WHAT IS STREAMING AND HOW DOES IT WORK?
Over the last several years streaming music has become the main disrupter in the Music Industry. The music Industry is experiencing one of its greatest days of revenue ever thanks to streaming. In the next 10 years the shift from physical to streaming will be drastic. The physical downloads ITunes ends and streaming takes over the world.
- Today over 50 Million tracks can be streamed
- 1.2 Billion Streams a day
- 255 Million people globally are paid streaming subscribers
- By 2030 Streaming will be a 1.15 Billion dollar industry globally
WHAT IS STREAMING?
Streaming music, or more accurately streaming audio, is a way of delivering sound — including music— without requiring you to download files from the internet. You don’t own it you rent it. Music services like Spotify, Pandora, Amazon and Apple Music use this method to provide songs that can be enjoyed on all types of devices. These streaming providers are also called DSPs … a digital service provider. DSP’s are the providers that help you as an artist monetize your music.
UNDERSTANDING THE DATA THEY LOOK AT AS IT RELATES TO YOUR SONG:
There are several data points that help generate traction on your music inside of streaming services which are the following:
- Save Rate – Is this track being added to listeners library’s more frequently? Saves are the number of listeners that add your track to their library. Imagine when you open up Spotify and click on a star icon you are saving songs to your library. This becomes valuable data back to DSP’s.
- Repeat Rate – Is this track being played over and over by listeners?
- Source – Which playlist or library did your streams come from? Which helps determine where new listeners are coming from.
- Demographics – Breaking down the age, gender and even countries that people are streaming from gives us a global picture on the success of a song.
- Average Drop-Out Time – at what point does a listener hit skip?
- Number of completed playbacks – Again you must have at least 30 seconds to count towards a stream. Which makes getting to your chorus before 30 seconds really important.
- Repeat Rates per Demographic – Are there groups of listeners that are repeating tracks so they can understand a demographic.
So all of this data generated begins to paint a picture on how successful a song will become. These things affect your playlist positioning.
Now let’s talk about how Revenue is generated in this industry.
HOW MUCH REVENUE DOES THE MUSIC INDUSTRY MAKE ON STREAMING?
I’m glad you asked….
According to the latest research streaming services are paying out BIG dollars to the Major Record Labels. The 3 top Gatekeepers are making $19 million a day on streaming services alone. According to the Recording Industry Association of America, streaming now makes up for a whopping 75 percent of its revenue.
Streaming giants like Spotify and Apple Music notoriously pay out only a fraction of a penny per play. Music labels take as much as 80 percent of those earnings as part of traditional record deals. Bigger stars who negotiate a more favorable royalty split still usually share around 50 percent of music revenue.
HOW DO YOU THE ARTIST GET PAID FROM STREAMING?
I understood how a person got paid from a download but what about streaming how does it work?
In the world of Streaming the landscape changes all the time. Trying to keep current with the payout rates can be as frustrating as trying to predict the futures market. One thing is for sure this is one revenue stream that will continually fluctuate.
Streaming services include Pandora, YouTube, Napster, Spotify, Apple Music, Deezer, Tidal, and Amazon. Each of these streaming services has a different rate of payout.
Let’s break it down like this.
To meet the monthly minimum wage amount in the US $1,472.
If you are an independent artist, it seems that currently Amazon Music is paying out the most to indie artists. Amazon Music Unlimited has the highest per-stream payout rate at $0.01175. An artist would need around 125,277 plays to earn the US monthly minimum wage amount.
Artists on Apple Music would need around 200,272 plays to earn the US monthly minimum wage amount.
Spotify, the streaming music giant now reportedly pays $0.00437 per play. Thats amazing consider they have 191 million users with 87 million paid subscribers.
A simple way to calculate what an artist makes inside of streaming would be to count 250,000 streams = $1,472 or minimum wage.
Down below I have listed the most recent pays per stream.
1 Stream on YouTube = $0.00069
1 Stream on Spotify = $0.00437
1 Stream on Apple Music = $0.00735
1 Stream on Tidal = $0.01250
1 Stream on Amazon Music = $0.00402
1 Million Streams on YouTube = $690
1 Million Streams on Spotify = $4,370
1 Million Streams on Apple Music = $7,350
1 Million Streams on Tidal = $12,500
1 Million Streams on Amazon Music = $4,020
SO HOW DO YOU MAKE MONEY IN THIS STREAMING WORLD NOW THAT DOWNLOADS ARE DEAD?
First let me give you a little history:
Through the last 60 years there has been an industry standard of Gold and Platinum records. This was started by the RIAA. The Recording Industry Association of America® (RIAA) is the trade organization that supports and promotes the creative and financial vitality of the major music companies. Its members comprise the most vibrant record industry in the world, investing in great artists to help them reach their potential and connect to their fans. Nearly 85% of all legitimate recorded music produced and sold in the United States is created, manufactured or distributed by RIAA members. RIAA’s historic Gold® & Platinum® Program defines success in the recorded music industry. Originally conceived to honor artists and track sound recording sales, Gold & Platinum Awards have come to stand as a benchmark of success for any artist—whether they’ve just released their first song or Greatest Hits album.
