WHY IT PAYS TO BE ON SPOTIFY, EVEN IF THEY DON'T.
You've heard it shouted from rooftops across the world by musicians who are putting out music on major's and indie labels alike, "Spotify doesn't pay artists!"
Spotify only pays between $0.003 to $0.0084 per stream, with an average payout of $0.004 per stream. So, how is anyone supposed to earn a living from streaming?
It's become such a big issue we've seen some major artists have pulled their catalog off of the platform entirely in protest. While competitors like Tidal, Amazon, and Apple Music have risen to offer fans an alternative generally in the form of superior audio quality, familiarity, or convenience, their payout margins are scarcely different than Spotify's.
The inclination may be to consider selling physical media, but this comes with its own set of conundrums from inventory management to order fulfillment, and finding retailers or opportunities to vend. It's not uncommon for fans of certain genres to still purchase vinyl, CDs, or even cassettes, but for the majority of people the thought of music as physical media is either a remnant of the past or a foreign concept entirely. In any case, there's no question that the market opportunities for selling music aren't what they used to be. While selling music on physical media may not be quite as dead as rumors indicate, it's difficult to sell music when no one knows who you are and hasn't heard your music. This also makes touring difficult, as promoters often shy away from booking unproven talent, leaving many artists flummoxed on how to earn money from their music.
Streaming offers an avenue to acquire fans without playing shows.
Once you've established a fanbase you'll have people willing to see you play shows, buy your merch, and tell other people about your music, but you need a way to build a fanbase in order to make these things happen. The internet, and specifically sites like Spotify, offer a vast ocean of potential new fans on a global scale, if you know how to find them.
So you know you need to get your music on Spotify, but how do you get it heard?
While Spotify is indeed a sea of opportunity, no one said it was easy sailing! A major factor playing into your chances to get noticed is that fact that roughly 60,000 tracks are being uploaded to Spotify every day, an astonishing average of a new track coming online every 1.4 seconds. There is literally not enough time in your life to listen to all of the content Spotify already offers. This can lead many independent artists wondering if it's even worth their time to get their music on Spotify, which is understandable, but the wrong way of looking at the situation.
Spotify is a tool designed with a very specific purpose, and it's not what you think.
A hammer is not a screwdriver, just as microphone is not a guitar.
Gain, EQ, Compression, Limiting, Saturation, each has their own specific effect to make a signal more audible, louder, more crisp. When you're using a specific tool you expect a specific result, but you generally do NOT expect it to behave in a manner other than which it was designed. This is the principle that applies here; Simply put, Spotify was not designed to pay artists. What it was designed to do is attract an enormous audience for music, analyze their listening behaviors, and serve the an ever-growing library of relevant, similar music so they'll spend more time on Spotify, rinse, repeat. And they're exceptionally effective at it...
Spotify is the #1 music streaming platform in the world, boasting an impressive 32% of the global streaming music subscribers as of Q1 2021.
It's two largest competitors, Apple Music and Amazon Music, only total 29% combined by comparison, and the gap in engaged users widens when you examine the number of premium users on Spotify versus the paying users of their competitors. Spotify's model does not differentiate between streams from paid or unpaid users, so the larger market share does mean more potential people listening to your music, allowing higher potential to generate streaming revenues. 70% of what Spotify pays out goes to rights holders. If an artist is signed to a major label the label will be responsible for paying the artist, if the artist releases independently the royalties are paid to the artist through their distribution partner.
Savvy independent artists may start to wonder if they are better off starting a label than getting signed to one...
In any case, unless you've got a song that goes insanely viral, don't count on the streams racking up massive numbers in payouts. Spotify pays out at roughly $0.04 per ten streams, meaning an artist would need to generate somewhere between 250k-500k streams per month to earn anything close to resembling a living wage. However, when you frame the platform less like a music store, and more like something between a personal assistant for music collectors and a hot social media platform its true value proposition becomes apparent.
If you've read any of the other pieces on marketing and strategy on our blog, you'll probably notice we champion a common theme: You have to go where the attention is.
With over 385 million active users in 2022 its undeniable Spotify has captured the attention of music fans across the globe. Access to an engaged audience of listeners on a platform that excels at recommending new music based on users's listening habits and music preferences presents an amazing opportunity to connect with new fans for any artist on the come up.
Spotify's users are there for one reason - to listen! Make them listen to you.
As a music fan, Spotify's value proposition is undeniable: every song that has ever been written or ever will be written in your pocket for $9.99/month. While TikTok and YouTube both boast a large audience of potential new fans, the music content on those platforms must constantly also compete with cat videos, makeup tutorials, people dancing, cooking shows, news networks, and any other subject matter one might imagine. While Spotify's expansion into the podcast vertical has somewhat diluted the purity of "music fans" using the platform, the comparative signal-to-noise ratio is significantly less than on YouTube and TikTok. Given the platform's purpose of aggregating music genres and serving up new music to the listener based on their preferences, this gives an artist in any given micro-niche a huge opportunity to get their music in front of people who are looking for that specific style of music.
The key is training the algorithm how to associate your music with other artists in your genre.
