Are you one of those that find streaming services to be the great revolution of music listening? To access infinite volumes of music today you just need a simple subscription to a major streaming service such as Spotify, Tidal or Deezer, and most music industry experts agree on the positive impact it has had on the overall income in the industry. In fact, it has contributed to minimize the damages of peer-to-peer networks – or much simpler, illegal filesharing. Those were the days when Napster, Kazaa and Gnutella offered free music at no cost at all – for the listener. For artists, digitization of music has been a complete disaster.
For most people with some sense of mathematical knowledge it’s easy to comprehend the impact that peer-to-peer networks as Napster had on artists’ earnings. Traditionally, if you sold a CD the record label to which they were signed just ripped them off of somewhere between 87-92% of their earnings. “Reimbursements for studio recordings, production costs, distribution costs bla bla bla” were well used arguments. But still, an artist earned somewhere in between 8-13% per sold CD.
With peer-to-peer networks and free downloading of music it is quite easy for someone passing through first grade math to understand that artists didn’t earn a dime. However, the production costs, promotion costs, distribution costs (well, it can be discussed) and all the other costs were still there. So what happened? Record labels lost millions of euros/dollars, artist contracts were terminated on a massive scale to fit the budget – downsizing, to use business terminology – and many labels vanished in nothingness and just have its rumor left. The saviour? “Streaming services” the choir sang! Sure, or you can say it’s yet another way to rip artists off their money, however in a legal way. So, how much do artists actually earn from streaming?
Of course it’s very difficult to get your hands on the data needed to do such calculations; record labels are not keen on sharing any data on record sales in general or how the individual artist contracts look like in terms of shares of digital sales/streaming incomes. However, despite these difficulties data journalist and information designer David McCandless started to compile big data in 2015 which he turned into a sweet infographic. Last year he updated his infographic, this time involving streaming incomes for both signed (label artists) and unsigned artists (DIY artists).
McCandless calculations are made in a US context and start in how much an artist can expect to earn from a single sale or stream, and how many of those sales or streams they’d need to earn the US monthly minimum wage of $1 260. It should be noted that his calculations don’t include publishing royalties which actually would make the calculations even more tricky since these royalties even may be different between members in a band because publishing royalties is given to the composer of songs (which necessarily don’t involve everyone in a band – yeah, there are quite many internal conflicts about it). Additionally, some artists have great contracts with their labels and earn even more money than what the infographic shows, however, some don’t have a great contract.
Simple explanation (you will get it); DIY artists doing everything on their own – “Self-distributed album CD” – and sell their CD’s for $12.00, need to sell 105 CD’s per month to reach US minimum wage. At the end of the infographic you will see Amazon/iTunes deals of sold downloaded single tracks for $0.99 meaning that artists need to sell 5 478 songs per month to be able to buy some bread at the end of the day. More interesting, deals and earnings are how much artists earn from the major streaming services. In this case I will only show Spotify since I’m a Swede and need to deal with some traditional Swedish remorse when studying these numbers (and due to my own research it’s actually worse than the infographic shows – but that’s another story), but French streaming service Deezer or American Tidal and Rhapsody, or even my own favorite, CBS owned Last.FM, all have terrible payment deals for music streaming.
So, here we go with Spotify (Swedish bastards..)
The light pink circle concerns unsigned artists and the darker pink one is about the signed artists – those who are ripped off by their label while the unsigned ones get their money stolen by aggregators (yeah, yet another hand to feed in between artists and the streaming service they use – and yet another story to tell alongside pie shares going to distributors, physical and digital brick and mortars, booking agencies etc.).
A signed artist on Spotify earns $0.0011 per played song – although the actual number is between $0.006 and $0.0084 but of course the labels need their share of the pie leaving $0.0011 to the artists – and an unsigned artist earn $0.007 per played song. That is, to reach minimum wage salary in the US a label artist needs around 1 100 000 plays per month while an unsigned artist only needs 180 000 plays per month since they keep more of the money themselves. However, to get a lot of played songs you often need to end up in the major Spotify lists which means that you usually need to have a label or use a PR agency to get promoted enough to turn up on those lists – and that rarely happens.
Of course there are some important caveats to have in mind concerning McCandless’ calculations because much build on estimations of the data at hand. However, major music institutions that usually are keen on preserving their goodwill and usually have an arsenal of arguments to prove that such calculations are wrong haven’t said anything. We rest our case – for now!
The full study is not available online anymore but you will find an article on the topic in The Guardian.