YouTube Music Key Is Paying Me 5.4 Cents a Stream…

“Not sure what it means, I only know what it paid me.”

This is the first royalty statement we’ve seen from YouTube’s Music Key, from an indie artist using a major digital distributor.

($2.20587 / 41 = $0.0538 = 5.38 cents)

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25 Responses

  1. Anonymous

    Those are decent numbers…. but I suspect it’s because they don’t have the traffic yet. Because YT Music Key divvies up subscriptions based on total streams, as the number of streams go up, your per stream pay will go down.

    This is simply the spotify model, and it’s going to have the exact same problems as spotify. Great, you’re doing well per stream now – but if Music Key succeeds in getting the traffic you won’t be doing so hot; by then it’ll be too late because it’s got so much traffic that leaving is a risky proposition, so you’ll just stay and deal with spotify-like payouts.

    • GGG

      This is most likely the case, however we may get lucky and it might not drop down to the .006-.008 avg Spotify is at. I mean, YT has a billion uniques a month, right? Compared to Spotify’s best, probably inflated number of what, 60M users?

      • Anonymous

        YT has a billion uniques/month – but that’s for the free YT service. I think the relevant number for this is the number of Music Key paying subscribers, which is likely to be just a small fraction of the overall YT numbers. And I think YT Music Key subscribers will be lower than Spotify’s paying subsribers because YT has established itself as a free site; I suspect it’ll have more trouble getting people to pay.

        • GGG

          Right, my point was less about the subscriptions and more about the ad rates being much higher (in theory, though this is YouTube after all….)

          • Anonymous

            Possibly, though ad prices are declining. Let’s assume they’re higher – they’d have to be drastically higher than Spotify’s to make these numbers work long term. In that case, I assume advertisers would begin to substitute cheaper spotify ads for the more expensive YT ads; after all, if the ad prices are that different, your money would go much further on Spotify than YT.

          • GGG

            Well, they can’t if they want a certain number of clicks. There are enough massive corporations who spend absurd amounts of money on advertising that hitting a service with a billion people is worth it, especially when that service has the ability to filter to a creepily specific degree.

            But you’re right that it’s still online ads, so it’s not exactly a windfall of money for each individual act. But even if it drops to a penny a play, I think most people would be happy.

    • Anonymous

      “Those are decent numbers”

      Decent? 🙂

      If this were true — if YouTube Music Key paid 5.4 cent per stream in average — it would save the industry and start a new goldrush.

      • Anonymous

        Yeah, except you have to actually consider the math here. These numbers aren’t sustainable. Maybe YT is eating the costs of jacking up per stream payouts to get a good rep back. YT’s ad prices + subscriptions can’t sustain this. It’s great for now (certainly better than no increase, however temporary) but don’t fool yourself into thinking these are actually long term numbers.

        • Anonymous

          “but don’t fool yourself into thinking these are actually long term numbers”

          Hence the if’s…

          And 98-99% of your fans would still use YouTube’s free service which pays even less than Spotify.

          So back to square one. Which might be the upcoming YouTube alternative Videscape. It’s currently in beta, and it looks that way, but here’s what the owner Tom Oswald said a couple of weeks ago:

          “hi there, last months payments were 0.61 cents per stream compared to youtube 0.00640 cents and spotifys 0.01 cents. You can upload audio and video to our site and the revenue share is quite simple. Every penny we get in from our 5 revenue streams is added together, running costs are removed then 50% is paid to the content creators. We anticipate at 1 million users per month we could see payneys of between 5-9 cents per stream as we have no upper cap on how much the site pays out. We are endeavouring to make straining a viable source of income for everyone”

          AND you’re free to make exclusive iTunes releases (if I got it right)…

          • MKB

            Videscape would be nice but I’m hesitant to believe those numbers without any evidence.

            They claim 5 revenue streams, but the site says ad only; maybe they’re talking about 5 different types of ads? They’re currently using AdSense, so you can’t expect better rates until they switch to a different ad network – which they claim they plan to do, to be fair. But will they get payouts 6-10x higher than any other streaming platform? I hope so but I’m not buying it yyet.

            Also, they claim their calculation is “straightforward” but it’s not.
            From the Videscape FAQs page: “Total platform ad revenue minus Platform costs = operating profit of which 50% are paid across the platforms total streams.”

            Total platform ad revenue = straightforward.

            Platform costs = not straightforward and, without tight controls that would not be in videscape’s interest, easily manipulated. Is the CEO’s salary a “platform cost”? How about the utility bills in Videscape office? The secretary’s salary? Fancy new top of the line computers and desks for all videscape employees? Company retreat in Belize? This formula also means that videscape doesn’t bear the expenses of poorly managing their costs – if videscape’s platform costs are 2x what they should be, that’s out of the artists’ pockets. And if salaries are part of the “platform costs,” then you can bank more money simply by raising salaries; you’ll still give half of whatever’s left to the artists, right? You can manipulate the payouts simply by changing what counts as “platform costs,” and how much you spend on them.
            Taking a flat percentage of ad revenue would be a more transparent formula.

            So it’s nice idea, but it raises a lot of questions. Looking forward to finding out the answers. 🙂

          • Anonymous

            “Videscape would be nice but I’m hesitant to believe those numbers without any evidence”

            Completely agree. And I’m sure Videscape will provide all the evidence we need if it’s the real thing.

