The world has moved on for music producers from physical to music streaming. As well as cloud-based platforms that digitally store your music for you. And while that’s a dream for the music fan who now has access to millions, maybe billions, of tracks at the push of a button, that’s had serious consequences for making money as a music producer.
Where artists in the 90s and noughties could rely on physical music sales, consumers are now choosing to only download their favourite tracks from a release or choosing to stream their music, often for free from music streaming sites with adverts. And let’s not even get into the illegal download conversation.
That change has had a huge effect on the music business as we’ll discover. 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. And download numbers have fallen: the Global Industry Report for 2017 noted that downloads were down 20% year on year. With those incomes now slashed, musicians and bands and producers have to rely on the digital streaming market which continues to grow and grow.
But with streaming platforms like Spotify, Youtube and Apple Music paying as little as $0.004891 per stream. It is 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.
The label, the distributor, and any other songwriters that are credited will split that 50%. While your manager (if you have one) will also take a cut.
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.
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.
The revenue will get split if you are in a band of four and share the song writing credits. 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. Credited songwriters will then get their split.
As an artist you must consider that money is needed to pay for various things. Such as hardware, software, studio time and the hundreds of man-hours of work that go into it and you realise the gravity of the situation.
The breakdown
> If a single track costs $1 to download.
> Download site takes approximately 50%
> The distributor takes approximately 15%
> The remaining 35% is then split between the record label and artist. This leaves around 17% for the band if on a 50/50 deal.
> The remaining money is then split between the credited writers – if that’s a band of 4 then that can be 4.25% each.
How much money do you make from music streaming
The rough formula above is true for the music streaming market. Spotify pay an artist $0.0084 per stream. When that payment is then split between the label the distributor will also take 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.
A little disclaimer. We try and provide accurate and information that is correct to help you. These rates are a guideline and are subject to change.
Obviously, streaming works with much higher numbers – numbers can go into the millions, which sounds impressive. You won’t get too far with million streams. One band revealed their full Spotify breakdown, showing they got $4,955.90 for just over a million streams.
Roughly, using an average of streaming payouts, an artist is going to need somewhere between 100-250,000 monthly plays to make the minimum wage in the US.
So what should you do?
If you want to support their music, these are the best ways to do so…
Try buying music from the likes of Bandcamp, CD Baby or Tunecore for example direct from the artist/label. They take up to 90-100% of the revenue.
Buy band merch direct from the artist including vinyl releases, CDs, tapes, CDs etc.
Download don’t stream. The artist get a much higher percentage of the profits this way, and you’ll always have a copy of their work.
Stream your music from Napster, TIDAL and Apple, the three sites with the highest artist payouts.
And if you are streaming their music, support the artist on social media. Share their new single, track, video, gig dates where and when you can!
In conclusion
Downloads will give the artist a greater lump sum. With downloads in decline, music makers are effectively reliant on streaming. But 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 once everyone has had their cut.
Streaming might be the ultimate convenience for the user. However unless you’re getting into millions of streams, an established artist or you’re in the popular playlists, it means very little apart from PR for music makers.
Making money in the booming live market is possible, and this shift in the music industry finances hurts people. These those who either don’t want to tour or can’t tour. They might have a small touring area (like our relatively small Middle East circuit) or just want to let their music do the talking.
In the 80s and 90s, selling music was enough. You had to make a living (and a very good one at that for the top tier).
Now, you need to sell music, tour or have a merchandise line, get into synchronised sales or move into commercials. Or ghost-writing, managing and any other music-related off-shoot just to get by.
If you wish to know more about this topic then please check out these other helpful blogs.
We Ask Is Music Streaming The New DJing?
A Step By Step Guide To Middle East Streaming Site
How To Become Better With Youtube
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