10,929,203 streams on Spotify = $56,329.35

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The following blog comes from Josh Collum (pictured above), Co-Founder and Partner at Sorted Noise, which makes and licenses music for TV, film, advertising, trailers, and other media, and is built around a community of Nashville-based artists.  Recent work includes TV spots for Nutella and IKEA, a trailer for the Warner Bros film “If I Stay,” as well as songs in TV shows such as Mad Men, The Walking Dead, Breaking Bad, Pretty Little Liars, and Vampire Diaries.  In addition to Sorted Noise, Josh is a successful singer / songwriter, particularly in the sync world. His band, Secrets in Stereo, has been licensed in film, TV, and advertising over 150 times and his songs have collected over 250,000,000 views on YouTube. 

There. In its rawest, purest form. This is what a song is worth on Spotify.  

Streaming fees, mechanicals, and performance royalties.  Doesn’t seem right to you? Then you should definitely keep reading.

Before Friday’s New York Times piece, you probably hadn’t heard of Perrin Lamb. He’s the singer songwriter behind those numbers in the headline (we’ll dig deeper into those in a minute).

But I bet you have heard the horror stories of how streaming music is undercutting the careers of songwriters and artists.

Whether it’s Aloe Blacc’s Op-Ed in Wired where he states he’s made less than $4,000 domestically as a songwriter in streaming revenue from “Wake Me Up,” and frames his scenario this way:  “If that’s what’s now considered a streaming ‘success story,’ is it any wonder that so many songwriters are now struggling to make ends meet?”

Or, Thom Yorke tweeting things like, “Make no mistake, artists you discover on Spotify will not get paid.”

Of course, that’s not a streaming success story. And of course, indie artists you discover on Spotify will get paid.

“Some songwriters and artists are making a living that simply was not possible five years ago.”

I was at a mixer recently in Nashville with over 200 songwriters and artists in the room, all of them making significant money through micro-licensing to indie films and small to mid-size brands.  Money they had no way of making five years ago.

These songwriters and artists represent a class and generation that has thrown away the old rules of the music business and begun writing the new ones.  

One of those new rules is to embrace streaming on all platforms, from Spotify to Youtube, and more. They’ve re-thought their businesses (yes, they are businesses) and the deals they choose to sign through the prism of a “Post-Napster” perspective. And they are making a living that simply was not possible five years ago. These are the true success stories.

I think these success stories need to get more attention than they do.

Perrin’s profile in The New York Times was a good start, but we need to see more. These artists don’t have 10 million Twitter followers.  They don’t get asked to speak on Capitol Hill.  And they don’t appreciate it when major artists and songwriters, who have completely different business structures from independent artists, say, “I’m speaking for the up and coming, unsigned artist or songwriter.”

You see, in my world, Spotify is not the problem. I repeat… Spotify is not the problem.

The reality is: Spotify consistently pays out around 70% of their total earnings to copyright owners. They state it pretty clearly on their website in a section aptly titled, “How We Pay Royalties…”

“Spotify pays royalties for all of the listening that occurs on our service by distributing nearly 70% of all the revenues that we receive back to rights holders. By ‘rights holders,’ we are referring to the owners of the music that is on Spotify: labels, publishers, distributors, and, through certain digital distributors, independent artists themselves.”

The key here is, are you the rights holder, or is a record label and/or publisher? Because that’s who’s receiving the 70%. If a writer or artist isn’t seeing the money, the answer to their question can probably be found within their label or publisher contract.

The Boogey Man and the Cookie Monster aren’t stealing it.

Every record or publishing deal is different, but most still use a “Pre-Napster” design and language that includes an advance, marketing budgets, and charged expenses that an artist or writer has to pay back.

And once those are paid pack, the split on streaming royalties is heavily weighted towards the record label or publisher (Although, some companies are evolving and re-thinking the way they do business in this new, digital world, such as Kobalt, Downtown Music, Thirty Tigers, etc).

“Some companies are evolving and re-thinking the way they do business, such as Kobalt, Downtown music, thirty tigers etc.”

On the other end of the spectrum, if you’re an independent artist that’s retained control of your music and distributes it to the platform “through certain digital distributors,” then you’ve got fewer hands in the cookie jar. You’re seeing more of that 70% and you’re feeling more of the positive impact the platform can have. They are two different business models.

I figured, most people understand this. So, I’ve typically moved on, knowing that different artists and writers choose different paths. Some want or need to be signed. Some don’t.

Neither path is right or wrong. I guess I’ve always assumed as we begin to better understand this digital ecosystem that we’re living in now, the pros and cons of our chosen paths would become clear and obvious.

