How Do Musicians Make Money From Spotify?
Contents
- Introduction
- How Musicians Make Money From Spotify
- What Is A Music Distributor?
- Popular Distributors
- How Much Will You Get Paid?
- Other Ways To Make Money From Your Music
- What Are Royalties
- What Is A Performance Rights Organizaton?
- What Is A Publishing Administator?
- Conclusion
Introduction
Most artists who are just beginning their career and people outside of the music industry lack an understanding of how musicians and artists actually make money from streaming services such as Spotify.
However, when it comes down to it, this is one of the less complicated aspects of the music industry.
This article will not only cover how musicians make money from spotify (and other streaming services), but how musicians can capitalize on more revenue streams and collect more money from their music.
How Musicians Make Money From Spotify.
In practice, it is pretty simple for artists to get their songs on all major streaming services and get paid for their streams.
The process looks like this:
- Artist makes the music
- Artist uploads their work to a Music Distributor along with eye-catching cover art.
- Music Distributor distributes the music to all major streaming services such as Spotify.
- Artist markets and promotes their music to social media, email lists, and IRL, directing their traffic to their Spotify link.
- Spotify reports streaming metrics to the music distributor and the distributor collects a very small payment (>$0.0006 per stream).
- Artist receives payment from the distributor about 3-6 months after the streams occur.
Streaming revenue from Spotify varies based on many factors such as if the listener was a paying or free member. On average though, 1 Million streams will generate about $4000 in streaming revenue.
Other streaming services like apple music, pandora, tidal, etc all have their own streaming rates.
What Is A Music Distributor?
A Music Distributor is a service that, as the name implies, distributes your music to stores, streaming services, and online radio.
Essentially a distributor is the middleman between artists/labels and the public.
Traditionally, music distributors used to serve the primary purpose of distributing physical records and CDs to stores, but they now mostly digital services.
Just as distributors are responsible for getting the music from artist to streaming services, they are also responsible for collecting money from services and distributing the funds back to the artist.
Some distributors will accept music from anyone that applies and pays for their service.
Others are more selective and only allow artists who meet certain criteria.
Popular Music Distributors
Distrokid
Distrokid is my preferred music distributor.
They only charge 1 relatively small fee annually for the ability to upload and distribute unlimited songs.
They offer all the important features and distribute your music to all the major streaming services as well as Instagram, Tik Tok and more.
Their streaming analytics are nice in that you get a stream by stream report of how much you’re actually making. However, they don’t have a way to combine all the data in a more easily digestible way, so you’ll have to do a lot of the math yourself if you really want to break down your streaming metrics.
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Tunecore
Tunecore is another popular distributor with a few more robust functions and easier to read analytics than distrokid.
One downside of Tunecore is that you have to pay for every song or album you want to upload, making it a more expensive option for artists that release music on a regular basis.
CD Baby
CD Baby is one of the longer-standing music distributors.
As their name indicates, they got their start during the CD era offering physical distribution and other services to their clients.
They have made a succesful transition to the digital age, but like Tunecore, they charge on a per song/album basis making it an expensive option.
How Much Will You Get Paid?
How much money you make from Spotify streams depends on multple factors including the listeners location and if they are using a free or paid account. On average streams make somewhere in the $0.004 ballpark.
If you would like an estimate of how much money you can make from a given number of streams, visit our Spotify Calculator
Other Ways To Make Money From Your Music
Streaming is only 1 small piece of the puzzle when it comes to monetizing your music.
If you’re relying solely on streaming revenue to fund your career, you’re selling yourself extremely short. It will be hard to make a sustainable living from your craft unless each and every song you release is able to reach millions of streams.
Revenue streams from live performances, merchandising, brand partnerships and other direct-to-fan monetization methods are all essential to building a successful and long lasting career. But there is another stream that a lot of people talk about but few have a solid understanding of – Royalties.
What are Royalties?
This article would be too long if I got into all the details of what royalties are and how they work. At the most basic level, it’s important to understand that there are two types of royalties for music. Performance Royalties, and Publishing Royalties.
Each and every song has two sides to it:
- The underlying melody and lyrics (we’ll call this The Song)
- The Master Recording of a given performance of The Song (We’ll call this The Master)
Performance Royalties refer to the revenue generated by public performances of The Song.
- This is not limited to live performances, and includes anytime a song is played over the PA of a grocery store, or is covered by a band at your neighborhood bar.
Publishing Royalties refer to the revenue generated by The Master
- This includes anytime a recording of The Song is sold, sampled, or performed publicly but does not include times when The Song is covered or interpolated on a separate recording.
In order to get the most money you can from your music you will need to make sure you both protect and collect your royalties for both sides.
Typically if a label is involved, they will claim ownership of The Master Recordings. As more and more independent artists achieve major label results without major label backing, labels are starting to be more flexible on this. Some labels opt to serve the role of a publishing administrator rather than a publishing owner.
What Is A Performance Rights Organization?
Commonly referred to as a PRO, a Performance Rights Organization serves the primary function of collecting and distributing performance royalties for copyrighted works used publicly.
In some countries PROs are called Copyright Collectives or Copyright Collecting Agencies.
It is essential for all musicians and artists to register for a PRO if they wish to protect their interests and collect royalties from their work.
It is important to note that if you are self-publishing your music, you must register as both a Songwriter and Publisher when signing up for a PRO.
Places like malls, bars, amusment parks and anywhere else that plays music for the public all pay annual license fees in order to play said music.
These fees are collected by PROs and after a complex tracking process to determine how often certain works were used, they are distributed to artists, songwriters and publishers.
In the United States, the two major PROs are ASCAP and BMI.
Fundamentally there is not much difference between the two organizations and functioanlly, it doesn’t much matter which PRO you decide to use, though ASCAP seems to be the more popular option from our experience.
There is no benefit to registering to multiple PROs. Doing so may in fact only serve to further complicate and delay the collection of your royalties.
PROs typically have a 3-6 month delay when distributing royalties.
What Is A Publishing Administrator
A Publishing Admin’s primary function is collecting and distributing publishing royalties for registered works.
Songtrust is a great example of a publishing administrator.
Songtrust registers your music catalog with 42+ societies around the world and collects royalties from over 200 countries/territories.
Just like PROs, Songtrust and other publishing admins often have a 3-6 month delay in payment processing.
Conclusion
Streaming is just one way to making money from your music. Spotify is just one of many streaming services that will pay you for the listens your music generates.
Don’t sell yourself short by focusing solely on streaming revenue and neglecting other streams of income.
Registering for a PRO and Publishing administrator are cruicial steps to collecting all the money your music can generate.
I hope this article helped to inform and clear things up about how musicians make money from Spotify and beyond.
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