Streaming music on our devices has become as commonplace as eating breakfast or checking the news. The speed and convenience of being able to access huge libraries of music anywhere at any time make these services very appealing and even –gasp– essential. But just like the intricacies of the internet, there’s a lot of things not many people know about, like how they work exactly or how they make money and pay their featured artists.
A comprehensive review of the subject was published recently by the research team at ConsumersAdvocate.org. Their editors explain how royalties in the music streaming industry follow one of two models: a service-centric or a user-centric approach.
For the service-centric approach (also called pro-rata), streaming companies add up the total monthly revenue, divide it by the overall number of streams for all artists, and then multiply that by each individual artist’s number of monthly streams. Basically, the money you pay for a streaming service doesn’t necessarily go to the artists you listen to, but rather to the most popular ones.
If that sounds a bit unfair… well, it’s because it is. The good news is you may find the user-centric approach much more balanced. In that instance, artists are paid based on each user’s monthly music consumption, so if you only listen to your favorite band, they get 100% of the royalties that stem from your streaming.
Why has this specific topic been a popular subject of controversy? Well, because (already struggling) upcoming or independent artists usually get the short end of the stick under this type of contract, and because the music industry is notoriously hard for artists that make minimum wage.
For example, did you know that an artist has to be streamed 2.1 million times on YouTube just to earn the minimum monthly income of $1,472? That same artist would need 1.1 million streams on Pandora and 240,000 on Apple Music. Hence, not all streaming services are created equal; each one has a slightly different formula for this. According to the research, the “fairest” streaming platform for artists appears to be Tidal, which requires musicians to have at least 120,000 streams to earn the same amount.
If you really care about your favorite artists or are even a musician yourself, this should be one of the most important things to consider when choosing a music streaming platform. That being said, let’s briefly touch on some of the potential pros and cons for each one so you know what you’re getting into.
1. Spotify
Pros: Spot-on music discovery algorithms, ease of use, low price, sharing capabilities.
Cons: Lack of contextual information about the artists and songs.
2. Tidal
Pros: Fantastic audio quality, exclusive content from certain artists, great spotlight for up and coming artists on Tidal Rising.
Cons: Great quality comes at a price–$19.99/mo for single users or $29.99/mo for families.
3. YouTube
Pros: Great multimedia content, intuitive search, and discovery (finding songs by guessing lyric snippets is game-changing), a huge catalog, audio-only mode, and an excellent price point.
Cons: Lowest payouts for artists across the entire industry.
4. Pandora
Pros: The original streaming service! Diverse and unique streaming recommendations, easy to use, customizable stations, and competitive pricing.
Pros: Licensing restrictions for certain songs only allow you to listen in “radio mode”.
5. Apple Music
Pros: Expertly curated radio stations, seamless iOS experience, and an intuitive interface.
Cons: No “freemium” tier, unlike the rest of its competitors.
6. Idagio
Pros: Specializes in classical music, has excellent audio quality, affordable price, and pays artists based on a play-per-second basis.
Cons: No sharing capabilities.
7. iHeartRadio
Pros: Incredible variety through thousands of stations, affordable pricing.
Cons: Low audio quality.
8. Soundcloud
Pros: Great for up-and-coming artists, perfect for discovering new music, superb freemium tier, musicians over 18 get pay-per-stream royalties for their original pieces.
Cons: Their paid tiers don’t offer much more than no adds and additional tracks
To find out more about each of these companies and how they remunerate artists, visit theBest Music Streaming Services Based on In-Depth Reviews.