Can musicians make a living off Spotify?, image of a guitar | Crunch

Since the comically futile ‘Home Taping is Killing Music’ campaign of the ‘80’s, disruptive technology has struck fear into the hearts of musicians making money from their hard work. Or in the case of big record labels – making money from other people’s hard work.

Fast forward to 2015 – fifteen years on from the infamous ‘Napster vs Metallica’ legal showdown (yeah, I feel old too). The game is changing again, and just like when CD sales plummeted due to downloads, now connection speeds are so quick that streaming is in and downloads are on the way out

Smartphones have limited storage space, so why clog up your device with all your tracks when you can easily pick and choose what you want to listen to online, in real time? Customers aren’t paying just to hear the music these days – there are plenty of ways we can do that for free. We’re now paying for the convenience to listen to whatever we like, wherever we like, however many times we like.

As a Spotify Premium subscriber, my £9.99 monthly subscription allows me to to do this from my choice of 30 million streamable tracks – and I’m doing my best to get through them all. If I had to fork out for all the music I consume, I’m pretty sure I’d be eating Smartprice cat food from the tin every night. Yes, us music enthusiasts objectively have it pretty damn good these days.

But what about the poor old musicians? Is it acceptable that their hard work benefits a multi-billion pound company when they’re not even compensated a penny per play?

Well, that’s my dilemma – I’m also a penniless musician. After an incredibly expensive fourteen years, making a little bit of money back from a release has gone from a pipedream to an absolute necessity if my band is going to afford to put out more music any time soon.

Do Spotify, and its colossal new opponent Apple Music (also available for a monthly subscription of £9.99), offer my band and other small-time musicians a better shot at financial stability?

Play your cards right

One Brucey-bonus of both Spotify and Apple Music is that they allow a ‘merch stand’ of sorts on your artist page – so if you’re having trouble shifting your swanky T-shirts or gig tickets, you can use your free music as bait to get your audience to check it out.

On the other hand, if your primary objective is to claw some of your money back from the studio session you just blew the next few months’ rent on, you might want to think twice about uploading your latest tracks to either Spotify or Apple Music. At least American guitar hero Marc Ribot might say so.

In his New York Times article “If streaming is the future, you can kiss jazz and other genres goodbye“, Ribot complained:

“In its first year of streaming on Spotify, my band Ceramic Dog earned 112.80 euros in Europe and $47.12 in the United States from our album “Your Turn.” The album cost over $15,000 to make. By contrast, CD sales on earlier albums netted us between $4,000 and $9,000. Now, maybe the market knows best, and the world is in fact better off without artists like me.”

Lockjaw Records head honcho and guitarist in Guildford-based punk rock band Darko, Rob Piper, doesn’t share Ribot’s pessimism.

Whilst it can be a little depressing looking at the payouts from streaming services, finding artists and albums that you would have never stumbled across ten years ago has become incredibly easy. If anything, this is even more prevalent for underground music such as jazz and punk.”

Piper (right) accurately notes that neither Ribot’s (left) nor Ceramic Dog’s Spotify page include any gig listings or merchandise promotion, which he believes is a huge missed opportunity.

“Despite a dip in album sales, the extra exposure can result in a massive sales boost for gig tickets and other merchandise. Artists should utilise these streaming services with this in mind… Nobody has forced Marc Ribot to give all of his music away for free.

While on the subject of artist discretion, musicians have recently been assured that they will not be removed from the iTunes store for opting out of streaming their work on Apple Music (despite rumours to the contrary) according to a company representative speaking to Rolling Stone. Perhaps good news if you’re an artist concerned with depleting download sales, or sensibly would prefer to hold off on giving your new music away for free until the sales start to dry up.

“Money, it’s a gas.”

If Metallica and Dr. Dre were the poster-boys of the anti-file sharing era, global pop superstar Taylor Swift has emerged as the loudest voice standing up to the streaming giants.

On November 3, 2014 Swift’s entire discography was removed from Spotify due to objections about Spotify streaming her album for free.

Spotify attempted to flatter the world’s biggest selling artist into coming back, stating that over 16 million of the service’s 40 million users had played her music within the last month. Swift replied “I’m not willing to contribute my life’s work to an experiment that I don’t feel fairly compensates the writers, producers, artists and creators of this music.”

When Apple Music was set to launch with a three month free trial, Swift again piped up, frustrated that Apple did not intend to pay artists at all for streams within the trial period. Yet after a short back and forth (which of course some have claimed was a clever publicity stunt), Apple caved.

According to both parties, an agreement was made and Apple will now be paying artists for the trial period. But just how much, and how does it compare to Spotify? Well, contrary to popular belief, it’s not as simple as a set amount per play.

How subscription-based streaming services pay artists

Spotify’s Artists website has a useful breakdown of the industry standard payout procedure:

The argument is that the more people who subscribe to the service, the more money there is in the pot to be divided up according to plays and eventually distributed back to the artists.

