How Much Does Spotify Pay Per Stream?
There’s little doubt that if you’re an aspiring DJ or musician, Spotify is one of the main platforms you’ll need to utilise. As one of the largest streamers of music, it is a significant revenue stream and publicity network for DJs across Australia. There is, however, a bit of confusion over just how Spotify works. From how much it pays artists per stream of their tracks to how to work out royalties due, we’re going to help clarify everything you need to know to get started here.
One important thing to note is that while this information is current as of the writing of this article, Spotify is an ever-changing and evolving service. As a result, some of the specific data here may be outdated in the future.
How much does Spotify pay artists per stream?
Understanding Spotify’s payouts
Spotify, as with most other streaming services, uses a pro-rata distribution model. Sometimes this is referred to as a platform centric model as well.
All this means is that the actual amount that an artist earns by releasing music and tracks on the platform is dependent on multiple different factors.
Factor #1 – Revenue Pool
This refers to the total streaming revenue pool Spotify has. In other words, the platform’s payouts are going to be dictated by how much money the company is bringing in.
Factor #2 – Payout Percentage
Spotify then takes its revenue pool and determines what percentage of it will be used for its global payout. This negotiation is up to the management and executives of Spotify.
Factor #3 – Total Streams
Like the first factor, this point is based on the total number of streams that Spotify receives. To put it mildly, at the end of the day while the number of streams your music receives is important, it is still dependent on the total number of streams going on on Spotify and in your related market. (More on this in just a second.)
Factor #4 – Your Streams
Finally, we come to your art. The number of streams your platform and tracks get will obviously affect the amount of money you receive. The more streams the more money, but exactly how much more… That’s where factors 1 to 3 come into effect.
Bonus Factors
There’s something else to consider as well. Spotify doesn’t consider all streams or all tracks to be the same. As you undoubtedly know, there are different types of streams. From paid subscribers (called Premium users) to family plans and even free users, streamers come from a wide range of countries and markets.
Each ‘pool’ of streamers–affected by the factors above–offers different levels of value to Spotify. For example, a paid subscriber streaming a track is going to be more valuable to the company than a free subscriber. To that end, Spotify, like any for-profit business, is incentivised to value that stream more than a free user.
How exactly they determine the ‘quality’ of each stream is something that is not only secretive and up to Spotify itself (as well as being very complex), it’s also a calculation that’s likely to be in a constant state of change as the many factors fluctuate across markets.
Another important point to keep in mind is the fact that the price of a subscription to the platform will vary from country to country. In aggregate, that means that each country or market will be paying a different amount of money to Spotify and represent a different percentage of their total revenue.
The higher the price in a particular country (plus the number of subscribers) the more valuable the stream, and consequently the more money you can make from each stream.
Summary
In summary, particular stream rates can be affected for four main reasons:
1.Global streaming and revenue factors.
2.Who you choose to distribute with/who owns rights to your music.
3.Where your listeners are situated geographically.
4.Your listeners’ account plan on Spotify.
How much can you earn on Spotify?
You may have heard the term “pay for stream”. This just refers to the pay model wherein artists are paid an amount of money (at a specified rate) based on the number of streams that said artist’s tracks receive. In short and on average, Spotify tends to pay between $0.003 and $0.005 per stream. In other words, that’s 0.3-0.5 cents for each stream of your track.
To put this in perspective: At the $0.004 rate (i.e. the average of the range above), you’d need over 25,000 streams to make $100.00. Of course, this might seem like a steep hill to climb but all social media– and that’s what Spotify is in essence- operates on a similar scale of increasing returns.
Using a Spotify Royalty Calculator
To quickly work out how much you could earn based on a certain number of streams, use the following formula to help you:
Y x 0.004 = money to the song’s owners ($)
In this formula, Y is the number of projected streams.
We need to add a caveat to the above data. All of this is a rough estimate based on released and available data. The actual exact amount an artist earns is dependent on Spotify’s internal calculations and rates, which are not on the record or available to outsiders.
Who owns the rights to songs on Spotify?
A song’s rights holders can include a number of different people. In the music industry, publishers, songwriters, musicians, record labels and producers can all be rights holders.
If you create original music that you produce and mix yourself, you’re the only rights holder. If you have a producer or a record label, make sure you’re across the details of your contract to understand who shares in the rights to your work.
Types of Royalties
There are two types of royalties generated in the music industry
1.Performance Royalties
Performance royalties are paid to the artist in exchange for the streaming of the copyrighted audio or track.
2.Mechanical Royalties
These royalties are earned through the reproduction of copyrighted tracks in either physical formats (CDs and vinyl) or digital formats (downloads).
How can you find out more about royalty calculations on Spotify?
While Spotify does keep the details of its calculations for royalties and artist payouts confidential, they do address the issue on their website.
Ready to earn more on Spotify?
At this point, you can probably appreciate just how important getting your streaming numbers up is for your bottom line. Make sure to check out our blog on how to beat Spotify’s algorithm to achieve just that. And, of course, if you need any assistance or need to upgrade your DJ equipment and gear to make killer tracks for Spotify, click here to find a DJ City store near you!
