How I Skipped Spotify and Made 10 Times the Revenue

moneysurprise2

Streaming royalty statements are repeatedly showing that Microsoft is crushing Spotify (and Apple Music).  They’re not the only one.

Earlier this month, Digital Music News published a report showing wildly better streaming payouts from both Xbox Music and Tidal, with repeatedly low payments coming from Spotify and YouTube.  Those disparities were happening across the world, though artists now have a way to dramatically increase their royalties by prioritizing just these two platforms in their distribution and promotional rollouts.

Now, there’s more data demonstrating systematically elevated royalties from Xbox Music, which was actually recently re-branded by Microsoft as ‘Groove Music’ (and, was previously called ‘Zune Music’ if you’re poring through your various royalty receipts).  That data comes from a small inspirational label in the US, with a modest roster of artists (many of whom are older and going digital for the first time).

At a top level, here’s what the label discovered over the past year on the royalty front (Microsoft can’t decide what to call its streaming music service, so look out for a bunch of different names).

Over a critical mass of 7,078 streams accrued on Xbox Music during the month of April, 2016, the average per-stream royalty paid by Microsoft was $0.0423, or 4.23 cents.

Across all songs, Groove/Xbox/Zune streams ranged from $0.014-$0.046 per stream (that’s 1.4 cents to almost 5 cents a stream).

XBox/Groove subscribers from the UK delivered an even higher royalty stream rate of $0.067 per stream (or 6.7 cents).

Compare that to Spotify per-stream payouts that routinely fall below the $0.003-$0.004 level, and Xbox Music is easily paying 10 times the amount per play.

This label was also distributed on Apple Music, where royalties came in at 1.13 cents per stream, albeit on a smaller (but still significant) count of 187 plays (almost entirely in the US).  We’ll be reporting on more Apple Music royalty data ahead (we’re expecting a lot of information), though a quick read of this data shows that Microsoft is paying roughly 4 times what Apple is paying.

Skipping Spotify.

The most interesting part of these statements was that we couldn’t find Spotify anywhere.  That may be part of a decision to skip Spotify entirely based on lower royalty concerns, with all the emphasis going towards paid platforms.  A large percentage of free, ad-supported Spotify users is part of what’s dragging those totals, with royalties from the platform routinely dropping well below the $0.004 level from data we’ve seen.

At present, Spotify is showing little signs of shifting away from its free tier, despite heavy industry pressure to vacate the low-rent offering.  On top of that, repeated leaks show that per-stream royalties on Spotify are getting worse, for reasons that are difficult to understand.  That has many artists skipping the platform, either for practical or philosophical reasons, while others feel the exposure and availability are more important.

(For those distributing to YouTube, the per-stream royalties are disturbingly low, and almost not worth the comparison.  Most earn virtually nothing on this platform.)

Which brings us to the next issue: Spotify, like YouTube, have huge numbers of users, but even so, it’s tough to win on volume.  Indeed, overall user levels on Xbox Music are lower, but pound-for-pound, this platform crushes Spotify when it comes to cash.

That isn’t just a detail on a spreadsheet, it’s actually helping labels and artists and reformulating rollout strategies.  “I must admit that the Zune/XBoxMusic/Microsoft Groove royalties are definitely helping [artists’] secondary residual income,” the manager of the above label told Digital Music News.

The strategic shift not only involves prioritizing higher-paying platforms like Xbox on distribution, but also committing more resources to getting promotional attention and features on those platforms.

The Tidal Factor.

Others are hacking in the same direction, with Tidal the other platform paying much, much more.  This is a global breakdown shared with Digital Music News by an independent rap label, whose owner conducted an experiment to determine actual country-by-country per-stream payouts on each service (remember, ‘Groove Music’ = Xbox Music = Microsoft).

tidalgroove_breakdown

Sounds great, though one caveat: word from labels is that payouts from these platforms can be slower, with Tidal guilty of a serious payout lag.  Microsoft is also a little delayed: “Depending on the distributor, XBox Music/Microsoft Groove takes between 2-5 months to report royalties,” the first label told us.

