Apple Music and Spotify have different structures when it comes to paying artists and musicians for the content they put on platforms.
Apple Music pays double per stream of what Spotify currently pays, according to a new report. However, this per-stream metric is not always the most useful way to gauge how music streaming services are compensating artists. Spotify has nearly twice as many subscribers as Apple, which means it contributes more to the music industry as a whole. Additionally, none of the subscription services pay artists and musicians directly on a per-stream basis.
As Spotify revealed with the launch of the Loud and clear website, the service actually pays the rights holders who own the music, not the artists themselves. To determine how much these rights holders are receiving, Spotify calculates the total number of streams in a marketplace and compensates based on the percentage of those streams they constitute. In total, Spotify would pay two-thirds of every dollar to rights holders, and a portion of those payments would then go to labels and artists.
Apple, meanwhile, is said to pay 52% of its subscription revenue to record companies. According to a letter obtained at the Wall Street newspaper, the figure works out to 52 cents for every dollar and almost a penny per flow. This figure per stream is much higher than that of Spotify, which is between a third and a half of a dime per stream. However, as the report points out, average monthly feeds per user is generally a much better metric to focus on. While Spotify may have a lower pay per stream, part of this is because the larger user base streams more often than Apple Music’s on a monthly basis.
Comparison of Spotify and Apple Music Pay structures
Overall, the two companies pay a similar percentage of every dollar they earn to music labels because the the Wall Street newspaper reports that between 50-53 cents per dollar of what Spotify does go to labels, after factoring in the percentage that’s left with rights holders. Spotify just makes more money in general due to its high volume of monthly feeds from its massive user base which creates more money overall for the music industry.
Aside from the simple discrepancy in the number of subscriptions, Spotify also pays partly more due to its free and ad-supported tier. Essentially, Spotify takes the total number of streams per month – subscription, free, or whatever – and determines its payouts based on those numbers. As this strategy groups streamers using Spotify for free with paid subscribers, it can accurately count the total amount of streams and compensate rights holders accordingly.
As Apple Music relies on subscription revenue, Spotify’s compensation structure is likely to be better for artists. Every Spotify stream, whether by a paid or free subscriber, counts towards the compensation that will eventually go back to the artist. Each individual stream can technically count less than Apple Music’s metric, but Spotify has a lot more streams. In other words, users don’t necessarily need to pay for a Spotify subscription to monetize their listening sessions for the artists they want to support, and that makes a difference.
Next: Spotify Vs. Apple Music Vs. Youtube Music
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