The most recent stats show Spotify have 20 million paid-up members, with another 55 million using the freemium, ads based service. Apple Music, despite being in existence for only a few months, have already welcomed 11 million subscribers to their service. A more telling figure should become apparent once the initial boom period from the three month free trial expires.

According to the company, these variables have recently led to an average per-stream payout to rights holders of between $0.006 and $0.0084, but Spotify prefer not to promote these figures as they can fluctuate heavily each month depending on revenue and streams.

There’s no such breakdown on Apple Music’s website, but according to company executive Robert Kondrk, Apple Music will pay music owners 71.5% of Apple Music’s revenue in the US. Outside the US this could fluctuate, but will apparently average out at around 73%.

Marginally better than Spotify’s 70%, but as it stands it’s hardly likely any small or medium acts are going to build a career, or even get a nice paycheque, from streams alone.

Even once the revenue of each service eventually rises to a stage where they will pay a nice round 1p per play, the artist will require a staggering 1,126,500 plays a year to receive the equivalent of the £11,265 UK minimum wage for one band member, and that’s before the taxman and the music owner (i.e. record label) has taken their cut.

So, if you’re a platinum artist like Taylor Swift, who was reportedly earning an impressive half a million dollars from Spotify a month, the ballgame is very different.

What are the alternatives?

Whether or not you choose to stream your tunes on Spotify and Apple Music (there aren’t any good reasons to date to pick just the one), there are many other streaming sites to consider, with varying business models.

For independent artists, Bandcamp has become the go-to platform for music distribution.

Bands incur no fee for signing up, and can set their own price for both downloads and physical sales, of which the company takes 10 percent of merch sales and 15 percent of downloads.

If the artist’s page is successful enough to reach a $5,000 profit in 12 months, Bandcamp reduce their cut to just 10 percent of digital profit. It’s worth noting that all transactions take place through Paypal, so sales are subject to Paypal’s transaction fees.

Bandcamp also allows artists the freedom to choose which songs are available for free streaming, and how many times this can happen before the listener is required to cough up any money. When a purchase is made, the artist receives the customer’s email address, which is incredibly beneficial if they have a mailing list.

Crowdfunding websites such as Indiegogo or Kickstarter are an increasingly popular means of raising the capital necessary to embark on a project – in the music world and beyond.

By offering backers tier-based incentives, the crowdfunding model has given musicians a greater level of independence, reduced the need for a record label and allows die-hard fans to become more involved in the final product. Perks offered to fans for their contributions range from the traditional (a signed poster) to the downright absurd (the artist will wash your car).

Granted, this isn’t much help if you’ve already released your music, but this is a tremendous way to raise money for an upcoming project.

You’ll be lucky to get paid anything at all for streaming your tracks on Youtube unless you’re getting ‘Gangnam Style’ level hits on your videos and have ads on your page, but this isn’t to say Youtube can’t be an excellent tool for building interest in your act.

The Youtube phone app still isn’t quite up to scratch for streaming albums on the go, so people may be more willing to fork out for a physical copy or digital download if they like what they hear than Apple Music or Spotify customers.

Users tend to find new music by hopping from video to video, so it’s hugely advisable to at least have a couple of tracks up on Youtube to promote your release. It doesn’t take much to get a nice graphic promoting the best way to buy your new release and whack it on top of the music, like so:

Soundcloud calls itself ‘Youtube for Audio’, citing 175 million unique monthly listeners as of Dec 2014. What sets it apart from its competitors is the unique real-time comments feature embedded into its media player. This can be especially useful if you’re putting out an early demo and trying to see whether that ‘experimental’ kazoo solo resonates with your listeners.

The service is notoriously bad at coughing up royalties, but it does remain a remarkably popular way to find new music, and a tool that no self-respecting musician in 2015 should completely ignore.

Answer the damn question already!

If your business model relies solely on CD sales, it’s up to you to decide whether the extra exposure is likely to result in more income. Streaming is already seriously damaging download sales, but on the plus side, it’s also helping to eliminate illegal piracy.

If you use the tools available to you, it can help you get your music heard by an enormous amount of people, many of whom may end up coming to your shows and buying your merchandise.

If you decide against putting your releases on streaming services, it’s still highly advisable that at least a taster is available to stream across the major platforms we’ve covered. Giving a little bit away is a good way so people can get a taste of what you’re offering, but of course there’s a reason you don’t get given a full meal as a free sample at a food stall.

If you eliminate the need to buy, complaining when sales decrease like the aforementioned Marc Ribot has done, won’t do much good. Wherever you choose to make your music available, have a gameplan, and remember the words of Bob Dylan: “you better start swimmin’, or you’ll sink like a stone – for the times they are a-changin‘”.

And for what it’s worth, you can listen to that song on Spotify and Apple Music.

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Tom West
Community and Social Manager
Updated on
October 8, 2020

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