3 years).
A lot less artist can actually live well from their music these days than before. I know quite a few artist (solo and band) for the last 25 years (a friend of my sister is in the industry as a singer, songwriter and producer) and it has now become very hard to pay the bills.
They reckon Spotify has a 69% market share - and Apple Music has something like 13%?
I find that a little hard to believe.
Going by the reported paid subscribers numbers that we've seen, and when the respective services supposedly hit various paid subscriber levels, it seems that Spotify would have averaged about twice as many paid subscribers for the whole year - perhaps a bit more. But you also have to account for the revenue generated by people using the free, ad-supported, Spotify service. What would that push the revenue ratio up to? 3 to 1 maybe? It's hard to say, but I wouldn't expect it to be 5 to 1.
There are other possible reasons for the disparity. For instance, it could be that Spotify subscribers tend to listen to the artists on the indie label they got this data from more than Apple Music subscribers do. I assume that all of the albums on this indie label are available to stream through both services, otherwise they should have made mention of the fact that they weren't. But it could still be that Apple Music subscribers tend to have a bit different taste in music or different kinds of music tend to be promoted more on one service or the other or their discovery / recommendation algorithms differ enough to cause certain artists to see a higher portion of the streams on one service than they do on the other. That shouldn't affect the per-stream average payout calculations , but it could affect how well the revenue share and stream share numbers (for this indie label) line up with what's going on overall.
"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."
But you have to remember that that 70% of the pot is not a constant just based on the number of subscribers. If Apple has 20M subscribers but each subscriber pays and average of $9.00 and Spotify has 30M subscribers but each subscriber pays an average of $6.00, the pot would be the same for each company (70% of $180M). (Which can happen due to how many subscribers are in family plans or paying student discounts.) But Spotify would have 10M more people streaming. So its not just the number of streams per subscriber that affects the per stream pay out rate to the Music Labels, its also the amount each subscriber pay for their subscription. If each Apple subscriber stream at the same rate as each Spotify subscriber, Apple would end up paying more per stream than Spotify (based on this scenario). And subscribers with student discount or under a family plan would be paying out less per stream than a single subscriber paying regular subscription cost, if they all stream at the same rate.