Spotify made big news again in mid-July when producer Nigel Godrich and Radiohead’s Thom Yorke pulled their music from the streaming service.
Their move was not without precedent. Just a few months earlier, Jeremy DeVine, head of the indie record label Temporary Residence Ltd, came on to our InputOutput podcast to discuss his plans to withhold new releases from Spotify. Earlier this week, The Huffington Post confirmed that several other independent artists planned to follow suit.
Ever since then, a misleading and hopelessly outdated infographic that I thought I’d never have to see again began resurfacing and making the rounds on social media. It claims that artists would need to rack up over 4,000,000 plays each month – more than 130,00 every day – just to make minimum wage.
How Much Does it Really Pay?
In reality, we’re continuing to see average gross payouts just shy of a half-cent ($.005) per play for ad-supported streams, about three-quarters of a cent ($.0075) for “unlimited” streams, and around one-and-a-half cents ($0.015) for “premium” streams.
This means that if you self-released your music and only attracted listeners on the ad-supported service, you’d need about 230,000 spins each month – about 7,700 plays every day – in order to earn minimum wage for just one person. Bleak, perhaps, but a far cry from 4 million.
On the premium service, you’d need more like 77,000 plays a month – or 2,600 plays each day – to crack that same nut. Not every band in the world is going to attract this much attention, but for many of the good ones, it is an achievable goal.
Although this revenue share is far better than the $0.00 offered by pirate websites, it remains an unworkable replacement for recorded music sales. Even at $.015 per stream, you’d have to listen to your favorite artist’s song 46 times in order for them to earn the same $.70 they would have ended up getting if you had bought that song on iTunes.
(Do me a favor real quick, and check your iTunes library to see just how many songs you’ve listened to that many times! The answer tends to be “not that many”.)
Despite falling technology costs, musicians’ biggest expense in making music remains time. And costs there have not gone down as far as some might expect.
At this point, we haven’t even gotten into factoring in the additional costs faced by artists who have labels, managers or more than one member — Not to mention artists who have the expectation of making more than minimum wage off from one of their primary products!
Just as with iTunes or physical album sales, if you have a record label or management team, chances are you’ll owe them a portion of this revenue. Self-released artists with managers often expect to share 10% or 15% of their income. Traditionally, artists on big indie labels might share 50% of their recording revenue. And if you’re on a major label? Numbers vary widely, but chances are your net take will be significantly less than 50%.
So: How Much is Enough?
The good news is that despite all of this, we’re not too far off. It may take some kicking and screaming and full-throated advocacy, but it’s feasible that in time artists could be looking at fair rates for music streaming – whether it’s from Spotify or an alternative service.
If we could get rates up to just $.02 per play, streaming would start to become a pretty fair deal artists. At that rate, you’d need a bit over 55,000 plays per month to crack minimum wage, or somewhere near 1,900 plays per day.
This sounds pretty reasonable to me – Especially when you account for the fact that even people who don’t like your record still end up kicking you some coin. (If someone listens to your song 10 seconds, hate it to pieces and write the most scathing Facebook review in the history of the universe, you’d still be getting paid.)
Get the rate up to $.03 per play, and streaming arguably becomes a better deal for musicians than iTunes ever was. At this rate, you’d just need 39,000 plays a month or 1,300 plays each day. What’s more, it would take just 23 plays to equal one iTunes download. And once again, even people who hate your song still end up contributing to these play counts.