Cash is king...

So, just how much money do artist make off of Spotify streams?

This overview will give an insight on how much will an artist make on a streaming platform.

You will be surprised to know how much will an artist actually get paid!

...but most artists don't get a ton of it.

The reality is that most artists (maybe even your favorite artist) do not make as much as you think.

A brief history of Spotify

In the first quarter of 2018, of the 79 million people who used Spotify in the US, 75 million were paid subscribers.

For comparison, in Q1 of 2016, of the 80 million people who used Spotify in the US, only 69 million were paid users.

Spotify was able to increase its paid user base by 24 million users in one year. This is almost equal to the 18% growth rate the music industry has had since 2012.

The growing share of paid users is due to Spotify having a larger user base to go after.

Apple has the largest user base in the music streaming market with over 50 million paid subscribers, but Apple Music was only launched in 2015 and had tons of users in their ecosystem given the popularity of Apple hardware, so there is no comparison to the rapid growth of Spotify as a pure music streaming service.

What are streams worth?

On average, artists on spotify earn $0.006 per stream (actually this number varies according to the streaming type, genre, and country, but we will stick to per stream rates for the sake of this article).

First, let’s break down the numbers a bit further.

Streams

Artists who stream live music on spotify generally earn around $0.001 per stream, or about $1,300 per year.

We have a great chart of average stream rates from an app called Chart.ly.

Stream Rates

Obviously, if a user streams one of an artist's songs at a time, that artist's average earnings will decline.

So, we can expect that artists are making around $6.50 on average per stream in 2016 (2,599,916 total streams).

Per Year

It’s always a bit tricky trying to break down your yearly earnings. When you look at per stream rates, you have to take into account the rate at which an artist is monetizing the streams, but you have to look at several factors when deciding on the right formula.

The rate at which an artist is monetizing stream is highly dependent on the country in which they are located, and their streaming platform.

For instance, Canadian artists tend to earn more per stream than the American artists, because their platforms give them the option of setting a slightly higher per stream rate.

For artists located in the United States, the most important factor in their earnings on Spotify is their CPM (cost per 1,000 impressions) — meaning the average price at which they are able to monetize each stream.

Some more numbers

If an artist is making an average of $6.50 per stream, they will need to earn $19.92 on average per stream to earn $1,000.

Here’s a quick look at how this would be divided up for an artist from the United States:

Methodology

To be in the lower revenue bracket, an artist can monetize their streams for $0.18 to $0.20 per 1,000 impressions. This means that a musician with 300,000 streams can only earn around $1,200 to $1,500.

The rest of the earnings are split between the labels and publishers, then split again depending on the artist’s revenue per stream. In 2015, with a $0.18 rate for stream rates, we can imagine that a musician’s share will be split 80/20 between Spotify, the labels and publishers.

Here is the full breakdown for a musician making some money on Spotify:

$0.18 per 1,000 impressions: $7,900 per year

CPM: $0.07 per 1,000 impressions: $1,400 per year

Total: $9,200

But, if you don’t make $6.50 on stream — or if you make $2 per 1,000 impressions — your yearly earnings are still $2,200.

For example, if a musician has 100,000 streams on spotify, and has a per stream rate of $0.18, their earnings are $1,400. If their CPM is $0.10, their earnings are $1,800. If they have a $0.20 CPM, their earnings are $2,600.

What we’re talking about here is a pretty wide range, but you can see that the rates aren’t always consistent across the board.

Spotify is stingy, but this could change

And here are some reasons why:

1. Apple won’t let it become the standard for on-demand streaming services

For most music listening, Apple Music is still a poor alternative to Spotify. This is because Apple won’t let it become the streaming standard, as they prefer a proprietary streaming platform. A game of “take one step forward, two steps back” is currently ongoing.

2. You can make playlists and set reminders

While not as good as customizing your own streaming profiles, you can create and share playlists with friends or family on the regular. You can also set reminders on them, so you can put them on repeat when you’re in a pinch.

3. Discover new music

Listening to other people’s favorite music is fun, but sometimes there’s something new that you just have to listen to. This is where Spotify shines.

4. Listen to live shows for free

And you don’t even need a subscription! Listening to live shows through Spotify is a good way to keep up with all the great local music you can find. You can even get a preview of bands before you buy a ticket.

5. Never get ads before music

No ads are currently part of Spotify’s on-demand service, but you will still get ads from Spotify Free, if you don’t cancel your account.

6. Once you’re in, there’s no going back

You can listen to songs you want to skip over if you want to, but otherwise you can’t get out of your Spotify subscription. Once you’re in, you’re in for good.

7. Spotify is awesome for playing old music you forgot about

Yes, Spotify has an annoying “Recently Played” feature, but the one time you will use it is when you discover something you forgot about.