But recently, the House Judiciary Committee came to Nashville for a roundtable discussion on copyright reform. The roundtable was largely populated by people that shared Aloe and Thom’s perspective. Not surprisingly, the world that I live and work in everyday was not represented. The artists and songwriters that are flourishing in this new age were nowhere to be found.

That’s when it became real for me. Laws could be made that would jeopardize this amazingly fruitful and growing ecosystem for the many, because of the stories and experiences of a few. That’s scary.

It seems to me, that in order to truly address a problem we must fully understand it. And to fully understand it, we can’t just hear the horror stories. We should hear the success stories too.

So, that’s why I wrote this piece: to show a different perspective on streaming. To be clear, just because Spotify exists doesn’t mean that you’re going to get millions of streams and make tons of money. The quality of your art still matters. Now more than ever.

But, having said that, it isn’t unique or an anomaly to find true success through streaming either.  As a songwriter and artist myself, I’ve personally seen royalty checks go from hundreds of dollars a quarter to tens of thousands from YouTube alone.  My partners and I started Sorted Noise in large part to build on that.

Now, we work with dozens of artists with similar stories. One just bought her first house. Another made thousands from Spotify while still in college (I don’t know about you, but I had to deliver pizzas for my beer money).

Hopefully, one day, those stories and the tens of thousands like them will be heard, understood, and learned from. But today, we’ll start with one. It’s the story behind that New York Times piece and those numbers in the headline above.

Perrin Lamb is your typical, Nashville indie singer-songwriter. He’s been in town for over a decade. He’s never been signed to a publishing or record deal. His music is delivered to Spotify by CD Baby, an indie music distributor that works with over 400,000 artists like him.

He’s done well with syncs in TV and film, but income from songwriting and being a performing artist has never paid all of the bills. He’s always had other jobs along the way. He’s doing ok, but it hasn’t been easy.

“The ‘post-napster’ digital ecosystem is a connected one.”

Then, in January of 2014, a song of his called “Everyone’s Got Something” was put on the Your Favorite Coffeehouse playlist on Spotify by their editorial team. The song had been out a year and hadn’t really done anything to that point. But, once it found its way onto the playlist… boom. Hundreds of thousands of plays turned into millions.

To date, the song has about 13 million streams. And the streams have increased, not peaked, over time. He’ll make substantially more in the second year of being on the playlist than in the first.

CDBaby.jpegFor transparency’s sake, our friends over at CD Baby sent over Perrin’s most recent sales report. You can view it here (right). When it comes to streaming fees, at last report, he’s been paid on 10,929,203 of those 13 million Spotify streams of “Everyone’s Got Something” to the tune of $44,100.60.

After a distribution fee of 9%, $40,131.55 goes straight to the rights holder: Perrin.

(Note: this report only shows streaming fees or “sales.” Mechanicals and digital performance royalties make up the remainder of the total $56,329.35, but historically lag behind in reporting and collection. As they have with Perrin.)

And keep in mind, the Spotify streams of one song don’t live in a vacuum. They are a driver for Perrin’s business and art as a whole. They drove up the streams on other songs he has on Spotify (you’ll see another song on this report called “Little Bit” that’s made about $37,000 in sales from about 11 million Spotify streams). Perrin’s download sales have gone up. Fan-made YouTube videos have been posted and he’s collecting on those royalties through our friends at Rumblefish.

You see, the “Post-Napster” digital ecosystem is a connected one. And if your business is structured in a way to capitalize on it, that connectivity can be incredibly powerful. And profitable.

So, my hope in sharing this is to show that there is in fact… hope. And even beyond hope, there is reason to be excited.

We are still in the infant stages of this digital migration, and there are already thousands and thousands of true success stories like Perrin’s. There are already artists and songwriters that are figuring out how to build strong, agile businesses for this new age.

As we navigate the growing pains of this migration, and potentially decide on law, we have to be just as willing to hear their stories as we are to hear from songwriters and artists that are signed. It’s too important not to.

And who knows, maybe we’ll find some solutions that work for everyone.Music Business Worldwide

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  • fowlersrule

    So, does Spotify pay 70% of gross revenue in royalties or 70% of something else? “Earnings” is vague.

    • Pim Keulen

      @fowlersrule I believe Spotify claims to pay 70% of net revenue after direct taxes to rightholders, which comes down to around 56% of gross subscription fees (VAT rates in Europe are usually around 20%).

