The world of entertainment has undergone a transformative shift in recent years with the rise of musical streaming platforms, known as digital stores, that have revolutionized the way listeners consume musical content while serving as a means of income generation to artistes.
However, contrary to what many think, the artistes whose works are streamed on these platforms may not be making as much money as imagined.
Digital musical platforms basically offer to listeners/subscribers opportunity to listen to digital audios or videos with the help of internet connection on their smart device. Listeners pay subscriptions on these digital stores either monthly or yearly, and the platforms in return pay royalties to artistes. Some streaming platforms like Audiomack, however, offer free streaming but on limitations, with ads always popping up, and alternative means listeners can support the artistes.
In recent times, record labels and independent artistes have relied on digital music distributors to get their musical content on major digital stores and websites. These music distributors accumulate these songs and distribute them to digital stores like Apple Music and other leading platforms. The digital music distributors then get mechanical royalties and public performance royalties generated from the artiste’s stage performance.
But before this, an artiste needs to pay “pay-per-release” fee of $9.99 for singles and $29.99 for album in the first year distribution cost to digital music distributors. The pay-per-release model allows artistes to pay a fee for each individual release, allowing them to distribute any song or album without being locked into long-term contracts or having to pay any upfront costs. The artiste also needs to book a studio session, where the recording of the song will take place, and pay for other things including beat.
Revenue from music streaming services has been growing and the estimated number of users of paid services has exceeded 523 million in all digital stores.
Global wholesale revenue in the music industry increased by US$4 billion year-over-year (YoY) in 2021, its largest increase in the past 20 years, the International Federation of the Phonographic Industry (IFPI) reported in March 2022. Paid music streaming services accounted for $12.3 billion in revenue ($2.2 billion YoY), and ad-supported streaming $4.6 billion ($1.1 billion YoY). However, artists seem not to have been reaping the benefits.
One common complaint from artistes has been that music streaming platforms pay very low royalty rates per stream. On average, the revenue per single stream is relatively low. For instance, Spotify’s average payout per stream to rights holders was reported to be between $0.003 and $0.005 in the past. Other streaming platforms like Apple Music and Amazon Music may have similar payout rates. These numbers can, however, fluctuate over time and may be different for each platform.
Going by this, an artiste may need to amass millions of streams in order to make a thousand dollars through his music on most of these digital stores. To make a dollar on Spotify, for example, the artiste needs to get 315 streams, while it is 725 streams per dollar on Pandora. On Amazon, it is 249 streams to a dollar. It is 456 streams to a dollar on Deezer, 128 streams on Apple Music, 78 streams on TIDAL, 1,250 streams on YouTube Music, while a streaming platform like Napster pays a dollar per 53 streams.
Artistes have also expressed concerns over the lack of transparency in how streaming platforms calculate and distribute royalties. There have been instances where artistes have had difficulty understanding how their earnings are calculated or how specific decisions impact their revenue.
Many music lovers and critics have questioned the process involving the complex payment structures and lack of transparency of distribution of royalties’ rates of these digital stores. They have also charged music streaming platforms to come up with better revenue-sharing models and fair compensation for artistes in order to encourage more artistes to participate in streaming services and thus foster a healthier music ecosystem.