Depending on the music you make, this could be doing collabs, features, remixes, etc. for other artists who's fans might dig your sound, song writing or producing for artists with crossover appeal, or simply getting playlisted alongside big name artists or labels in your genre. The more your music is listened to, liked, and saved alongside similar artists the faster Spotify will associate you with those artists and start suggesting you to their fans.
Spotify wants the same thing that most platforms want - for users to spend as much time on it as possible. Be a reason fans stay tuned in.
Have you noticed how Netflix, YouTube, Instagram, and pretty much every other platform and service you sign up for wants to send you notifications, or emails you about recent updates, current events, new feature rollouts, or promotions, etc? This is to keep your attention focused on the platform. Spotify, too, wants to keep users coming back, and has noticed that its users enjoy playlists of algorithmically suggested music such as Discover Weekly, Your Daily Mix, Radio, and the all-important Release Radar. These playlists are key for an artist who is looking to connect with new fans, as they are several avenues someone can discover your music, current fans get notified when you drop a new song, and they can be instrumental to boosting your stream numbers.
Consistency Is Key, Frequency is Fluency.
Setting up a consistent release schedule is key to staying top-of-mind with your growing fanbase. Some artists complain that this makes music too much like social media, but if you just make some adjustments to the way you think about releasing music, it's really nothing different than what you're probably already doing. You can still release an album annually, it's just distributed in small bites rather than a big chunk. Setting up a release schedule of one song every 4-6 weeks ensures your fans are consistently reminded you exist. Just this alone can be enough to explode your fanbase, but dedicated artists can leverage Spotify's desire for frequency even further to their advantage with additional content creation.
What is measured, improves. Spotify For Artists data tells the tale of the tape.
Setting up your Spotify For Artists profile is critical to access and track relevant data on your releases, seeing which playlists you're on, and know where people are listening to your music. This data can be especially valuable if you're investing in any advertising campaigns, as you already have a better idea of where your fans are when setting up your targeting. Furthermore, if you are releasing additional content, these insights can tell you which subjects your audience likes best, and which of your songs your audience prefers based on response numbers. As an artist, if you decide to create additional content, you'll want to strike the balance between long and short-form content, as Spotify pays based on total streaming numbers- not total time streamed. While this shouldn't necessarily influence the length of songs you write, this does play a factor if you decide to release more than just music using your artist name.
It's important to note that your song/track must play for at least 30 seconds to count as a stream, so don't waste that time in your long-form content with commercials or a repetitive intro stinger during that time- use a juicy soundbite that will make the listener go "oh, I've got to know more about this..." The more long-form content you have the less total streams you get from it, so you'll want to ensure any long-form content is jam packed with things that attract and connect with your audience, cementing them into your fanbase. One of the best ways for fans to get to know your personality, hear your story, and connect with you as a person is by podcasting. "But wait," you're thinking "you said podcasts were bad because they were diluting the music content." You're right I did, and furthermore I say that Spotify's shift towards promoting podcasts was a clever play toward higher profits, since they pay the same for a single song stream as they do for a podcast stream- podcasts are generally longer than songs, meaning less streams- you do the math... Regardless, cleverly applied, podcasting is a great way to let fans inside your personality, share relevant interests, and make them feel like they're an insider.
Access Behind The Scenes and Backstage From Anywhere. Cast your pod, and catch fans.
Regarding Spotify's shift toward podcasting content, as a musician you may feel annoyed, but this presents a unique opportunity for artists to create content that lets their fans behind the scenes and get to know them in a more organic way. Comedians, Actors, and media personalities of all sorts have found fans will gather to listen to interesting conversations between them and their friends, and built enormous fanbases from consistently releasing this type of content in addition to their main art. Producing podcast content is within the power of any artist with a DAW and an audio input. Your laptop mic, air pods, bluetooth headset, or any audio interface and external microphone are enough to get you started. Audio quality is important, but don't let perfect be the enemy of good enough- just start making content that will humanize you and start making your more authentic to your audience. Putting out this type of content between releases keeps you in front of your followers, gives you an opportunity to promote your current and upcoming releases, and provides additional value to your fans in the form of entertainment, education, and access. And thats not the only benefit! On top of all the benefits for connecting with fans, if a podcast becomes popular it creates an entirely new vehicle to create revenue streams- sponsorships, appearances- use your imagination. If you're planning to release music and content regularly, it's our opinion that DistroKid is the way to go. Unlimited uploads for one annual fee, and you keep 100% of your streaming royalties on Spotify, Apple Music, etc. You can release the music to all the DSPs, and decide if you want the podcast content to be exclusive to streaming platforms as you release it. From there it falls once again to ensuring the right people are becoming aware of the content you're creating with a steady stream of constant promotion drawing attention from existing fans and new fans alike, giving each new release the spark it needs to catch fire. You can learn more about how this works by reading our Case Studies to see other artists we've helped, or read thru more articles in our blog for some additional breakdowns of music marketing strategy, examples of strategies we've created and executed, as well as cases examined from afar and dissected to determine what made them successful, and other insights gained from 20+ years in the entertainment industry so you can take the shortcut to the Big Show. Want more articles on mindset, marketing, and making music? Subscribe to get notified when we drop our next article!
Tons more coming, see you soon!