author: Clayton Brown
date: march 8 2024
topic: streaming, royalties, employment
Have you ever asked the question, “how much money do streaming services make per stream?”
If you do you don’t get the answer based on the question. Instead, what answer is given is the question most people ask. That question is, “how much money do streaming services pay per stream.”
Do you see the difference?
One question asks the value of a stream to the streaming company,
and the other question asks how much money will be paid to the artist of the music.
What I want to know is,
how much money does the streaming service make per stream,
so that I can know the value of a stream,
in comparison to the conversation about raising the price per stream value being paid to musicians.
If I don’t know how much a stream is worth, in total, according to the value being earned by the streaming company before the amount is divided and paid to the artist(s); how can I understand the value, truly.
Sure, it’s easy to find the answer to how much artists, or musicians if you are one of those magicians, make by simply doing a search online. Based on that information yes it is a great news to see that the price per stream being paid might be raised.
What if the price per stream earned by the streaming company was $1.00? Would it be a good value to earn $0.01 per stream as an artist?
Shouldn’t the value of the streaming services earning be relevant to the conversation of how much the artists deserve so that the value of the streaming company is not single handedly stealing all of the value based on a random business model that no one really knows who came up with or why the value per stream wasn’t set as $0.01 cent per stream in the first place?
Great, so now the music world can blush over the idea of making more money on the streams they think they found from loyal fans and random listeners along the way, and now it’s all worth it because the value went up a little bit higher than it was before, instead of seeing the value as being raised according to the demographics of the music industry to relate to a ratio of value that is computationally fair basd on the higher law of earnings and the music industry, right.
Would you be happy knowing you were earning $0.01 cent per stream if you knew by the value of the music industry you could be earning $0.10 ten cents per stream? Basically, all I’m asking is for people to understand the value of one cent can’t possibly be fair. Until we know how much money companies earn based on each stream we will never know the true value of a single stream. So let’s do some pretend mathematics and figure out what the solution to the problem could be;
How many subscribers does Spotify have? (keep in mind, the truth about streaming should be a complex of combining all streaminig platforms together to account for the total value of the music industry)
If tidal has an estimated revenue of $100 million and that equals 3 million users, that could be a value of $7.8 Billion dollars for Spotify.
In USD that is $14,485,776,805.25 dollars
That’s a start. Spotify’s $14.5 billion dollars per year divided by the average of 236 million subscribers from around 180 markets equals 61.38 per person earned. What’s the average price of a spotify subscription?
What we can conclude is that spotify does not make enough money from subscribers, since they offer free plans where most people listen for free, meaning, most streams come from free users, most likely; the value of a stream is nothing before the company absorbs all the money unto themselves.
Now this begs the question, how much do these spotify people earn and how much do they get paid so we ask how many employees does spotify have?
We have a few numbers were working with here:
value of spotify per year, not including the much higher valuation by the stock industry,…
$14,485,776,805.25
number of people estimated to work for spotify,…
5,584 people
number of subscribers on spotify per year,….
236,000,000 million subs
Now we need to know the average wage of a spotify employee? This answer is going to make you vomit if you live in America and do customer service for telecommunications and computers.
Spotify employees make $55-$57/hr
Now we compute the total cost of all the employees,….
Spotify must pay around $662,312,656 per year for their total business to run. I’m sure some people make more and some people make less to account for the total average that may run higher or lower than this estimation.
Now we subtract the employee cost from the total earned each year:
$14,485,776,805.25 spotify per year earnings – $662,312,656 spotify employee cost = $13,823,464,149.25 total earnings per year.
Now we divide the value of the true earnings after removing the cost of running the business (this does not include overhead costs such as lighting, infrastructure, computer security extensions, building costs, water, heating, etc.) …
we then reach a solution of $58.57/per subscriber value.
What more can we ask of this problem to resolve the understanding concerning how much a stream will be worth?