  • fowlersrule

    I’d also like to see some info from other artists. The artists I know, have gotten paid $.0017 or so per stream. That does not add up to Perrin’s numbers. Perrin’s rate works out to about $.004/stream. More than double $.0017. Does Perrin get a better rate so articles like this generate better PR for Spotify? Because they’re not paying everybody like that.

    • Desirsar

      You say it yourself – artists got paid. Spotify doesn’t pay the artists. Spotify pays the label. The label pays the artist. The so called “problem” with streaming royalties is between the artist and the label, not the artist and the streaming service.

      Streaming still pays more per listen than radio, and I haven’t seen any calls for a boycott there…

      • fowlersrule

        The “problem” isn’t merely between artists and the label if Spotfiy is ridiculously underpaying rights owners – even by Spotify’s own supposed rates. It is a major problem if Spotify says they pay a certain amount and yet pay far less than 50% of that in reality. That’s a huge problem. $.0017/stream is far LESS than radio per listener (which is comparing apples and oranges anyway since streaming is “on demand” and should cost more than radio). And that $.0017/stream is the ACTUAL rate artists I know are getting paid by Spotify.

        Regardless, Spotify could be a little more transparent.

        • Streaming is NOT on demand… Spotify might be… but “online radio” is more “radio” than “Spotify” is…. your statement is the blanket issue that creates errors and controversy amongst ALL online radio stations paying .0017 per song per listener.

  • Minister Stevie Tee Thompson

    It’s great to have a structure as an indie artist and label to hopefully give it to help others or even sell in a book one day. Algorithms is what many labels are scrambling to find right now in order for success, D.J. Stevie Tee figured one out with YouTube for the song Five Nights At Freddy’s. I do see why many in Spotify are using Payola again to get on these playlist because being on 10 playlist like the one mentioned in the article at the same time will amount to half a million dollars and up but utilizing the other services like Vevo and YouTube while doing Spotify will put an indie in a whole another league.

  • Ariel Elisha Leon Rosen

    Bullshit on so many levels. First: 44,000 is nothing!

    Second- tshirt sales? a gift economy is only a possible in prosperous times. And even so – its a freaking tip jar. There is nothing new about this.

    The issue of music quality is important- if you have medium level success you will make a few hundred bucks. The record could easily cost more than 20 grand to make. It could easily cost more than 50 grand.

    As a result every artist will attempt to mimick the sound of the mainstream to aim for ten million streams, to make the equivalent of a slightly over minimum wage yearly salary.

    The statistics don’t match your experience.

    The bottom line is this isn’t an issue of music or being contemporary. Its a labor issue.

    Music which is great requires labor. The techies, the few, they decide what labor deserves to recieve pay. They think STEM is valid and all else is not.

    Finally – the quality of music that can work in sync is background music. So all you have done is bring Elevator music to the 21st century

  • likewowgeek

    It’s strange the way this story has emerged. It goes against all reported songwriter experience, and it seems like there may be some spin going on here. UK songwriter Si Hulbert, who co-wrote a major One Direction hit with Ed Sheeran, has just posted that from 14.5 million streams on Spotify he has received £190 ($293) on a 50% share. Could someone please explain how can that be squared with $56,000 from 13 million streams?

    • Mateja Praznik

      Si Hubert probably has a publishing deal. And One Direction are a major label act. Re-read the article.

      • likewowgeek

        The aim of the article was to show that the absolute potential gross for all rights was $56,000 dollars on (11 million of ) 13 million Spotify streams. The point I was making was this… how can the song share of that equate to $293 for a 50% writer’s share? Let’s go up to $400 per half, to include a publisher on a pretty standard 75/25 split. That would mean that the two writers and their publishers received around $800 between them. Okay, Perrin Lamb got lucky… he owned all the rights and got selected by a curator/tastemaker for a preferential slot. Good luck to him! But the regular non-performing journeyman songwriters like Aloe and Si (and SO many others) are rightly complaining about derisory streaming rates. Please can someone from Spotify or MBW make some sense of these contradictory reports. If both are correct, then the song value is (let’s round it up to) $1000 dollars and the master recording rights $55,000. This information is vital in a period of Non Disclosure Agreements, lack of transparency and new streaming platforms which value songwriters’ work at micro fractions of a cent per hit, and their own market value in the multi billions.

  • Done With It

    The mere fact that they pay out 70% for the product they sell, doesn’t mean that for most artists, it’s a good deal.

    When streaming is killing downloads, it may as well still by piracy.

    Very few artists are going to get 11,000,000 (at $0.00336 per play) plays for any of their songs because there are so many artists.

