Streaming Platforms Secure Millions For UK Music Industry Through Royalties

A recent report by BBC reveals that Spotify paid an impressive £750 million to the UK music industry last year, highlighting the significant role of streaming platforms in the music ecosystem. Although nearly 1,000 artists earned at least £100,000 in royalties, the exact amount reaching musicians is unclear due to varying contracts with record labels and publishers.

Typically, artists receive around 16% of generated revenue, leaving them potentially with £16,000 from £100,000 before taxes. Despite concerns about fair compensation, Spotify’s dominance in the UK streaming market offers artists additional earning opportunities through platforms like Apple Music and Amazon Music.

It is interesting to note that English-language music is facing competition from other languages globally, indicating a shift in music consumption preferences. Despite challenges, Spotify remains a major contributor to the music industry’s revenue, with its disclosed UK payouts doubling since 2017.

What Are Royalties?

Royalties are payments that are made to creators, such as musicians or authors, for the use of their work. When someone listens to a song on a streaming platform or reads a book, the creator earns a royalty. These payments are usually a percentage of the revenue generated from the sale or use of the work.

For example, musicians receive royalties each time their song is played on platforms like Spotify. Royalties serve as a form of compensation for creators, ensuring that they are fairly rewarded for their artistic contributions.

How Does Spotify’s Royalties Work?

Understanding how royalties work on Spotify can be perplexing, but it boils down to a few key points.

Firstly, Spotify compiles a royalty pool from a portion of its subscription and advertising revenue. This pool isn’t directly distributed to artists; instead, it’s divided among rights holders, which usually means record labels or distributors for recordings, and publishers for compositions. Individual payouts hinge on a share of the total streams.

In essence, the more music is played, the larger the artist’s piece of the pie becomes. However, this doesn’t come with a guarantee. Royalty rates are subject to fluctuation, influenced by factors like user location and the distinction between free and premium subscription tiers.

While the precise amount artist’s earn per stream may be hard to pin down, understanding this system can provide valuable insights for musicians who want to utilise music streaming on Spotify.

Which Streaming Platforms Provide The Best Royalties?

Music streaming services have revolutionised the way we listen to music. However, for artists, the question remains: where does the money go? The royalty payouts per stream vary greatly between platforms, and it’s not always a straightforward answer. In general, services that offer higher subscription fees tend to provide better royalty rates.

Here’s a breakdown of popular options in the UK:

Tidal: It has the highest reported payouts, around £0.012 per stream. However, it has a smaller user base compared to rivals.

Apple Music: It offers a mid-range rate of roughly £0.007 per stream. It has a larger user base than Tidal, which potentially balances out the lower per-stream rate.

Qobuz: This high-fidelity service caters to audiophiles and offers a reported rate around £0.008 per stream, placing it between Apple Music and Tidal. However, its user base is smaller than both.

Deezer: A popular European platform, Deezer offers a reported rate close to £0.006 per stream, similar to Apple Music. It boasts a wider user base than Qobuz but remains smaller than some competitors.

Amazon Music: It is similar to Apple Music, averaging around £0.004 per stream.

Spotify: The free tier with ads significantly impacts its average payout, bringing it down to roughly £0.003 per stream. However, Spotify has the largest user base globally, potentially offering wider reach for artists.

For musicians, the ideal platform depends on their goals. Targeting a smaller, high-paying audience may favour Tidal, while wider exposure might be more achievable on Spotify. It’s important to remember that these are just averages. Royalties can be influenced by factors like user location, free vs. paid tiers, and whether the stream is ad-supported.

Ultimately, getting your music heard is crucial. Building a fanbase across platforms can help generate a more consistent income stream, regardless of individual royalty rates. Remember, some platforms offer additional revenue streams, like playlist placements or exclusive content deals. Researching each platform’s options can give you a clearer picture of their overall value.