            “Also, they claim their calculation is “straightforward” but it’s not. From the Videscape FAQs page: “Total platform ad revenue minus Platform costs = operating profit of which 50% are paid across the platforms total streams.””

            Again, I agree. All I’m saying is this:

            Videscape might be the real thing and we should give it a chance. Tom Oswald has been very open in this forum, and I’m sure we’ll get all the answers we need.

          • Anonymous

            …also, imagine if Videscape were really smart and actually paid the 5-9 cents per stream Tom Oswald mentioned:

            Every single artist on the planet would leave YouTube asap.

            And again, imagine what that would do to the industry: People would invest like crazy in music and videos!

          • MKB

            Agreed… but I’d be a lot more hopeful if they just did a flat split – like 60% goes to artists, 40% to platform (or whatever). It seems sketchy to me that they’re using this wishy-washy calculation.

            If I were an evil mastermind bent on making my fortune off the backs of artists, this is the sort of formula I’d use: I’d suck artists in by offering amazing payouts based on Total Ad Rev – Platform Costs = Operating Profit that gets split 50/50 between Videscape & artists; once I hit traffic numbers to become the dominant platform, I’d hike my “Platform Costs” (aka salaries, perks, bonuses) and continue to split the leftover “Operating Profit” with artists 50/50 — artists can’t really do anything about it, because (A) we’re the new Youtube, so they don’t have much choice and (B) “hey guys, we told you the deal upfront, we’re just doing exactly what we said – not our fault we need to quadruple our executives’ salaries in order to keep them, its a competitive market.”

            Professional artists are businesses. I want a platform that says “this is exactly where our revenue comes from, this is exactly your share” – that’s stability and I can count on it for my business. With this model, because BOTH revenue and operating costs are wild cards, so there’s a lot of potential room for instability.

            At least with YouTube, operating costs are YouTube’s problem, not mine. Same thing with Spotify – if Spotify pays higher rates than it needs to for data or servers or whatever, that’s Spotify’s problem to deal with, not mine; Spotify doesn’t say “hey, our costs were high this month so we’re actually not going to be able pay out anything, so sorry, guys.” But with Videscape, he wants HIS business’s costs to constantly be MY problem. That doesn’t scream “professional” or “reliable” to me.

            Also, we’d be getting 50% of whatever is left over after costs. Assume costs are 60% of revenue. That means only 20% of total ad revenue goes to artists. Of course, that will vary – if costs go up, the artists’ share of revenue goes down. He says that he expects to be able to get ad rates 6-10x higher than youtube’s – great, but that doesn’t mean anything because we aren’t GETTING a percentage of those rates; videscape gets those rates, covers god knows what costs, and then we get a cut. We could easily wind up doing WORSE under this model than we are doing on Youtubee, even if videscape does get the higher ad rates.

            And that’s the problem – we don’t know. “We promise we have multiple streams of revenue but we won’t tell you what they are.” “We’ll give you 50% of our operating profit but won’t give you detailed information on how that’s calculated or what the costs are.” Under the model they’re proposing, they should be willing to make their financial statements completely available to artists for auditing – otherwise you have no way of knowing whether you’re even being paid properly according to their own calculation; are they?

            Yes, I hope videscape turns out to be the real thing. But if they had their shit together, they’d already be ready with answers to these questions – these are basic issues they should have seen coming and figured out by now.

            I’ll support them, sure. I’ll put some stuff on the site and give it a go because I want a better option than what I’ve got now. But I don’t see much reason for being optimistic about this one yet.

  2. Jeff Robinson

    Is the substantially higher due the fact that this is video format and not just audio, as Spotify is?

    • Anonymous

      I doubt it. The only difference between audio and video from the platform’s POV is that video is much more expensive. Perhaps the ad prices themselves are higher on video than on audio – but even then they’d likely be on par with existing YT ad rates. There might be a slight premium for higher quality content on Music Key than on YT generally, but it wouldn’t be this great. The most likely explanation is that the revenue from ads/subscriptions for Music Key is being divided based on an artificially low number of total streams, resulting in significantly higher prices now than you’ll see long term.

  3. Anonymous

    Paul, which major digital distributor — and do you have any more info?

    This sounds way too good to be true…

      • Anonymous

        Yeah, imagine that — $54k for 1m streams. 🙂

        Unfortunately, nobody’s going to use Music Key since it doesn’t bring anything new to the table — at least not anything people are willing to pay for.

        Which leaves you with $1k, or less, per million streams. 🙁

  4. Sound Exchange

    Billboard article a week ago

    Sound Exchange 2011: $292 mil
    Sound Exchange 2012: $426 mil
    Sound Exchange 2013: $590 mil
    Sound Exchange 2014: $773 mil

    But since it’s good news related to streaming, Digital Music News refuse to cover it. Biased much?

    • Jeff Robinson

      Soundexchange is immensely dysfunctional. They offer zero transparency (term used loosely given the ‘invisible-ness’ of the digital domain).

      • Versus

        Truly. When will it finally be possible to see one’s own submitted catalog on the SoundExchange site?

        • Jeff Robinson

          Yeah, like you can with BMI and ASCAP. That would be helpful.

  5. Manny Sheehan

    It would be interesting to compare the same tracks on YouTube ad supported.

  6. Sebastian Wolff

    Sounds fantastic. Curious though who managed to misspell “Subcription.”