Looking at payment per stream metrics for music streaming services can be misleading when considering artist pay, as many factors determine streaming royalties

Early Friday, Apple Music sent a carefully worded letter to artists, music labels and publishers that briefly explained …

Variety 2021-04-17 Jem Aswad

Context & Ripple Effects

Apple Music's artist letter positioned its stated per-stream payment against Spotify's lower average, but the accompanying analysis argues that comparison is not a direct measure of what artists receive. The dispute shifts attention from a simple platform-rate claim to the royalty chain involving artists, labels and publishers.

Apple had previously proposed a simplified songwriting-royalty rate based on streams, making the new emphasis on the limits of per-stream comparisons notable: simplification can aid messaging without capturing every determinant of artist income.

First-order effects

Artists, labels and publishers get a clearer warning that a headline per-stream figure should not be treated as an artist-pay figure; the report describes communication, not a change in Apple Music payouts.
Apple Music’s claimed advantage over Spotify becomes a qualified marketing point rather than a standalone measure of creator compensation.

Second-order effects

Spotify’s lower reported average is less useful as a direct competitive benchmark, pushing streaming-service comparisons toward how royalties are allocated across contracts and rightsholders.
Labels and publishers gain more reason to scrutinize how platforms describe payment rates, since those messages can shape artist expectations even when the final royalty differs.

Third-order effects

If platforms continue to promote per-stream rates while acknowledging their limits, music-streaming compensation debates will increasingly center on royalty-accounting transparency rather than a single payout number.
The longer-term competitive issue is whether services can make payment explanations legible enough for creators without reducing complex licensing and royalty arrangements to misleading averages.

The trend: Music streaming is moving from headline per-play payout comparisons toward greater scrutiny of how platform payments translate into artist earnings.

