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Here's How Much Money Artists Really Make From Spotify

Here's How Much Money Artists Really Make From Spotify

Here's How Much Money Artists Really Make From Spotify
09 June 2015

With the much-anticipated unveiling of Apple Music last night, the focus is on the nascent streaming industry more than ever. And, whatever you thought of Tidal, it also brought into focus the question of whether or not artists are getting a fair deal.

Data from December 2014 recently released to music publishers reveals the royalties that Spotify are paying for each play on their service - and they're far higher for songs played via their Premium service than via the free one.

A song played on Spotify Premium results in royalties of 0.68 of a cent, or $0.0068. Meanwhile, on the free tier, it's just 0.14 of a cent ($0.0014) - only a fifth of the royalties achieved through Premium. Currently, Premium users make up 25% of Spotify's 60m active listeners, so this gives us a useful jumping off point to work out exactly how much those big hits are actually worth to the artist - the average play (grouping free and premium plays proportionally) is thus worth 0.275 of a cent ($0.00275).

Interestingly, Spotify has previously claimed to pay an average of 0.72 cents per stream to rights holders - despite claiming that it was an average across both tiers, it clearly wasn't really revealing that this is only for plays on their premium service, of which only a quarter of users subscribe. For comparison, Tidal pays 1.2 cents per stream, quite substantially higher - albeit it has no free tier.

Every record contract is different and, naturally, there are things like advances involved but, generally artists receive around 15% of the income that reaches the label.

If the artist is lucky enough to have written the track by themselves, they will receive an additional 8% of the income (although a proportion of that will go to their publishers, if they have a publishing deal in place).

As a sample, we've taken a look at the 8 biggest UK hits of 2015 so far, as of April (albeit some were released before 2015), as well as four more recent number one singles, looked at their worldwide total number of streams and worked out the total royalty paid out by Spotify, and then the amount that reaches the artist themselves (we've ignored the publishing aspect for now).

Mark Ronson - Uptown Funk (released 10 Nov) - 337,496,543 streams - $928,115 to the label - $139,217 to the artist
Ellie Goulding - Love Me Like You Do - (released 7 Jan) - 268,469,720 - $738,291 - $110,744 to the artist
Hozier - Take Me To Church (released 13 Sept 2013) - 357,553,156 - $983,271 - $147,491 to the artist
Philip George - Wish You Were Mine - (released 26 Dec) - 35,838,022 - $98,554 - $14.783 to the artist
Rihanna - FourFiveSeconds (released 24 Jan) - 162,039,219 - $445,607 - $66,842 to the artist
Ed Sheeran - Thinking Out Loud (released 24 Sept 2014) - 376.969, 670 - $1,036,667 - $155,500 to the artist
Weeknd - Earned It (released 23 Dec 2014) - 196,977,843 - $541,689 - $81,253 to the artist
James Bay - Hold Back The River (released 17 Nov 2014) - 109,341,439 - $300,689 - $45,104 to the artist
Jason Derulo - Want To Want Me (released 9 March) - 101,050,288 - $277,888 - $41,684 to the artist
Omi - Cheerleader (Felix Jaehn Radio Edit) (released April*) - 10,585,798 - $29,111 - $4,367 to the artist
Major Lazer - Lean On (released 2 March) - 180,256,834 - $495,706 - $74,356 to the artist
Jess Glynne - Hold My Hand (released 22 March) - 51,237,184 - $140,902 - $21,135 to the artist

*song has been officially available since 2012

As stated, these are rough numbers - the 15% royalty won't be the same for everyone, and some artists may appeal more to premium users than free tier users, so may earn more.

But, considering that these are worldwide payments for massive hits, it's not really that much money - take out your 20% for management, knock off some recording and promotion costs and it doesn't look like Jess Glynne will be able to retire from the proceeds of Hold My Hand just yet.

Better cancel that private jet Jess

But don't feel too sorry for them just yet - this is just the income from Spotify; they'll have other streaming services, as well as regular downloads (still large - by April 2015, Uptown Funk had been download 810,000 times in the UK alone - of which the label receives 70% of the $0.99 charge and the artist 15% of that, so Ronson would have emerged with £85,000 just from UK sales up to April 2015) plus CD sales, not forgetting those live show proceeds on top. And, of course - they don't just release one song, there's albums to contend with.

With Apple now entering the market, it shakes everything up - and no one yet knows what royalty agreements they've agreed with labels - but the very fact that Apple have taken so long to join the arena must mean they see themselves as genuine contenders. Will streaming income finally manage to make up for the inevitable loss of CDs, whose time is surely now done? The jury is still out, but Apple could be about to change everything. Again. 

(Images: Getty)