Pay per stream is a messy metric

Here's a question: let's say Music Service A pays me $0.01 per song streamed on their platform and Music Service B pays me $0.03 per song streamed. Which of these services is better for my income as an artist?

Wait, wait, there's more data you need to know. Music Service A paid me $10,000 last year and 100,000 people listened to my music. Music Service B paid me $3,000 and 10,000 people listened to my music there.

So I'll ask again, would you rather have had your music listened to by more people and you earned more money, or would you like to have had fewer people listen and make less money?

I'd imagine most people would prefer to have more people discovering their work and bring in more actual money than have fewer people hear them and make less money, right? Welcome to the Spotify vs Apple Music debate!

This was inspired by one of Brian Merchant's latest posts over on Blood in the Machine (a recent blog discovery for me, but it's pretty good), How to quit Spotify. I'm not going to disagree with the post's overall message…I don't like Spotify either and I would agree that the business model it pioneered has represented a massive reduction in direct value most artists get from the raw musical output they create. After all, I grew up in the 90s when a new CD routinely cost like $17 from the local music store, which is about $33 in today's money. But I find the "Apple Music pays more per stream" argument endlessly frustrating because it's horribly misleading. Yes, it's a single data point, but it's telling a sliver of the full story.

To put it simply, Apple Music and Spotify have basically the same deal with music labels, the difference is that Spotify has a free tier while Apple Music does not. As such, Spotify makes less money per user, but they have way more total users than Apple Music. If Spotify got rid of their ad-supported free tier today, then they would be paying artists basically the same as Apple Music. Of course, that would reduce the number of people using Spotify, streams would go down, and payouts to artists would go down as well. But the pay per stream would be higher, so all good, right? This very short article explains the pro-rata model if you want to get an idea for how it works.

By a similar token, if Apple Music added a free, ad-supported tier today, many people would start using that, and pay-per-stream would go down to Spotify levels. Or maybe you think that would be a terrible thing, and you think there should be no way for people to stream music without paying $10 or more per month, but let's talk about that then and not about how choosing Apple Music is the more "ethical" choice.

In that same post, Merchant links to this video by musician (and another YouTuber I like) Benn Jordan, in which he shares the exact pay per stream he got from music services in 2024. Unfortunately, he doesn't share any raw payout amount, he just shares the per-stream amounts. That resulted in this chart which I've seen a few people share.

I think this shows the absurdity of the whole "per-stream pay is all that matters" argument. For one, if this is the metric you care about, then you should only release your music on Peloton! Or maybe Qobuz, a French streaming service which, despite him saying he'd never even heard of until a few months ago (neither had I), has the highest per stream rate of the normal music services on this list. I'm guessing that because he'd never heard of it, it's not bringing in an actually significant sum of money. he also mentions that he's sure that if they get as big as Spotify, their per-stream rate will go down as well. That could be true, but really only if they add a free ad-supported tier.

In fact, here's an updated version of the chart with a line that I think clears up the difference.

Correction: Deezer does have a free tier, it's just hidden on their pricing page, so I didn't find it when I double checked for this original post. I'd love to see how their expenses differ. Maybe there's some hope for an ad tier in some cases?

I'm not here to say that Spotify is a faultless company or anything (I don't like them myself and I don't use them), but I think this obsession over pay-per-stream is a bad way to talk about these services. It's a data point worth considering, but it's not the end of the conversation.

I'll leave you with a couple assertions I feel pretty confident about.

1. If Spotify stopped offering a free tier, their pay-per-stream would match Apple Music/Deezer/etc.
2. If Apple Music/Deezer.etc. added a free tier, they would instantly drop to Spotify's pay-per-stream rate.
3. I strongly suspect Spotify paid him more in 2024 than any other service on this list.
4. Streaming music is a tough business to make meaningful profits for anyone unless you're huge. Yes, I would like to see Spotify and others increase the amount they pay to artists, but they can only do so much, this is simply not a great way to compensate artists.
5. Consumers don't want to reconcile the fact that they want to pay 10% of what they paid for music in the 90s, they want exponentially more of it, and somehow they also want artists to be paid the same as they used to.
6. If you want to actually support your favorite artists, buy their music outright. Bandcamp is a good option here, and direct from the artist is even better (Jamie xx, for example).