Show Me the Money!

I am admittedly a little bit of a datahead. So a big part of wanting to make this blog was to have an excuse to take a nice deep dive into the payment data and see what the numbers had to say about streaming payouts.

Let’s start with Spotify. I had read articles mentioning a rate of $0.006 to $0.008 per stream, but these were from 2015. I was able to find some more current analysis from mid-2017 that concluded the average payout had since dropped to $0.0038.

But second-hand accounts aren’t good enough for me! I pulled my own bands’ data from ~3 years of streams. My two bands together had a little over 3,500 plays averaging about 0.39 cents per stream ($0.0039). Alright second-hand accounts, you done pretty good.

Bandcamp is primarily a sales platform and not a streaming service, so it’s not a perfect comparison. We can at least see the general way they pay artists, though. Looking at their (very transparent) fee structure, they take 15% as a platform and also tack on transaction and processing fees, roughly 2.2% + $0.20. For transactions under $8 it’s 5% + $0.05. Again, looking at my bands’ sales data, this averaged out to roughly a 77% cut, upwards of 82% if your main sale items are $8+ album downloads.

Let’s try to find a way to compare these, and look at a hypothetical 12-track album.

If you were to buy this album on Bandcamp for $10, Bandcamp takes their cut (~$1.80) and leave the artist with a net payment of approximately $8.20. If you instead stream this album on Spotify, the artist makes 4.6 cents. But clearly, you’re going to listen to that album a lot more than once-- let’s level the playing field and toss it all into some charts:

These look pretty similar, right? The first graph is showing the majority takeaway for the artist, compared to Bandcamp’s cut. The second scenario with Spotify though, is actually almost the inverse. I even factored in an assumption that the user would listen to that album every single day for a month, which would yield $1.45 to that artist and the other $8.54 to Spotify (and presumably, to other artists you’ve listened to in that month).

To actually get to the point where streaming this album on Spotify would equate to the same income from a one-time album sale on Bandcamp ($8.20), you would need to listen to the album every single day for six months.

I don’t know about you, but I don’t get that obsessive.

In a more general scope, to pay out $9.99 worth of streams to artists in a month, you need to stream at least 85 songs every day. Even if you want to allow Spotify a similar platform fee to Bandcamp, to yield $8.20 in a month you still need 70 song streams every day. Certainly, this is not impossible, but I would venture it is a tough metric to meet for the average listener.

To distill it all down into a sound bite conclusion, every dollar you spend purchasing music downloads (and let’s even use the low end assumption of $0.77 yield to the artist) is equal to 197 song streams.

To me, this seems pretty cut and dry. If there is music out there that you really like, buy it. Even if you’re going to stream it, “like, totally all the time,” chances are on average you will not really do it enough times to make a net positive monetary impact for the artist.

Of course, there are other considerations to the benefits of streaming and detractions of download purchasing that I’ll continue to explore as the year goes along-- stay tuned!