How Much Money Do Bands Make From Streaming Music Services Like Spotify?

0

With labels reporting that streaming services now make up as much as 25% of their bottom line, subscription-based, music streaming services are shaping the future of the music industry.

With Spotify generating hundreds of millions of dollars of income and labels seeing huge revenue growth, just how much money can bands expect to make from these services?

The Next Web recently published a case study of indie band Parks and Gardens who shared their revenue garnered from streaming services Spotify and iTunes Match.

Tweet

Parks and Gardens added their songs to Spotify and iTunes through music aggregator TuneCore for a fee of $49.99/year which lets them keep all income generated from their songs. Band member Josh Davison reports that Spotify paid them just under a cent ($0.0097) each time one of their songs was listened to on the service. While this may appear dismal compared to the average $0.99 sale price of a song on iTunes, it should be noted that this is paid each and every time someone listens to their song on Spotify.

Davison also reports that iTunes Match, a service that allows you to stream your iTunes library to other computers and mobile devices pays roughly a third of a cent ($0.0033) per stream. Unlike Spotify, iTunes Match requires users to already own a copy of the music, whether purchased from the iTunes Store or obtained through other means in order to stream the song to the user’s other devices. So, this third of a cent is paid over and above the income already generated from the sale of the song.

While it will take many listens of a song for a band to generate substantial revenue through music streaming services, they at least offer an additional revenue stream that bands can capitalize on for a rather low cost of entry.

While Spotify is not yet available in Canada, Rdio has recently signed deals with TuneCore and CD Baby allowing independent bands to easily add their music to the service through these aggregation services. Bands who submit their music through TuneCore will not only have their songs distributed on the iTunes Store but they will also be available for streaming on Rdio, Spotify and iTunes Match.

For more on Rdio’s music streaming service, please see our recent review!

UPDATE: We have received reports claiming that Spotify pays different rates depending on whether streams are from paying subscribers or free listeners. Revenue from free streams is claimed to be much lower.