music stream online has become increasingly popular among music artists. With the rise of music platforms like Spotify, Apple Music, and YouTube, artists can now make their songs available to a global audience. However, as a music professional, perhaps you’re wondering how much you can earn from such streaming services. In this article, we will dive into the pay-per-stream model on Spotify, and help you gain a better understanding of how streaming revenue works.
Spotify’s Growth and Revenue Model
According to the latest data in 2023, the global music streaming industry has grown to $6 billion and is projected to increase to $7.3 billion in the coming years. As an artist, this presents a great opportunity to leverage the growth of the music streaming industry and earn more in the future.
How Much Does Spotify Pay Per Stream?
Based on 2023 data, the average payout per stream on Spotify is between $0.003 and $0.005. Additionally, Spotify’s revenue split model for music artists is 70/30. This means 70% of royalty earnings go to the music rights holders, which includes songwriters, publishers, and recording owners, while 30% is paid to Spotify.
However, it’s worth noting that the exact amount an artist earns per stream may vary. There are several factors to consider that can affect the amount of royalties offered by Spotify.
Factors that Affect the Spotify Artist’s Payout Rate
To determine how much an artist earns per stream, several factors need to be considered:
Type of Listener – The royalties paid depend on the type of audience targeted to help an artist earn money from Spotify. Premium subscribers generate higher royalties, while free users yield lower royalties. The reason is that Spotify makes more money from premium subscribers, and as a result, pays higher royalties to artists whose music is streamed by premium subscribers.
Location of Listeners – Spotify’s subscribers are from different countries worldwide, and not every user generates the same royalty rate. For example, if your music is played by a US-based listener, you earn a higher royalty payout versus if that same song is streamed by a listener in a third-world country.
Music Distributor – Royalties that you receive depend on your agreement with your music distributor. Each distribution channel has its pricing strategy, and some may deduct a fee from your earnings.
Various Types of Spotify Royalties
Music streaming on Spotify generates various types of royalties. Understanding the type of royalty helps rights holders to determine the amount earned.
Mechanical Royalties – Likened to traditional royalty payments for physical music sales, mechanical royalties are paid whenever music is streamed or downloaded.
Performance-Centric Royalties – Publishers and music composers receive these royalties when their music composition is publicly performed, including performances during live performances, radio airplay, public broadcasts, and online streams.
More Ways to Earn Money As a Spotify Artist
Spotify for Artists can help you generate income streams beyond music streaming. If you have a verified profile on Spotify for Artists, you can take advantage of the music distribution platform’s features to sell concert tickets. Use your profile page to promote upcoming concerts, and leverage your Spotify account to boost ticket sales.
As a Spotify artist, you can also add your songs to relevant playlists to increase their visibility. Better visibility means higher earnings per stream on Spotify, so be strategic in promoting your work.
Calculating Your Royalty Rate as a Spotify Artist
It can be challenging to calculate the exact amount per stream earned by an artist on Spotify. Popularity on the platform indirectly affects an artist’s earnings, with popular musicians receiving higher royalties than lesser-known artists. Therefore, it is essential to promote your work, attract more followers and increase your popularity on the platform.
Spotify’s pay-per-stream system presents an excellent opportunity for music artists to reach a broader audience and generate income. However, securing higher royalties requires developing a fan base, targeting premium subscribers, and creating an effective promotional strategy. Additionally, platforms like SoundOn can help artists distribute and promote their music, and avoid administration charges, which can positively impact their earnings. By understanding the factors that affect Spotify royalties, you can maximize your earning potential on the platform.