With Spotify by far the most widely used music streaming platform globally, there’s no wonder it’s considered the main benchmark of popularity and success within the music industry. With playlists currently taking centre stage when it comes to music promotion and increasing audience reach, we beg the questions, how easy is it to make a living from Spotify streams? And what other revenue streams can be utilised by independent artists on top of the often meagre income generated by this streaming Goliath?
Music Streaming…is it commercially viable?
Even though Spotify hasn’t really done much to counter its exploitative reputation, still only paying artists between $0.0033 – $0.0054 per stream; that’s still surprisingly more than some of their big competitors. With that rate of pay, a song streamed 250 times on Spotify would on average earn you about $1, while on YouTube Music it would only generate $0.44 and even less on Soundcloud at $0.33. Those same 250 streams could earn more with some of the other big players in the streaming market, with both Apple & Amazon Music paying around $1.25, all the way up to a healthy $3 on Tidal – which arguably takes the position as the most ethical streaming platform out there currently (more on that in future posts).
Given these rates, you’d be hard pressed to believe it’s possible to make any decent income from streaming full stop, unless your streams are in the hundreds of thousands, as the only platform to pay out in excess of $1000 once the 100k streams are hit is Tidal – paying $1200. Those hard earned 100k streams on Spotify would only earn you $400, and a measly $175 on YouTube Music!
Spotify doesn’t payout the same rate for all streams, with this rate being heavily determined by the demographics of the listener as well as the distribution agreements of the artists. Distributors will often take a cut of streaming royalties, unless you’re with a distributor like Tunecore, who offer a 100% royalty rate after paying them annual fees of $50 per album and $10 per single. The real crux as to whether you get the .003 or .005 per stream is really based on who is listening. If most of your listener base are free-tier users, you’ll likely be getting paid the lower rate, with Spotify premium users paying more per stream (from their subscription), and hence generating a slightly higher rate for their streams. Where your listeners are in the world also makes a big difference in the amount paid per stream, with listeners in North America and Scandinavia paying by far the most, followed by Western Europe, and listeners in The Middle East and much of Asia paying much lower rates per stream – this is due to the different subscription amounts paid in different regions as well as ad revenue.
Going by these statistics you could be fooled into thinking that having listeners based primarily in Scandinavia and being paid subscribers could go a long way in helping you generate more money. But based on 10k streams of a song, we’re still only talking about a difference of $33 to $54 from the least to the most ‘valuable’ listeners.
So, you’d think the fact that Spotify has around a ⅓ market share and by far the most users – 155 million, 83 million more than their biggest competitor Apple Music – would mean that they have something special other platforms don’t. Well, that’s not really the case; their 70 million strong song library is actually more or less the same as Apple Music, Amazon Music, and even Tidal! Perhaps Tidal having more or less the same amount of songs while paying much much higher rates, begs the more important question….why doesn’t every listener switch to Tidal? That’s a very hard question to answer, but we’re pretty sure marketing budgets play a significant role.
So, going back to the main question, is it possible for independent artists to make a half decent income from Spotify? Given all the info previously mentioned, as well as the fact that major record labels take 78% of the platform streaming share, compared to just 6.3% taken by solely independent artists, we can categorically say that unless you’re a hugely popular artist, you’re probably not going to be able to live off your Spotify streaming income.
Maybe if Tidal boasted more users, we’d suggest that, but the fact it hasn’t even managed to reach several million yet, leads us to believe that you may find it difficult to receive a decent income on there too. This is a sad reality that has become increasingly more of a hard truth since the turn of the millennium, when easily accessible file sharing applications seemed to make people a lot less inclined to buy music directly; things have never really been the same since.
Not to worry…here’s some great alternatives!
As much as it’s now harder to generate income from recorded music alone, the internet has opened up a whole host of new tools to benefit independent artists and essentially help them forge their own careers, while allowing them to keep all rights and do things on their terms. To put things simply, recorded music sales aren’t the be all and end all anymore, which brings a new question to the forefront….what else can independent artists do to earn extra income from their artistry as a whole? Well, there’s good news, because we have at least 3-4 answers, as outlined in the paragraphs below.
The first useful alternative to Spotify income is merchandise sales! Essentially any kind of artists can sell merch, as long as they have fans and a channel to do so. Traditionally, bands would sell merch at gigs, which does still happen of course, but now there’s even more opportunities to sell merch online too. Check out the My Merch & Music platform, as a useful resource for buying and selling merch items! Merchandise can often be overlooked by many artists, but is probably more worthy of attention than streams from a financial standpoint (we know nothing beats the feeling of people listening to and enjoying your music though). Put it this way, let’s say you sell band t-shirts at gigs for $25 each, and they cost you only $5 to manufacture, so you’re making $20 on each. If you were to sell only 50 t-shirts at a gig, series of gigs or online, you would make more money from that than you would from a whopping 225,000 streams on Spotify!
Selling 50 t-shirts = 250,000 Spotify streams….let that sink in!
Another alternative well worth considering is song publishing, aka licensing your music for use on adverts, TV shows, movies, or even video games. This form of licensing can be a big money maker if done right, and with the right people, often paying much much more than streaming income from ANY platform. This does require a certain amount of industry know-how and good contacts though, and can sometimes mean trading off some of your creative control, which is obviously a downside. Platforms such as Songtradr make licensing your music as an independent artist very easy, but do not always guarantee results.
Of course there is income from live performance, which many artists would agree is probably the most enjoyable way to generate income from music. Live performance also opens up other opportunities like for example selling merch (as already mentioned), potentially promoting and showcasing your music to new audiences depending on the gig etc, actually connecting with fans face to face, as well as scouting ops. As exciting and effective as live performance may be, the pandemic has shown how important it is for artists to have other forms of income. It can also be very difficult to achieve big numbers at gigs, particularly at the early stages of your career, making healthy incomes from gigging quite hard to achieve for many DIY artists.
Lastly we have sponsorship deals, which SoundSight is committed to making more available to independent artists! This form of income for artists became more prominent in the industry after music streaming came to dominance, due to it being more difficult to sell recorded music. The first thing most decent record labels will do for their signed artists is find them a sponsorship deal, and this is often a huge source of untapped profit potential for relatively little work compared to gigging or even merch selling. But as with gigging, success in this area usually relies heavily on at least some form of popularity to begin with, translating to at least a medium to large audience – the only difference here is that the audience is usually on social media rather than standing in front of you at a gig. With more and more artists going independent and building up large fan bases online, as well as more and more businesses looking for influencer marketing, there’s never been a better time to get sponsored as an independent artist! Have a read through our FAQs if you’d like to learn more about the process, and if you haven’t already, sign up to our artist database to make finding a sponsorship opportunity much easier and more accessible!
We think this quote sums up the current state of the industry perfectly, as Brandon Pain, a 27 year old rapper from New Jersey told Insider mag earlier this year, “This is why rappers make their money through merchandise, endorsements, and features”.
We hope this helps any independent artists worrying about their income from streaming. And we’d encourage you to always remember that as long as you’ve established your audience (be it online or offline) and you put in the work, utilising all 4 of these revenue streams on top of your recorded music sales could quite easily generate a healthy full time artist income. Hopefully this can allow many artists to scrap the day jobs and have more time to spend on their creative endeavours!
Stay tuned for more blog posts in the pipeline which will go into further detail on revenue generating strategies for independent artists, as well as exciting news on all the latest developments in music streaming!
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