Tuesday, February 23, 2021

How much each distributor pays for Spotify and Apple Music

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+Read this full report (and see the charts) on aristake.com

All streams are not treated equally.

How much Spotify and Apple Music pay for a stream varies on many factors.

There are around 800 different pay rates for each stream on Spotify. Some of the variables include:

  • Country/Territory of the listener
  • Subscription plan level (free, family, student, discount, premium)
  • Promotional stream
  • Distributor / label negotiated rate

We're focusing on the last point here. But I'll get to that in a minute. First let me break down the most obvious points:

Country/Territory of the Listener

Spotify and Apple Music pay more for a stream from a listener in the US than a stream from a listener in India. Why? Simply because the cost of a standard premium subscription in the US is about $10. In India it's under $2.00. Not to mention the free, family and discount plans.

For the ad-supported free plan on Spotify (Apple Music only has a 3-month trial - without ads) advertisers pay more for US Spotify placement than they do for India Spotify placement, so the pay split (which has never been revealed) for ad-supported streams will also be much less.

Subscription Plan Level

Spotify and Apple also pay differently based on the listener's plan. So Spotify (and Apple) will pay-out more for a stream from a listener on a $9.99/mo premium plan versus a listener on the free, ad-supported or family plans.

Worth noting that Apple Music pays a lot more than Spotify across the board because Apple Music does not offer a free, ad-supported streaming experience to users. Ad supported streams pay much less than subscription supported streams.

As of December 31st, 2020, of Spotify's 345 million monthly active users, only 155 million of them are subscribers.

Promotional Stream

This is a very new thing that Spotify is experimenting with. Spotify is offering labels and artists the ability to essentially advertise their songs on the platform as suggested songs to listeners (once they finish listening to their chosen song/album/playlist). Instead of paying a fee up front for advertising, you instead take a lower payout rate for the promoted streams. We don't have any data on how this is working yet.

Distributor / Label Negotiated Rate

This is what we're focusing on with this report. One of the biggest reasons that there isn't a "Spotify pay rate" or an "Apple Music pay rate" is because each distributor negotiates a different pay rate with each DSP (Digital Service Provider - catchall for streaming services). Some indie distributors are part of the Merlin network - which essentially collectively bargains for a rate which will then be utilized for all distributors in that network.

Merlin publicly lists on their Press page that they represent “15% of the global market share” and Merlin’s members include: Amuse, CD Baby, AWAL, DistroKid, Symphonic, Vydia, Sub Pop, Ultra Records, Mad Decent, Secretly, along with "hundreds more" indie labels and distributors.

Supposedly every Merlin deal will result in the same pay-rate for each label and distributor.

But just being part of the Merlin network does not mean that the distributor has to opt-in for every deal. Which is why some distributors have higher pay rates than others who are also part of Merlin.

Worth noting, no distributor paid out more than $.004/per stream for spotify us in 2020

Note that's Spotify US - not Spotify across the board.

We didn't calculate Spotify's average per-stream rate across all territories (as many other reports do) because it would be heavily weighted on the location of the artists' lister base. If an artist got included in a country-specific playlist, like "Top Brazil" and 90% of their streams came from Brazil, their numbers would look awfully different than someone whose streams come primarily from the US or India. Because streams are not evenly distributed amongst every territory, you have to split up calculations by country.

So, we did.

Read the full report (and see the charts) here.

~Ari

Follow Ari's Take on Instagram @aristake_ and TikTok @aris.take for daily doses of inspiration.

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