I will say the value of the employees sees high in comparison to the rest of the world, but then again we are talking about Sweden. By America’s very low success of poverty level average household income being less than $40,000 per year, Spotify employees by American standards would be in the “upper” middle class range of citizens somewhat therefore radically wealthy living a very comfortable life.
As we know musicians suck and their life is usually not successful. Streams are worthless and even if you do make money with streams the change of rate does not change the difficculty in succeeding in the music industry while you are young so that your success can sustain itself well into the future on an into your adulthold and ugly aging period of your life, gray n’ all. As we all know people who are old and still make money with music well into their aging years most likely do so because of television, radio, and many other venues of performance. Is streaming so successful, so brilliant it’s capable of sustaining careers on it’s own, creating stars from scratch on it’s own, not without the help of Spotify employees and the leadership that places the people where they want them to be seen therefore this would mean the powerful hands that pull the strings at Spotify and all streaming platforms are not less likely to take less money. If you pay yourself more money per stream, how much more will the people that work at Spotify begin to pay themselves? Is it possible to get the wage of streaming to be raised without the people who run streaming services also raising their own wage thus defeating the purpose? Have you ever seen any benefit from the rising cost of food industry workers and food? As in; do food workers now have full dental and medical insurance coverage compared to before?
If you knew that each subscription was only worth $58 dollars and you were paying streaming according to a new standard of $0.01 cent how many streams would it take to remove the earnings value per subscriber, in essence to flood the earnings and cause Spotify to begin to fail into debt?
There are an estimated 236 million subscribers.
The answer is 23.6 billion streams is equal to the number of subscribers, not to mention we didn’t account for the money it costs to pay the employees.
Okay we need streams to crush the value of 13,823,464,149.25, i.e. that many streams, before the value of Spotify is in the red.
If each stream is only 1% of the value of a dollar that would simply be 13.823 billion streams. How many streams does Spotify get each year?
This is a harder question to solve, like the first question about how much a stream is worth to a company which I am trying to solve with this post.
Top streaming artists on spotify, statista info*
According to statista there are 574million streaming monthly users at the end of Q3 2023. multiply that by 4 and the year is equal ~2.3 billion users. That number is much larger than the number quoted from the internet of subscribers. If we take the difference there is information hidden there from the free users and their value added to the economy of spotify streams. There are approximately 2 billion free users. Free users only make money by seeing ads. We don’t know how much the ads are worth to the company but we do know the music industry can’t account for that money to pay the artists because it’s a deal directly with spotify and the ad revenue company. The question is should Spotify have to use their ad revenue value to pay artists instead of paying themselves?
The way I see it, it really shouldn’t matter how you look at it, a stream is a stream whether it’s by a subscriber or a free user, the value of listening to a song is the same. If spotify has chosen to let users stream for free the entire song the value is the same.
Free users account for 90% of the earnings, not to mention the complete reason for and value that comes from ad revenue on spotify. Not necessarily, because while the ad revenue is there to make money the subscribers keep listening to music and that’s the conversation. How much is a stream worth. For all the times a person has to listen to commercial after commercial the pro users are listening to more music and that makes more money for musicians through streams. Ad revenue could even be argued to be out of the pool of money to pay musicians because while the ad is being listened to that’s where the money comes from and therefore the money earned goes directly to Spotify because the user was listening to an ad, not music. Essentially, a large portion of Soptify’s revenue and earnings goes directly to spotify with no way of using that value to pay or argue in favor of musicians.
I don’t have spotify on my computer otherwise I would look up some of those most popular artists to see how many streams per month they have and calculate that value into the storyline.
While all these artists that no one cares about are boo hooing all over records and whining about not getting paid enough even though they found a little hipster hole to crawl out of where a few people care about them enough to press their record and give them a place on a playlist including a way to be reached by audience, I’m like, can I get paid any money.
Good luck with that. By my math that would mean I could make more than 0.10 cents on my next record.
© 2024 music office blot
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