So far, it’s seem worth the wait.

 

Image by Thomas Galvez, licensed under Creative Commons Attribution 2.0 Generic (CC by 2.0).

25 Responses

  1. HansH

    Looking at rates only is stupid. Does say anything about revenue. Skipping Spotify and using other streaming services only leads to less revenue.

    Reply
    • Anonymous

      “Skipping Spotify and using other streaming services only leads to less revenue.”

      On the contrary, it seems…

      Reply
      • HansH

        Come on. Get real. Spotify is the biggest streaming service by far. If their users can’t stream your music your overall revenue will be lower. You miss the Spotify part of your royalties. Fine with me, but not good for your income.

        Reply
        • Anonymous

          “If their users can’t stream your music your overall revenue will be lower”

          No, they buy it instead. We’ve seen it again and again.

          Reply
          • Maximus

            No they will steal it. The numbers I see every month are that yes Spotify pays much less but we get 5 times more revenue over the rest.

  2. Me2

    Hard to say, because we can only look at it on a case to case basis. And the very question always leaves a “what if” in either scenario.

    Some sure feel that skipping or windowing have worked for them.

    Others simply don’t want to be on the free tier out of principle, and I’m all for that too.

    Reply
  3. Anonymous

    I think we all know by now that Spotify and YouTube are bad for business — but here’s what I don’t know:

    Why are the German Tidal numbers so bad? I mean, 20% of Ireland and UK?

    Reply
  4. Me2

    Last year, while switching distributors there was a short time where a chunk of the catalog just wasn’t available on most platforms. There was a definite bump in Bandcamp traffic during that time.

    For what it’s worth, it pointed to the idea that being on a particular platform (or not) isn’t the be all and end all of the universe. People will find you.

    Reply
      • Me2

        Sure. This is actually some years ago now that I check the BC stats, it goes from dead zone (like less than 20 plays) to nearly 500 for that month. Small stats I know but considering how weird and niche that particular music was, without much of a previous fan base and DIY promo, it impressed me at the time.

        But to be fair, this was coincident with a new album (likely why distribution was getting switched around). I’m sure people were being directed there from FB/Twitter etc.

        Further, it looks like the majority of those plays were from that new release, so I have to call bust on this one from a stats standpoint, though I still found that people will go to where you are if they know about it.

        Reply
  5. FarePlay

    The problem with Spotify is they never committed, cared to or understood how to create a sustainable business. As a result their collateral damage has been epic. Spotify’s business model was mirror image of Napster, everything, everything free and who knows how much of that was Sean Parker’s hubris. He was going to fix what he broke, like single handedly he broke the music distribution model and now he was going to fix it. Right.

    The deal Spotify leveraged with equity and fear was no different than what Napster had been angling for fifteen years ago. The difference was piracy had gutted the business and Spotify swooped in for the fire sale. Deja Vu all over again.

    Tidal. I don’t know if these guys are going to make it, but they’re doing a lot of interesting things. Unlike Spotify, in every way, they don’t give their service away. They’re niche driven, hip-hop, they upsell high-def streaming for a premium price and they have relationships with artists so they can get exclusives.

    Why the labels ever allowed Spotify to pay next to nothing for their free, advertising supported subscription model, if you can legitimately call it a subscription model, is reprehensible. This ‘deal’ has been a major contributor to the latest decline in paid downloads and the sale of physical product.

    While the sale of music was in decline, cheap/free streaming greatly accelerated that decline and was another low blow denying musicians and songwriters their best source of revenue.

    Unless they could fill auditoriums………

    Reply
    • Me2

      Interesting. It makes sense that the Napster and uTorrent bags would probably just be full of tears.

