How do unsigned artists make money?

 

Making music is expensive. Between work and classes, you probably don’t have a lot of time to spare so isn’t it time you start making your music work for you?

 

In this series we look at the options available for unsigned artists to start recouping costs (and maybe even make a profit). From live performances to publishing royalties and everything in between, this series will focus on the business of music so you’re in the know.

 

 

Streaming Your Music Online

 

Having now long-since replaced CDs and downloads as the number one method of music consumption, the meteoric rise of the music streaming service has ushered in a new era in how we discover and consume music that has left the music industry in a state of constant transformation.

 

On the face of it, streaming seems intuitively easy – simply upload your music and get paid, right?

 

While it might be easy to get set up, actually turning a profit from people listening to your music is an entirely different matter with some record labels charging as much as 70% and with a significant portion of the rest going to app/service maintenance, very little money is left over - especially when the profits are again split between the often-multiple band members or songwriters on a track. Coupled with this, as more people join these services the per-stream rate has continued to drop, year on year.

 

Here’s a little snippet of a recent Facebook post by American songwriter/producer Sam Barsh to give you an idea of just how little those involved in the actual creation of music make;

 

“For my songwriting on Kendrick Lamar’s “Institutionalized” from the album “To Pimp A Butterfly,” I have earned less than $20,000. I have a 12% share of the song. The album went Platinum, won a Grammy and was a worldwide phenomenon.”

 

“For my songwriting on Anderson .Paak’s “Heart Don’t Stand a Chance” and “Your Prime” from the album “Malibu,” I have earned less than $5,000 total. I have a 16.66% share of each song. The album was certified Gold in Europe, nominated for a Grammy, and launched .Paak into stardom.”

 

So, as you can see, streaming definitely isn’t the silver bullet when it comes to making money from music but it would be impertinent to forget the other huge bonus that these streaming platforms offer artists and fans alike; music discovery (but we’ll get into that in another article).

 

To that end we’ve compiled a list of all the big players when it comes to music streaming and what you can roughly expect to receive per stream based on a recent study via The Trichordist surveying a medium size indie label with an approx. 200+ album catalogue and 200m+ annual streams.  

 

[This article is intended as a guide and should not be used as a sole source of information - all currencies are in AUD unless otherwise specified and are accurate at the time of writing, market-share figures based on US market statistics]

 

 

From most to least – which streaming services pay the most per-stream:

 

 

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Napster (formerly Rhapsody) – $0.023 per stream, 0.3% Market Share

 

Bought in 2011 by Rhapsody, Napster has always had to diversify itself and has tried not go toe-to-toe with the likes of Spotify or Apple Music. It’s president and CEO Bill Patrizio has spoken about the need to diversify and segment it’s offering to make the service more personalised instead of the ‘one size fits all’ approach used by the bigger players in the market - an example being the possibilities related to the immanent launch of global 5G networks which will open up new doors when it comes to music streaming. While they are still very small in the scheme of things, this is definitely one platform to keep an eye on.

 

 

 

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Tidal - $0.018 per stream, 1.7% Market Share

 

Plagued by problems since it’s 2015 launch, Tidal has limped on from one crisis to another - from various lawsuits to having a revolving door of CEO’s and now even news coming out recently that they have been late in paying several indie labels over the past two years. More worryingly yet, after some investigative reporting Norwegian newspaper Dagens Næringsliv reported that Tidal was inflating their it’s subscriber numbers, citing internal reports showing only 1.2 million subscribers instead of the much-touted 3 million. As you can see, Tidal pays artists one of the higher rates when it comes to streaming however one cannot help but wonder for how long?

 

 

 

 

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Apple Music - $0.011 per stream, 22.29% Market Share

 

At 38 million subscribers worldwide, Apple Music is the second biggest player in the music streaming industry behind Spotify but despite their size they are still tossing up strategies to future-proof themselves. This includes potentially investing in or at least forming a partnership with the ailing iHeartMedia, an American-based mass media company (who is currently looking to cope with nearly $20B in debt) and who owns nearly 850 US radio stations – the idea being these radio stations would drive traffic and content to Apple Music which is another strategy being touted to make the business more sustainable.

 

 

 

 

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Amazon - $0.010 per stream, 3.8% Market Share

 

Interestingly, Amazon actually has two music streaming platforms; Amazon Prime and Amazon Music Unlimited with a combined subscribership of about 16 million people. While both platforms are very similar, the main difference is that Prime only has about 2 million songs compared to Unlimited’s ‘tens of millions’ among a few other features.

 

 

 

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Google - $0.0085 per stream, 4% Market Share

 

Once actually being very reasonable in terms of payouts, Google Play Music has slowly descended into obscurity and lower pay-out rates for artists. Word on the street is Google is looking to phase the service out in favour of it’s newly launched YouTube product.

 

 

 

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Spotify - $0.0055 per stream, 51.51% Market Share

 

Despite growing 40% a year Spotify is still losing money which doesn’t bode well in the long term for the industry as a whole. There is speculation however that in order to stem the tide of money flying out the door they could look to cut out the middle-man and re-orient themselves as a record label which could potentially save a lot of money but would be a huge undertaking for the company.

 

 

 

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YouTube Music - $0.0010 per stream, 1.7% Market Share

 

While it’s still a bit too early to tell how YouTube’s new music streaming service that launched this May will be good for artists and consumers alike, what is clear is that their historic service has been relatively dismal on all fronts – as Daniel Sanchez from Digital Music News.com commented; ‘don’t ever expect to make any money on YouTube.’

 

 

 

 

Despite all the challenges and risks facing the music streaming industry it isn’t going anywhere soon.

 

Instead, platforms will have to evolve and adapt to our changing needs as consumers if they want to survive. It is also important to note that while per-stream the payout is relatively miniscule, obviously if you start pulling decent numbers on your monthly streams the payout will start to add up.  

 

 

Vale to all the other streaming services who are no longer with us in Australia…

 

Deezer, Mog (Telstra), Rdio (Nova Entertainment), Songl, Guvera, Grooveshark and Pandora.