Apple Music’s payment rate for artists and labels is basically one cent per stream, according to a letter from the company posted on the artist dashboard and first reported by the Wall Street Journal. This payment rate is higher than Spotify, which has a confusing floating rate system that is basically half a cent per stream.
Announcing a penny-per-stream price is a nice PR win for Apple Music because 1. it’s very easy and 2. Spotify hates talking about its per-stream payments, which the company believes is a are misleading number. Seriously, it’s easy launched a whole website called Loud and clear The last month is designed to help artists and fans understand how payments work. A good part of it is devoted to explaining why per-stream rates aren’t the thing to focus on. It’s a lot of copies like this:
In the streaming era, fans don’t pay per song and services don’t pay per stream. Hence, we do not believe that a “per-stream rate” is a meaningful number to analyze. However, we do know that it is useful for artists to calculate an effective rate per stream, or in other words a revenue to stream ratio, by dividing the total size of the license pool on Spotify (the counter) according to the total number of music streams on Spotify (the denominator). Both numbers grow incredibly quickly every year.
There are a number of factors that help make this ratio look small, which we can understand seem to be problematic.
Law. It’s important to note that Spotify runs a massive ad-supported music service at a very different economy than the paid Spotify Premium tier, while Apple Music only offers a paid service. And Spotify is much larger with a total of 345 million users, of which 155 million Spotify premium customers pay. (It’s hard to get good numbers on how big Apple Music is right now. The company’s last public number is “more than 60 million subscribers” as of June 2019 and recent estimates got it at 72 million.)
In any event, Spotify argues that it pays lower variable rates with far more streams, while Apple is pleased to say that it pays a higher, simpler rate with fewer streams. Neither of the two arguments really solves the main economic problem of streaming, which is that most artists cannot live on streaming license fees alone, which is why everyone is out there selling NFTs and in the hope that the concert business will soon come back into force.