Discussion

@sleepwellcap @sleepwellcap on x
2020, and Apple is prob somewhere around $3B. Specifically, I'm referring to this article, but I've seen this talked about countless times https://www.wsj.com/...
@johnlmacfarlane @johnlmacfarlane on x
@ballmatthew @bdmon3 And please don't get into me with the bulls**t that the free tier has ad's and is good. Simply look at it from the Artists perspective and the per stream rates are a hundredth the paid tier. That's what Apple is pointing out. Artists are paying for Spotify's …
@johnlmacfarlane @johnlmacfarlane on x
@ballmatthew @bdmon3 You do realize that paying less on a unit basis, as the service grows, isn't good for the Artists? Or the market. Even if they grow the market faster than the rate drop that's short term good and long term bad.
@ballmatthew Matthew Ball on x
Thread (see above and below the QT) from Sonos Co-Founder who (to simplify for a tweet recap) believes Spotify isn't doing enough for artists, lacks proper incentives alignment, needs to increase per stream rates, and that Apple is better aligned overall https://twitter.com/...
@johnlmacfarlane @johnlmacfarlane on x
@ballmatthew @bdmon3 So, fast forward, and Apple is saying to the Artists - “we are aligned with you and here is proof” (I don't know if they supplied proof but they are saying the magic penny/pence per stream). And it's largely true. No free tier, simple.
@johnlmacfarlane @johnlmacfarlane on x
@ballmatthew @bdmon3 They asked Spotify, for example, when Spotify wanted to launch in the US for an enormous up-front payment (like $50M) and a percentage of revenue. I guess they could argue the up-front wasn't for an Artist so they could keep more?
@sleepwellcap @sleepwellcap on x
Let's get something straight, since I've seen a lot of media attention focused on this: Per-stream rates are meaningless👇🧵 $AAPL pays 1c per stream and $SPOT pays 0.3-0.4c on average. Why? A few reasons 1) Apple is 100% subscription based while Spotify has half of their users
@johnlmacfarlane @johnlmacfarlane on x
@ballmatthew @bdmon3 Spotify had no choice, and being the stubborn true believers they were - they paid but they also learned. Next time, Spotify could argue for a lower rate on the streams, and a larger up front (which is always good if you believe in the long term).
@sleepwellcap @sleepwellcap on x
in ad-supported, which is the biggest acquisition funnel for paid subs and additional revenue source (thus the right strategy), and this obviously dilutes the overall payout. 2) Apple's ARPU is higher, given Spotify's focus on penetrating and growing emerging markets
@sleepwellcap @sleepwellcap on x
where price for subscription is much lower. 3) MOST IMPORTANTLY: Spotify gets not only more streams than Apple, but more streams PER USER. So this metric is meaningless. If I stream an artist twice as much as another platform, the per stream rate is going to be half! We know
@johnlmacfarlane @johnlmacfarlane on x
@ballmatthew @bdmon3 Apple isn't speaking to you or I. They are talking to the Artists (and Managers). And what they are saying is we (Apple) are doing the right thing by you, see. Now, I can't read the letter, or rally see the figures so I can't say if that's true or not but if …
@johnlmacfarlane @johnlmacfarlane on x
@ballmatthew @bdmon3 The only service which was Ad based and really worked to make it work for the Artists was Pandora (pre purchase - I don't know now). They worked hard to make the free/ad market work for everyone, inclusive of Artist.
@sleepwellcap @sleepwellcap on x
Spotify has 2x+ higher engagement so obviously they generate many more streams than competitors and thus lower per stream payouts. The really important metric is how much each platform is paying *overall* to rights holders, and Spotify wins here, by a mile with over $5B in
@johnlmacfarlane @johnlmacfarlane on x
@ballmatthew @bdmon3 There is a little bit of history here that Apple knows about and is benchmarking to. When Rhapsody, the first of the on-demand streaming services integrated with Sonos (I want to say 2005/2006) the basic cost to Rhapsody was $0.01/track. How do I know? Becaus…
@tedgioia Ted Gioia on x
Apple claims it pays a penny per stream—twice as much as Spotify—to musicians. https://www.wsj.com/... Just the fact that streaming platforms now feel the need to disclose payouts is a sign of progress.
@joeyquits La Neve on x
From all the numbers I've seen, Apple does not in fact pay a cent per stream. Far from it. And we need to continue to push them on that. But the fact that they're declaring it as a goal is a big deal. https://www.wsj.com/...
@viticci Federico Viticci on x
The @TIDAL app is proof that displaying full credits for songs and albums is totally possible these days. They have detailed breakdowns for engineers and performers on each track. When other streaming services don't do this, it's simply because they don't care, which is a shame. …
@joshtpm Josh Marshall on x
@seanhackbarth i'm a hardcore apple guy but apple music freaks me out
@rsgnl Joe Rossignol on x
I wonder if and when we'll get an updated Apple Music subscriber count? I believe the last publicly disclosed number was “more than 60 million” subscribers in June 2019. Nearly two years ago. I wonder if Apple feels this info is too competitive to be shared now, or what?
@ballmatthew Matthew Ball on x
@JohnLMacFarlane @bdmon3 1 of 2: If per user engagement grows, per streams fall. But ST royalties are flat + LT pricing should grow. Good for all If family plans reduce ARPPU and grow users, per streams fall. But total paying users grow, so too should LT ARPU. Good for all
@joshtpm Josh Marshall on x
@jbouie @seanhackbarth Yeah, I'm not sure why I was so turned off by it. I think because they made it harder to use iTunes to greased the skids into Apple Music and that pissed me off.
@joshconstine Josh Constine on x
Does this just mean Apple Music subscribers stream half as much music as Spotify subscribers? https://twitter.com/...
@ballmatthew Matthew Ball on x
@JohnLMacFarlane @bdmon3 But I certainly hope that over time, more artists make more money. That does seem to be happening quite widely - and certainly can't without new revenue growth comin in - but am open to data showing the per stream rates are instead diverting it elsewhere
@viticci Federico Viticci on x
And before I get the “But Apple doesn't have the data!” responses: - An indie utility called MusicSmart figured out how to display full credits for any Apple Music track by querying different online databases: https://www.macstories.net/... - It's Apple. They could just buy the d…
@ballmatthew Matthew Ball on x
Alt Headline: Apple Music subscribers use the service half as much as Spotify subscribers do, or live in countries with twice the ARPU https://twitter.com/...
@viticci Federico Viticci on x
For context: Spotify shows lead performer and producer info. Apple Music only shows who wrote the lyrics. Both of these services should do *a lot* better to give proper recognition to folks who work in the music industry. https://twitter.com/...
@ballmatthew Matthew Ball on x
@bdmon3 Also pays more gross than any other service, and has singularly doubled the market
@reckless Nilay Patel on x
Apple has really put itself in the crosshairs with this penny-per-stream number — if that isn't what artists ultimately see, the backlash is going to be real.
@ericswaggyswoop @ericswaggyswoop on x
unless they just recently raised this, this isn't even true? looking at distrokid i get anywhere from 3/10 of a cent to 9/10 of a cent from apple music. never a whole cent. nevertheless it's true that apple music has paid an average of double that spotify does per stream https://…
@reckless Nilay Patel on x
Updated this piece — Apple's penny-per-stream is an average rate, artist payouts do vary by plan and country. Still, Apple taking direct shots at Spotify here https://www.theverge.com/...
@riegerreport JM Rieger on x
Apple Music pays $0.01 per stream, roughly double what Spotify pays per stream. Apple pays 52% of subscription revenue to record labels. Spotify pays 2/3 of every dollar of revenue to rights holders, with 75% to 80% of that going to labels. https://www.wsj.com/...
@evan_greer Evan Greer on x
Wall Street Journal: “Apple's penny-per-stream payment structure—which music-industry experts say can dip lower—is roughly double what Spotify, the world's largest music-streaming service, pays” hmmmmm seems like it's time for #JusticeAtSpotify https://www.wsj.com/...
@lanceulanoff Lance Ulanoff on x
Still trying to digest that artists get just a penny per stream https://www.wsj.com/...
@ethanwsj Ethan Smith on x
Apple Music says it pays the music industry a penny per stream—about double what Spotify pays. (But Apple Music generates many fewer streams.) https://www.wsj.com/...

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