In this piece, Bobby Owsinski breaks down some complex recent streaming data, which highlights the disparity between the royalty rates paid out by major streamers (with YouTube coming up particularly short) as well as the contextual challenge of drawing accurate information from these kinds of data sets.
Guest post by Bobby Owsinski of Music 3.0
How steaming music royalties are derived is such a complex subject that even few within the industry know how it works completely, so it’s easy to get a skewed viewpoint based on limited information that we’re sometimes fed. That said, most data is relevant in some way as long as it’s put into context. One such list comes from the 2018 Streaming Price Bible on David Lowery’s The Trichordist blog (a good read with lots of info) and it provides the streaming royalty rates for the top 20 streaming services. I’ll just show you the top 10 below based on the streaming rate they’re paying:
|7||Amazon Digital Service||$0.00395|
|10||YouTube Content ID||$0.00028|
I guess the biggest thing you can take from the above chart is that the gap between what YouTube pays and even the next lowest (Pandora) is quite large, and it’s positively huge when compared to the service with the highest payout (Amazon Unlimited). This has long been the contention of record labels and content creators everywhere, so no new news here.
When looking at royalty data though, nothing is as simple as the pure numbers. In this case, it represents just one mid-sized label with a 250+ album catalog that generates about 1 billion streams per year, so it’s really a small sample size.
There are a number of questions that come to mind as a result, which would put the data into a better context. For instance, where are most of the streams generated? If most of them are from outside of the U.S. where the subscriber rates are lower (and therefore the royalties), that throws the data into a different light.
Next is which tier generated the most streams? Of course this only applies to streaming services with free tiers like Spotify (where the bulk of the streams came from, in this case), but if an artist receives most of her streams from the free tier, then the royalty rate will be far lower than if they’d come from the paid tier.
With only about a billion streams total, there’s obviously not a mega-hit within this catalog, which screws the rates even more. A huge hit actually receives a higher royalty based on its the market share with many services (like Spotify, for instance), which, for better or worse, raises the total average streaming rate. That doesn’t apply here, so the rates are probably more typical of what the average artist would receive.
The point is that while the streaming royalty data is certainly useful, it’s not the definitive because of its relatively small sample size. If you’re part of this small label it impacts you greatly, that’s true, but perhaps a look at the overall industry data might be a better indicator of what the true rates are.