Apple vs. Spotify: Who can follow the math?

Apple says it pays a penny per stream, but it can dip lower. Spotify pays half to two thirds of a penny, but it streams more.

From “Apple Music Reveals How Much It Pays When You Stream a Song” posted Friday:

Apple Music told artists it pays a penny per stream, according to a letter viewed by The Wall Street Journal.

The disclosure, made in a letter to artists delivered Friday via the service’s artist dashboard and sent to labels and publishers, reflects music-streaming services’ increasing efforts to show they are artist-friendly. Apple Inc.’s move can be seen as a riposte to Spotify, which last month shared some details of how it pays the music industry for streams on its platform.

Apple’s penny-per-stream payment structure—which music-industry experts say can dip lower—is roughly double what Spotify, the world’s largest music-streaming service, pays music-rights holders per stream. Spotify pays an average of about one-third to one-half penny per stream, though its larger user base generates many more streams. Apple’s payments come out of monthly subscription revenue from users…

Artists aren’t paid directly by streaming services, so a single play of a song doesn’t result in a penny going into that artist’s account. Instead, streaming services pay royalties to rights holders—a group that includes labels, publishers and other distributors—which in turn pay artists based on their recording, publishing and distribution agreements. Both Apple and Spotify pay rights holders based on the share of total streams their artists garner on each service.

Yet artists cite the per-stream pay rate as an indicator of their earnings. Major labels say the average monthly streams per user is a better measure of the streaming economy, and growing numbers of streams mean more money coming in for artists. Both Spotify and Apple, they say, are at or near the 1,000-streams-per-listener monthly benchmark that is seen as a success.

In the letter, Apple says it pays 52% of subscription revenue, or 52 cents of every dollar, to all record labels. Spotify, which generates revenue both from subscriptions and its free ad-supported tier, says it pays two-thirds of every dollar of revenue to rights holders, with 75% to 80% of that going to labels—translating to 50 to 53 cents on the dollar, depending on agreements between the service and different labels.

My take: Lost me.

8 Comments

  1. Michael Goldfeder said:
    Apple needs to file an immediate complaint with the EU about the shoddy and abhorrent mistreatment of musical artists undertaken by Spotify.

    6
    April 16, 2021
  2. Gregg Thurman said:
    What’s the complaint of App developers? They receive 70% on the dollar from Apple.

    0
    April 16, 2021
  3. Jerry Doyle said:
    “…. My take: Lost me.”

    Your take is spot-on for most of us. I know this fact: musicians make money from playing concerts, not from having their songs played over-the-air.

    I remember clearly the days in the ‘50s & 60s’ recording artists traveling “personally” to visit popular DJs to get them to listen to their records & persuade the DJ to play the records on-the-air. If the musician later became popular, then that DJ always had some markers to call-in from the musicians such as a special concert for a local deserving civic or community group, or a special favor such as access to free concert tickets.

    Things really haven’t changed much. Back in the ’50s & ‘60s musicians got a fraction of a penny each time their song played over-the-air. It seems to me that musicians are better positioned today than in the past.

    Continue….

    2
    April 16, 2021
  4. Jerry Doyle said:
    Continued….

    Contemporary musicians have easier access to humongous numbers of listeners world-wide whereas, back in the ‘50s only access to listeners in a small geographical region. I remember Elvis starting out at the Louisiana Hayride where my uncle worked at KWKH in Shreveport. Many top musicians in the 50’s got their start at the Hayride. (I got to sit behind stage as a kid with them… cool).

    Elvis was widely known for a period in the Southeast & East Texas. It took a couple of years before Elvis exploded onto the national scene when his contract was bought out by a major record label from Sam Philips in Memphis. That no longer is true today. Musicians do not have to claw their way from regional to national exposure to get their songs streamed to huge audiences going from DJ to DJ, from town-to-town to get airtime for their records.

    In summary, it seems to me that Apple is doing far more than the industry ever has done historically for groups of musicians starting out and for musicians already established.

    5
    April 16, 2021
  5. bas flik said:
    Jerry, did you ask for a signature from elvis?

    2
    April 17, 2021
  6. Ken Cheng said:
    “Spotify pays an average of about one-third to one-half penny per stream,”

    Math is hard…

    1
    April 17, 2021

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