The streaming platform is an industry leader in streaming-service payouts.
The switch to digital consumption of music changed a lot for the music industry. As physical copies of albums have become less popular and streaming has become the primary source of listening, artists have had to depend on touring and other things to make a reasonable amount of cash in their careers.
Spotify has come under fire numerous times by artists for the measly payouts associated with its platform. Apple Music has notably taken a more firm stance in ensuring artists get their fair share of coins, recently explaining they pay artists and labels an average of a penny per stream as they believe in, “the value of music and paying creators fairly for their work.”
Manny Hernandez/Getty Images for Apple Music
In a letter shared to their artist dashboard last week, the company explained the payouts associated with their streaming platform. “While royalties from streaming services are calculated on a stream share basis, a play still has a value,” the letter read. “This value varies by subscription plan and country but averaged $0.01 for Apple Music individual paid plans in 2020. This includes label and publisher royalties.”
The company adds in the letter that it pays the same 52% headline rate to all labels, the same headline rate for all compositions, and do not pay a lower rate in exchange for featuring. As explained by Variety, “In the letter, Apple says it pays 52 percent of subscription revenue, or 52 cents of every dollar, to record labels. Spotify, which generates revenue both from subscriptions and its free ad-supported tier, says it pays â of every dollar of revenue to rights holders...
"...with 75 percent to 80 percent of that going to labels, which translates to 50 to 53 cents on the dollar, depending on agreements between the service and different labels.” Following the latter from Apple, the Union of Musicians and Allied Workers demanded more transparency from services, noting that Apple Music's payout methods are “doable for streaming companies, including Spotify which currently averages $0.0038 per stream.”
“If Apple can pay a penny per stream, then Spotify can too,” the union wrote in a second tweet. “We also know that paying a penny per stream is only a starting point to righting the wrong of the streaming economy. This adjustment alone will not make the music industry sufficiently equitable or fair.” Spotify has previously explained on its Loud&Clear website launched dedicated to helping artists explain their payment methods and why they don't believe in a "per-stream rate."
“Still, we understand that artists find it useful to calculate an effective “per stream” rate or, in other words, a revenue-to-streams ratio — dividing the total size of the royalty pool on Spotify (the numerator) by the total number of music streams on Spotify (the denominator),” the site read. “Both of these numbers are growing incredibly quickly every year.”
Frazer Harrison/Getty Images for Spotify