      Reply
  6. studiodovis@gmail.com

    Am interested in a comparison with regular radio. Say 12 regular (non-internet) radio stations in the EU each played your song 10X in April 2016. And say the average audience was 100,000. That’s 12 million ‘listens’ for the month. From all the 12 stations together, how much would the composer get? How much would the performing artist get? And how much would owner of the sound recording (say, the label) get?

    Now tell us, how much would each of the 3 get on Spotify for 12 million listens? And how much each of the 3 would get on Tidal?

    From what I can make out, ALL the streaming services pay each of the 3 (the composer, the performer, the owner of the sound recording) MUCH less than does regular radio. Correct me if I am mistaken. (I use the EU as a reference, because US radio doesn’t pay a performance fee).

    Reply
    • Anonymous

      “Am interested in a comparison with regular radio”

      Whatever for?

      Radio was all the rage 20 years ago, but it’s totally worthless today.

      It should just die if it can’t figure out how to pay artists for the content it needs.

      Reply
  7. Versus

    (US) Radio should die, if it doesn’t do the right thing and start paying performance royalties, as is done in the rest of the world.

    Reply
    • Anonymous

      “start paying performance royalties, as is done in the rest of the world”

      Not correct: China, Iran and North Korea don’t pay performers either.

      🙂

      Reply
  8. Anonymous

    I am confused how skipping Spotify makes any impact whatsoever on streaming revenues from other sources. Withholding your music from Spotify isn’t going to make your fans sign up for Tidal or Groove Music so they can listen to your music unless you are a major platinum selling artist with a cult following. The vast majority of people use only one on-demand streaming service. If your music isn’t on their platform of choice then they simply won’t hear you. They could possibly download it but integration of purchased (or stolen) tracks and streaming services has become incredibly poor (intentionally).

    Reply
    • Anonymous

      “The vast majority of people use only one on-demand streaming service”
      That’s fine. They can choose any platform ( Tidal, AppleMusic, MicrosoftGroove, etc..), except Spotify. Labels and artists witholding from Spotify aren’t trying to force their audience towards one specific platform, they just want to encourage them to choose other more decent streaming platforms rather than Napst…err..I meant Spotify…

      Reply
  9. Stu

    There’s a difference between ’10x the per-stream rate’ and ’10x the royalties’ though: if the label whose figures were quoted did 7,078 streams on Xbox Music in April at an average rate of $0.0423 (so $299.40 in total, right?) it’s a shame there are no Spotify figures to compare that against.

    e.g. at the lower $0.003 rate for Spotify cited, if the label did more than 100,000 streams that month on Spotify they’d get the same amount. If they did 500,000, they’d be earning five times as much on Spotify, if they did a million it’d be 10 times as much etc etc.

    Reply
    • Faza (TCM)

      What makes you think that such a difference in the number of plays between platforms is achievable? You’re talking about 2-3 factors of magnitude differences, which seems highly unlikely.

      Every artist’s audience is capped at some number of fans over any given period. Each of those fans has a cap on their listening time (due to the number of hours in a day). Extra spins don’t cost the fan extra money, so a Spotify play “costs” just as much (little) as a Groove play. Where would the extra 93,000 plays come from, exactly?

      Reply
  10. info@ticksa.com

    On Ticksa.com artists can set their own price for exclusive material. Music is freemium on whatever channel, but create some compelling exclusive material (vids) and post them on Ticksa for 1.00$ (or what you think it’s worth) and watch your revenues grow in real time. Ticksa pays 80% to artists directly.

    Reply
  11. rp

    Nope. I was wrong. He’s still trying to sway everyone to hate Spotify. smh.

    Reply
  12. Leave It To Beaver

    Power is the capacity to modify the conduct of an individual or institution through the real or threatened use of rewards or punishments. Since the bank has the financial power and the FBI has the legal power and their stomping on my ass I have to step into my literary world– deep inside the ‘ Terror Poet ‘s pulpit and appeal to my terror brothers and sisters around the globe and call for an international , Fatwa , on BNY : Catch the bankers coming out the building and shank their ass beheaded where they stand.

    Reply

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