Which streaming service pays artists the most?
Thanks to the substantial contributions from music streaming platforms, the “big 3” (Warner, Sony & Universal) generated an estimated $14.2 million per day from platforms such as Spotify and Apple Music. Universal Music Group alone made $4.5 million each day last year. Impressive as these numbers are, how do they correlate with artists’ revenue? As of 2017, Napster boasted the highest artist payouts. 90,000 plays on the platform would earn the US monthly minimum wage of $1,472. In contrast, Spotify and YouTube, arguably the largest streaming music services, had the worst payouts. The Swedish music platform had a per-stream rate of $0.0038. With over 1.1 billion users, artists would receive just $0.0006 per play on YouTube. However, this was last year, let’s take a look at 2018.
Although a U.S copyright issue forced the company to increase royalty payments over a 5-year period, Spotify are ranked 3rd-lowest in artist payouts, paying artists a mere $0.00397 per stream. As a result, they still boast a gargantuan percentage of the total market share. Spotify’s 157 million users and 71 million paid subscribers (highest amongst all platforms) helped the Swedish company claim almost half of all revenue in the specified market. In addition to this, Spotify’s subscriber numbers are increasing at a staggering rate. Since Q1 2015, Spotify’s total number of subscribers has increased by 19%, including more than 50 million of those, paid. The company’s premium churn, i.e. the cancellation rate of its paying customers, declined from 7.7% in 2015 to 6.6% in 2016 and 5.5% in 2017, indicating a high degree of customer satisfaction.
Forget Apple Music’s rocky start, that’s ancient history now. As of March 2018, Apple Music had 38 million paying subscribers worldwide. While they’re not quite matching Spotify, they’re not far behind. Since its launch in 2015, Apple Music’s subscriber count jumped by more than approximately 40 million, as opposed to Spotify, who jumped by more than 50 million in the same time frame. As for paid subscribers, Spotify’s 71 million trumps Apple Music’s, who had 30 million as of September 2017. Despite this, Apple Music still manages to pay artists $0.00783 per stream – almost double that of Spotify.
The chart below, starting from March 2008, display’s Spotify’s growth since its inception. Given the information presented above, it’s evident that Apple Music is off to a hotter start. However, keep in mind, Apple Music’s launch came in the midst of a music streaming boom, as opposed to Spotify, who arguably launched the boom.
Often overlooked, Pandora is still a big fish in the streaming market, despite having the lowest royalty payouts per stream amongst all music streaming platforms – $0.00134 per stream. Although the platform is not interactive like its competitors, Spotify and Apple Music, their 21.7% market share puts them in the second-highest chart on top of the page, more than double that of Apple Music.
Pandora currently boasts an impressive 81 million users, however, of that 81 million, only 4.3 million are paid. That number is expected to rise to more than six million in 2025. Given their slow growth rate, their low royalties correlate, unlike Spotify. Spotify has approximately 66.7 million more subscribers than Pandora and has generated approximately $3.61 billion more in revenue. In addition to this, Pandora’s active user count has slightly decreased since 2015, whereas Spotify’s has increased dramatically, yet, Spotify pays a minuscule $0.00263 more per stream.
Also overlooked is Deezer. With 6.9 million subscribers as of January 2017, Deezer had the 3rd highest number of paid subscribers in 2017. With that, the French company pays $0.00624 per stream – more than Spotify and Pandora combined. Although they boast a library of 53 million songs, the chart atop of the page has them listed at 7th in market share. The majority of Deezer’s traffic comes from France, making up 34% of total traffic, while Brazil, Germany, and Ukraine follow with approximately 11%, 4% and 3.5% respectively.