Streaming has revolutionised the music industry, offering artists and producers new opportunities to monetize their music. Some even agree that streaming has saved the music industry from piracy. If you're considering investing in music or seeking to understand the revenue streams associated with streaming platforms, you've come to the right place. In this article, we will explore the intricacies of earning potential through streaming and delve into the detailed royalties offered by different platforms. By the end, you'll gain valuable insights into how your investments in music can generate returns and unlock the untapped value of music intellectual property.
Understanding the streaming landscape
The streaming industry has experienced explosive growth in recent years, becoming a dominant force in music consumption. In 2022, global music streaming revenue reached a staggering $24.5 billion, accounting for 62% of the recorded music market. Platforms like Spotify, Apple Music, Amazon Music, and others have emerged as front-runners in this digital revolution, collectively boasting billions of users worldwide.
But what is a music stream and what does it mean? A stream is created and counted each time a user consumes a recording (a track). Most of the time, the platform requires the stream to have lasted at least 30 seconds to be valid. If the stream is finally accepted, a fixed rate of revenue is sent to the rights holders of the recording in question.
Decoding royalties and earning per stream
One of the primary revenue streams in streaming is royalties, which are paid to artists, songwriters, and investors based on the number of streams their music receives. Let's delve into the detailed breakdown of royalty structures on popular streaming platforms.
Spotify
Spotify, the largest music streaming platform, offers a "per stream" model. On average, artists can expect to earn between $0.003 and $0.005 per stream. However, it's important to note that royalty rates can vary based on factors such as user location and whether the listener is using a free ad-supported account or a premium subscription. There is much debate surrounding the remuneration model of the world's #1 streaming platform. Currently, "market-centric", it may be considering a shift to "artist-centric". Many industry figures believe that this would enable a more balanced remuneration of creators, producers and composers on the platform. To be continued!
Apple Music
Apple Music, with its substantial user base, adopts a slightly different approach. The platform offers a tiered payment system, with royalty rates ranging from $0.006 to $0.008 per stream, depending on the user's location and subscription type.
Deezer
Deezer, a key player in the European music streaming market, announced in November 2023 a new remuneration model, named "Artist Centric". This model, aimed at better remunerating artists, represents a major turning point in the industry. According to their latest communication, Deezer would offer a royalty rate of around $0.0065 per stream, a figure slightly higher than that of its main competitors.
What distinguishes Deezer's Artist Centric model is the way it distributes revenues. Unlike traditional models, where earnings are distributed according to the total number of streams on the platform, Deezer proposes to pay artists directly according to the streams of their individual listeners. This means that a listener who listens exclusively to an artist will contribute directly to his or her earnings, making the model fairer and more transparent for artists. This change could have a significant impact on independent artists or those with smaller, dedicated listener bases.
Deezer's announcement has sparked heated debate in the industry, with some seeing it as a major step forward for artists' rights, while others express reservations about implementation and the potential impact on the overall streaming market. Nevertheless, this initiative could prompt other platforms to reconsider their own remuneration models, marking a step towards a more artist-centric streaming ecosystem.
Amazon Music
Amazon Music employs a similar model to Spotify, compensating artists with an average royalty rate of $0.00402 per stream.
These figures provide a general overview of the earning potential on each platform, but it's important to recognize that royalties can vary based on factors such as user location, platform-specific deals, and artist agreements.
Maximising earnings: strategies for artists and investors
While streaming royalties provide a significant part of revenues associated with music rights, there are additional strategies to maximise earnings in the music industry. Here are some key strategies for artists and investors:
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Song Shares and Music Catalogs: By owning Song Shares and music catalogs, artists and investors can secure a more substantial portion of the streaming royalties. Building a diverse music catalog enables long-term income generation and enhances the potential for higher returns.
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Playlist placements: Getting your music featured on popular playlists can significantly boost your streaming numbers and increase your earnings. Collaborating with curators, leveraging influential connections, and creating targeted promotional campaigns are effective ways to secure valuable playlist placements.
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Sync licensing: In addition to streaming royalties, sync licensing offers another avenue for revenue. By licensing music for use in commercials, films, TV shows, and other media, artists and investors can tap into additional income streams and expand their reach.
Streaming presents a promising avenue for earning potential in the music industry. By understanding the detailed royalties and implementing effective strategies, artists and investors can unlock the true value of music intellectual property. At Bolero, our music investment platform, we empower individuals to build their own music catalogs starting from just $10. We are dedicated to unlocking the untapped potential of music intellectual property, creating a new market for fans and corporates to acquire music catalogs. Join Bolero today and embark on your journey to music investment success. Discover the opportunities that streaming and alternative investments bring, and unlock the full value of your music catalog.
Important: This is not an investment advice. Buying digital assets carries risks of capital loss, illiquidity and lack of valuation. It is up to each person to do their own due diligence before becoming an owner of a digital asset through the Bolero Music platform.