Updated: Nov 10, 2021
Music streaming platforms have, for a long time, kept their royalty models and artist payouts a closely guarded secret.
Apple Music seemingly broke this trend when it opened up about payouts in June 2021 in an effort to gain credibility and more subscribers. The Cupertino company said that its average per-play rate is US$0.01, which equates to about US$1 for 100 streams.
How does Apple Music’s model stack up against the competition? Well, Apple Music actually sits at the top of the payout ranking, according to a recent study by Statista.
Compiling data collected by Digital Music News, The Trichordist and Forbes, the German data analytics firm created a ranking of the different music streaming platforms based on the average amount of streams needed to reach a payout of US$1.
Behind Apple Music is French streaming service Deezer with about 185 plays needed for a US$1 payout. Amazon Music comes in at third with about 200 plays, which roughly equates to US$0.005 per stream.
Meanwhile, Spotify is fourth with an estimated per-play rate of US$0.0032 and an average of 312 plays needed to earn US$1.
“While this rate can be seen only slightly below average in comparison, the Swedish music streaming service boasts almost triple the amount of paying subscribers as each of its direct competitors, calling into question the fairness of its business model,” wrote Statista.
“CEO Daniel Ek has routinely downplayed such criticism and cited artists' lack of engagement as a possible reason for low payouts.”
Spotify has over 172 million subscribers worldwide, making it the market leader among music streaming services.
At the bottom of the per-play ranking is the Chinese streaming service Tencent Music with up to 2,500 plays needed to earn US$1. However, according to Statista, the platform introduced micropayments, specifically a tipping feature that allows users to support the artists they love.
“It not only makes most of its revenue via a commission on these one-off payments but also opens up another avenue for artists to earn money on streaming platforms,” Statista added.
In contrast to its payout ranking, Tencent Music comes is second to Spotify when it comes to subscriber count with over 66 million listeners. It’s followed by Apple Music with 60 million and Amazon with 55 million.
Statista points out that the payout mechanics need improvement. But there’s no hiding the fact that music streaming has become the most important revenue source in the recorded music segment. The data firm further mentions that in 2020, 62.1% of earnings came from streaming services while physical records and downloads made up for 19.5% and 5.8% respectively.
Written by Kyle Chua