So now let me break down for you the equivalents of streaming songs today compared to downloads:
150 streams = 1 Song Download (Equivalent)
1500 streams = 1 Album Sale (10 Tracks Equivalent)
75 Million Streams = 500,000 Singles Sold (Gold)
150 Million Streams = 1 Million Singles Sold (Platinum)
1.5 Billion Streams = 1 Million Albums Sold (Platinum)
So to give you an idea on what that could mean to you financially…
If you go Platinum video on YouTube, you will get = $103,500
If you go Platinum on Spotify, you will get = $655,550
If you go Platinum on Apple Music, you will get = $1,102,500
Now you know how much money is potentially on the table so you can be sure the label, distributor, manager or publisher is paying out correctly.
Why is streaming changing the Future of the Music Industry?
Here are the ways I see the future:
- There is an increase in smartphone streaming from 2% to 9%
- Think about what you watch and consume on your phone.
- Your phone is your screen into the world. This is where you connect with others.
- Gen Z and Millennials spend more time streaming music than any generation with 77% of this generation consuming music via streaming. This is a big opportunity
- With the increase of 5G into our tech space will only increase what is possible with music and video. We are just seeing the beginning of what will become a revolution yet again in this industry. The entire infrastructure of technology as we know it is about to get upgraded once again.
How can I estimate the number of streams and calculate potential revenue between the streaming providers?
I have created a great tool called the Music Mastery Streaming Calculator.
We have taken the guesswork out of what your streams will be worth. Simply go to the link in this session and let our calculator help you figure out estimated payout amounts. Again these payout amounts change all the time. Having a complete picture of streaming is a moving target. The best way to look at streaming services is part of your overall strategy to create a solid footprint across all platforms. Your streams generate data which generate saves and potentially more purchases and future projects. If you want to get the attention of a label figure out how to increase your streams, which increases your data. The more data you generate you will increase the value of your work.
Play-listing how does it work and who are the “tastemakers” behind playlists?
You can liken a playlist to the old Mix Tape. It’s how people share their music and get the word out about what they are listening to.
How do you find these playlist curators or “tastemakers”?
Playlist curators have become the drivers of helping people discover new artists. With one placement into the right playlist a song can bring global listenership. Yes there are several ways to find these curators and to also work your way onto their radar. Remember these curators are getting hit with 20,000 plus new songs each day.
Here are some of my insider tips to getting play-listed:
- BE SPECIFIC: One of the key ways to get on playlists is to make sure when you approach a playlist curator you want to be specific with the song you are looking to get play-listed. Don’t just send a whole album without being specific on tracks. Send over the exact link to the song you are trying to get some heat on.
- BE FOCUSED: Know what you’re promoting and why you are promoting it to that playlist. Give specifics as to why they should play your song. Remember in most cases you are pitching your song to every playlist. This also means tagging your song so it is as specific as possible.
- BE OPTIMIZED: You must optimize your chances by making sure your accounts are verified with each streaming provider.
- BE TENACIOUS: You have to promote your own music. Believe in yourself and get yourself out there. Make sure your song is mastered perfectly. Make your art stand out. Create value off-platform that leverages your brand and art with your social media following:
- Have your fans follow you on services like Spotify and apple music to increase your algorithmically chances of getting into new playlists.
- Another way to do this is to make sure your website points back all the links to these services. Connects the dots so that it eliminates the guesswork.
- BE STRATEGIC: target “trigger cities” with your music. There are key cities across the globe that can help you increase your listenership. They are particularly interested in new music and new artist. For example did you know that this past year Mexico City stood out as one of these trigger cities. The listenership gravitated to New artists and new music streams. It just makes sense to go after these key cities where you increase the likelihood of increased streams. Which increases your data!
- BE RESOURCEFUL: one way to do this is to pay a service to help pitch for placement on playlists which can help new artist get discovered. It would only make sense that there be a service that might push you to the front of the line with these curators. There are a number of companies that will pitch playlists for you and yes I’ve included them in the link below.
- BE DATA INFUSED: Help Playlists Algorithmically find you by..
- Curate a great playlist on your profile. The better the playlist the more people will share it.
- Be making playlists of your music also increases and optimizes your own accounts. Part of that is choosing a theme or two and curating music around those themes.
- Within each streaming service you can also be very specific in your descriptions which allow you to select music cultures, moods, song styles, and even different languages available with your music. The more specific you can make this the more you increase the chances of standing out in this sea of new music.
- In a data-driven listening environment, the commodity is no longer music. The commodity is listening. The commodity is users and their moods. The commodity is listening habits as behavioral data.
- Spotify calls this “streaming intelligence” and is more likely to be surveillance of its users to fuel its own growth and ability to sell mood-and-moment data to all sorts of brands.
DSP’s have a specific process to apply to playlists. Again all of this is based on data. If you can increase the data you will increase your chances of gaining the attention of some of these key playlists. Making your music stand out is key to getting people to CARE about your music.
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