Tuesday, May 19, 2015

How Much Money Does A Hit Generate From Spotfy?

If you listen to many artists complain about Spotify, you'd think that they're making almost no money at all from the service. That's probably true for artists that don't get many plays per month (and when it comes to streaming, a million is not that many), but for others with a real hit on their hands it can be substantial.

Spotify has a nice page that explains how it pays royalties, and on it there's a chart that shows the payout of 5 different "hits." Of course, the definition of a hit is different for different types of acts. For instance, a hit for an indie band is gauged far differently than a hit a mainstream artist.
Chart from Spotify

As you can see, a global hit album actually returns quite a bit in monthly income at $425,000. In fact, even a huge single can pay out at least as much or more, with a good example being the Marc Ronson/Bruno Mars hit "Uptown Funk" doing twice that amount.

One of the good points of streaming is that unlike a sale where the customer buys the album or song just once, in this case the customer may stream it month after month, thereby generating continued income.

But the problem for the artist isn't how much is generated in royalties - it's how much actually trickles down after the record label takes their cut, and this has been the problem all along. 

If a hit has generated $400,000, the typical artist would probably only see $80,000 (on a 20% deal). Of course, if the artist still owes the label money from recording or advances, that figure could be considerably less than that.

As you can see, there's a lot of money being generated in music streaming, it's just not actually making it to the artist. In other words, same as it ever was.

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