The world has moved on from physical music to streaming and cloud-based platforms that digitally store your music for you. And while that’s a dream for the end-user who now has access to millions, maybe billions, of tracks at the push of a button, that’s had serious consequences for musicians and producers. Where artists in the 90s and noughties could rely on CD sales at $20 a pop to tide them over (with artists getting around 10% of that), consumers are now choosing to only download their favourite tracks from a release or choosing to stream their music, often for free from streaming sites with adverts. And let’s not even getting into the illegal download conversation.
Downloading Vs Streaming
And that change has had a huge effect on the music business as we’ll discover. According to the Global Industry Report for 2017, download revenue was down over 20% from the previous year, down itself from the late 90s and 00s peak. In 1999, physical music – ie CDs, tapes and vinyl – made up 100% of the music industry revenue. Today, it’s at 34%. Which mean producers, bands and artists get a much smaller percentage of that revenue.
On the flipside, however, the digital streaming market continues to grow and grow. But with streaming platforms like Spotify, Youtube and Apple Music paying as little as $0.004891 per stream, it’s going to take you a long, long time to hit minimum wage.
Read on to find out just how much – or little – music makers actually make…
How Much Money Do You Make From A Download?
Let’s assume you’re an artist, band or producer and your track is selling online for $1.
Before you even see a penny of that money, the online retailer will take around 50% of the sale for hosting your music in the digital shop window. So your percentage has just shrunk to 50%, despite making your first sale.
That 50% is then split between you, the label, the distributor, any other song-writers that are credited. Oh, and your manager if you have one who’d take around 15% – but we’ll assume you haven’t hit that level just yet…
The distributor will normally take 15% for getting your music onto the online retailers, making sure it’s labelled correctly and smoothing the connecting chain.
Lets Break It Down
The label will take half for their work – so the remaining 35% (give or take) is then split between you and the label, giving you around 17% of the share. So if your track sold for $1, you can expect around 17c of that sale.
If you’re in a band of 4 and you share the song-writing credits, that’s then split 4 ways. Which is not going to get you very fair with rent, mortgage, food, electricity, water, insurance, phone bills and the rest.
But… labels will normally only pay you when you reach a threshold of $50 that covers mastering, artwork, sample clearance and any other costs incurred. Sell $49 worth of music and you might not see a penny. Sell $1000 of music – which is a fair turnover for digital singles in this hugely competitive market – and you’ll still only see around $170 of that money, which is then split between any credited songwriters who then need to pay for hardware, software, studio time and the hundreds of man-hours of work that go into it. Plus any music marketing and promotion costs.
What are the costs?
Download site take 50%
Distributor takes 15%
Money split between label and artist 50/50 (without taking for marketing costs)
Money then split between the credited writers – if that’s a band of 4 then…. 4.25c each
How Much Money Do You Make From Streaming
The formula above is true for the streaming market – so when Spotify pay you $0.0084 per stream, that’s then split between the label with the distributor taking their cut. The money left over – let’s call it $0.00030 is then split between the recording artists. If that’s you, wahey – that money is all yours. But if you’re in a band and you split the proceeds, it gets split between you all which means you effectively get nothing.
Obviously, streaming works with much higher numbers – numbers can go into the millions, which sounds impressive. But even then, a million streams won’t get you too far – one band revealed their full Spotify breakdown, showing they got $4,955.90 for just over a million streams.
Downloads will give you a greater lump sum, but with downloads in decline, you’re left relying on streaming. And for streaming to work, you need to get into the millions – and even then, you’d need to hit multi-millions to actually make money.
And while, yes, there is money to be made in the booming live market, this shift in the music industry finances hurts people who either don’t want to tour, can’t tour or just want to let their music do the talking.
In the 80s and 90s, selling music was enough to make a living (and a very good one at that for the top tier). Now, you need to sell music, tour, have a merchandise line, get into synchronised sales, moving into commercials and adverts, ghost-writing, managing and any other music-related off-shoot just to get by.
All figures are approximate estimates and will vary according to the artist contract, the streaming sites, online retailers etc.
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