    What spotify doesn’t say, is that for the 70% they pay out, they get the biggest catalog of music in the world to attract their customers, and they don’t have to do anything to get the product.

    The fact that an equitable deal for the artists would mean that spotify’s business model doesn’t work, should mean that spotify doesn’t stay in business. It should not mean, that artists get screwed just so spotify can have a working business model.

  • All you need to do is make music that was designed to be played in the background while other things are happening upfront! THE DREAM IS ALIVE!

  • Claes Olson

    This is one of the best pieces I’ve ever read about the “new” ecosystem in music biz (it’s been around here in Sweden for quite a few years now). Thanks a lot! GREAT ARTICLE!
    all ze best Claes@comedia.se

  • RS

    is the writer a lobbyist for the tech companies? The only figure that we need to know is how much Spotify pays artists for plays. That figure, whatever it actually is, just too low for the average professional musician to make a living. I had a major record deal in the pre-streaming days, and I made a living. I have a good record deal today, and streaming is not contributing much to my living. The “New Age” model that the writer describes is one that benefits the tech companies, not the musicians.

  • Grayson Healy

    Interesting article. I’ve recently released an album, for which I own all the rights, via a distribution company, paying them a flat fee (£40 about $60). They then distribute to iTunes, Amazon, spotify, YouTube etc and pass ALL the resultant fees to me. They also have a free option where they’ll take 20% which I think is fair enough. I’ve also allowed them to sync, for which they take 50% (again, fair enough-they’re doing the work finding clients and selling etc). I have done this as a hobby and I have a normal job otherwise. My thinking is that it therefore doesn’t matter if I make no money from this or if no-one hears it, although it would be great it I did, and they did. What I think is great is that in this day and age it is possible to make something yourself and distribute it to the world – something that would have been almost impossible 5 or 10 years ago (MySpace, anyone?!) without a record/publishing deal and a chunk of good luck. I’ve deliberately not marketed my album so it’ll be interesting to see what the baseline income is (I suspect very little!) and if there’s any growth in streams over time. But it’s out there and people can hear it if they can find it. This is the biggest problem when there are so many more artists able to self release. But the flip side of that is there is so much more music out there, some of which is bound to be great (some perhaps not so). Just a case of finding it (and somehow standing out in the crowd).

    But, financially, the money to pay artists has to come from somewhere, in most cases I guess it’s advertising. The advertising is only worth so much to the companies, and the streaming providers will be trying to squeeze every penny/cent out of that. The streaming services are perfectly entitled to take of cut (without them they’d be no-one listening and they’re doing the work selling) so the balance has to be struck. If you start charging for premium you’ll get fewer users (again the provider has to balance this fee to gain maximum users/revenue). Think about how much you’d be willing to pay to stream a song if you paid per stream, bearing in mind you may stream up to 50 or 100 songs per day, some which you’ve never heard before and may dislike – anything more than a fraction of a cent/penny soon adds up. Giving people a platform to listen to your music at no cost to them is therefore a brilliant way to get people to listen to your music and give you a chance. I can’t think of many other options that wouldn’t actually lead to more cost for the artist. I don’t know what the answer is but I think that you probably shouldn’t count on making a living from this alone, but if you can, good for you!

    • Cidre

      What distribution company is this called?

      • Grayson Healy

        Horus music ltd

  • ChasBono

    The article is ridiculous. Young people have complained for years about the crappy corporate labels, yet they don’t want to pay the artists. So the irony is this terrible system has been created by music “fans” themselves and it tells you listeners are completely fine with whatever lower quality there is today. Or they don’t think of it as lower quality.

    The real question this article doesn’t answer is this: It seems like musicians at one time would have been paid huge for 10 million plays. Is that true, and if true why is it different now? You will find out that even 15-20 years ago would have made about 70-75k for 1 million plays. That is the key. If that’s the case, to say spottily pays 70% means nothing.

    • Jason

      Sure, but music isn’t worth what it was 20 years ago. It was massively overpriced 20 years ago, because it was a closed shop – a racket. We paid a lot and didn’t listen to much as a result. Now the consumer drives the market, which is how it should be. We listen to lots more music – way, way more than we would if we were actually paying per-play (and we are not, which is why the per-play basis of revenue measurement is useless) and can pay 10 bucks a month for limited sound quality, more for higher quality, or we can still buy the album for unlimited high-quality listens. Consumers buy the product for what it is worth, not what the industry artificially manipulates the market to demand. It isn’t as good for bands, and that is a shame, but the industry created and then stole their golden era from them, not consumers.