According to Atlas VPN investigation,Music streaming services are now the largest source of revenue for recorded music. In 2019, music streaming accounted for $7.1 billion or 63.6% of all recorded music revenue, which reached $11.1 billion.
To compare, CD sales revenue amounted to $4.3 billion and 55.2% of total recorded music sales in 2009, but fell sharply to $614.5 million and accounted for only 5.5% of total revenue in 2019. Meaning, throughout this 10 year period, CD sales slumped by nearly 7 times.
So, the music industry has had a major shift toward streaming services, but what platforms should artists focus on?
At first sight, it might seem that creators should concentrate on music streaming services that pay the most per play. However, there is another important factor — the number of users an artist can reach.
To help artists and those interested in the music industry navigate the complex streaming service landscape, we provide real-world revenue data as well as the userbase of the most popular streaming services.
Napster tops the list with a $0.00916 payout per-stream, which amounts to $9,160 per 1 million clicks. To earn the US monthly minimum wage of $1,260, artists will have to average over 137 thousand streams per month. Those who want to make the US monthly median wage ($3,714) will have to get more than 405 thousand hits.
Apple is second on the list with $0.00675 revenue per play, which means that 1 million listens will rake in $6,750 for the artist. For artists to earn minimum wage, they will have to reach nearly 187 thousand plays per month. For artists who wish to earn the US median wage — $3,714, they will have to look for 550 thousand streams.
Deezer takes the third place with $0.00562 revenue per hit, which amounts to $5,620 for 1 million streams. Artists on Deezer will have to get 224 thousand clicks to earn $1,260. To earn the US median wage, artists will have to get nearly 661 thousand plays.
Amazon Music sits in fourth place, paying out $0.00426 per play or $4,260 for 1 million listens. Creators on this platform will have to get almost 296 thousand plays to earn a US monthly minimum wage of $1,260.
To bring in the US median wage, artists will have to score around 872 thousand streams.
Spotify, arguably the most popular music streaming service, compensates artists $0.00348 per hit, or $3,480 for 1 million plays. Singers will have to get at least 362 thousand clicks to see $1,260 hit their bank accounts. To get $3,714, artists should aim for around 1.07 million plays per month.
Pandora, one of the oldest players in the market, offers around $0.00203 revenue per play or $2,030 for 1 million listeners. On Pandora, creators normally need 621 thousand listeners to earn a US monthly minimum wage of $1,260. To earn the medium wage of $3,714, Pandora will squeeze out 1.83 million plays per month.
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YouTube, the most popular streaming service overall, pays the least to creators — $0.00154 per play or $1,540 per 1 million hits. Just to earn $1,260, musicians will have to reach 818 thousand views. And finally, to earn $3,714, YouTube will require an average of 2.4 million clicks.
As a side-note, the per-stream payout rate is in constant flux, since it depends on multiple factors — main of which are: the listener’s country and currency, whether the user has a paid or free account, the specific artists royalty rate, and the percentage of ownership the artist has on the song.
Userbase
Userbase is the second most important element when considering potential revenue, so it is vital to consider this factor before jumping on a specific platform.
Even though Napster has a considerably higher per-play payout rate than other services, you can expect that a total stream count will be minuscule compared to Spotify and YouTube. Napster has only 32 million users, of which 2.5 million are paid subscribers.
In comparison to Napster, Apple Music provides the potential to reach a wider audience since this platform has over 68 million paid users.
Following Apple Music comes Deezer, a service that has only 16 million active listeners, out of which 7 million pay for a premium subscription.
Amazon Music is one of the more popular platforms which has 55 million paid subscribers. A music streaming service that is becoming more popular by the day — Spotify, has over 299 million subscribers as of October 2020.
The old-timer Pandora has 60.9 million listeners, but only 6.2 million decided to purchase a premium subscription.
Finally, the Google-owned platform — YouTube can boast of its 2 billion users. On the other hand, only 20 million users decided to upgrade to a premium subscription, which explains the lower payout rates.
Artist has to weigh the advantages and disadvantages of these services, keeping in mind the two most important variables — users and payout rates.
Finally, most artists do not have exclusive deals with any of the music streaming platforms, which allows them to upload music to all of them. After seeing the results, they can shift their focus to markets that bring the most profits.
Hopefully, this real-world data provides valuable insights into the music streaming industry.
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