Understanding your royalties and how much you're going to get paid is crucial to making a success of yourself in the music business.
In this article we're going to cover everything you need to know about Spotify streaming royalties, Apple music, how much you get paid, & how much you'd need to earn a full-time living.
Here's what Spotify pays per 1000 streams:
You will make anywhere between $2 and $4 per 1000 streams on Spotify. The average pay-out per stream on Spotify is $0.003. But, how much you get paid can fluctuate between $0.001 – $0.008 per stream, depending on factors like length of stream, country of stream & paid vs free users.
While we're on topic, make sure you're getting paid 100% of your royalties by taking a look at our best music distribution guide.
How Much Does Spotify Pay Per Stream
So the golden question arises: how much Spotify pays per stream?
The global average pay out per stream is around $0.003 per single stream.
Unsurprisingly however, the answer is less black and white. The amount of variables that go into calculating Spotify's pay-out per stream, is incredibly vast. To put it simply: not all streams are created equal.
Consider the two main categories of Spotify users, the free user and the Spotify premium user.
Free users create streaming income through listening to the adverts. The more ad listens that eventually get converted into sales, the bigger the pay-out per stream. This means that wealthier countries, like the US, UK and Japan, end up paying more for their Free users' streams, because they have more sales.
Premium users don't add to the royalty pool with ads, but with subscription prices. And, you guessed it… the price of a Spotify subscription changes from country to country.
For example, a Spotify subscription in the United States amounts to $9.99, the price of a subscription in the UK is £9.99, the price for students is £4.99, and the price of a subscription in India is base level $1.99.
There is a varying amount coming in from each country, because $9.99 may not be a lot in the States, but it is a huge amount in India for instance.
The global ARPU (Average Revenue Per User) of premium subscription users is around $4.81.
In contrast to that, the free subscription to Spotify only brings in around 10% of that, with the global ARPU at $0.51. When you look at this, you can start to see why artists' Spotify revenue and income per stream is in always bouncing around between different values.
So, while the average pay-out would be $0.003 per stream, the fluctuation of this number could be from $0.001 – $0.008.
It really all depends the where, who, what and how of your listener:
- Are they free or paid?
- How many ads have they listened to?
- Have they purchased anything from the ads?
- What country are they from
- Etcetera, etcetera
Obviously, other factors like minutes listened play a part, but figuring out the exact criteria that Spotify uses behind closed doors is impossible.
How Many Streams on Spotify = $1?
On average, about 300-400 Streams will amount to $1 of revenue. But, as we stated before, this can range from 150-1,000 streams per dollar, depending on the quality of streams you're getting.
It depends on a huge number of different factors, including country of stream, time spent listening & a tonne more we'll explain below.
How Many Streams on Spotify = $1000?
Based on the average payout of $0.003/stream, to earn $1000 on Spotify, you'll need to get 300,000 – 350,000 streams.
But again, how much Spotify pay per stream varies, so the number can range from 150,000 – 600,000 thousand streams per $1000.
How Does Spotify Pay Artists?
Spotify works out a ‘stream-share' based on how much your track's stream makes them, from ads, and the amount of paying users they have.
They then divide this number into that ‘stream-share', and that's what you get paid. They also take a their cut of the stream before paying you.
When someone talks about Spotify pay-out, they're talking about the pay-out to the owner of the recording. If you're signed to a label, it's most likely you're not the owner of the sound recording, so this money will go through them and be split by whatever agreement terms you came to.
If you have also distributed through a service that charges commission on streams, you will split your stream earnings with them too.
There are 2 other ways you can make money through music, and not Spotify's stream-share.
The world of copyright royalties is wide and confusing, but the main things you'll need to know are quite simple.
Your music generates two types of royalties outside of Spotify:
- Mechanical royalties – paid to the writers and publishers, for the right to copy your work. Copying in this sense means reproduction, CD's, streams, etc. Essentially, anytime someone decides to listen to your music on Spotify, a mechanical royalty amount is generated. This is then split between you and your publisher (label, or distribution service).
- Public Performance Royalties – paid to the songwriters, and publishers, to be able to perform their music in public. If you consider the listener, they aren't at any point the owner of a song, even if they buy the CD. This essentially means that, even if you're listening at home on headphones, your stream is considered as a public performance.
These two types of royalties also cover radio plays, and any other possible reproduction of your music. Spotify pays for neither of those.
If you're the writer and composer of music and you're only on Spotify or Apple Music, then you're missing out on some of the royalties you could be earning.
Both Mechanical and Public Performance Royalties are paid through Performance Rights Organizations, or PROs for short.
The downside to these is that, once again, they're services that require a paid membership. Unlike the cheap yearly subscriptions of the main distribution services, PROs are more expensive, but usually offer a one-time payment.
PRS for example, costs £100.
There are also distribution services that will collect these royalties on your behalf, meaning you won't have to pay the upfront cost to be part of these services, just the yearly distribution fee you already pay.
Distribution services, like Ditto, have a publishing arm that will collect these royalties for you.
There are also other distribution services that will do this, but some don't. It's important to be informed of the different music distribution options you have, before choosing a distributor, because they vary widely.
Another thing to note is that, this is all different if you're signed to a label.
Companies like Warner, Sony, Universal etc. have their own licensing agreements with Spotify. Due to their direct relationships with streaming services, your mechanical and public performance royalties will be paid through your publishing company.
What Affects Your Spotify Royalty Rates?
Not all streams are equal.
There are two main factors, that will determine how much Spotify will pay per stream.
First off, as we already discussed, the main factor, is the region or country, that the stream is coming from.
If your audience consists of mainly American listeners, you'll be earning quite a lot more on average, than an artist with a primarily Indian audience.
If your audience is from Australia primarily, then you'll be earning even more too.
This pretty much just comes down to the subscription rates and advertising levels.
If you have 1,000 listeners that all pay $9.99 every month, that's obviously going to be worth more, than if you have 1,000 listeners all paying $1.99 a month.
The exact same thing goes for advertising. Since advertisers are more likely to focus their ads on a market with the most potential customers, poorer countries end up contributing less to the overall pool of royalties.
Essentially, the more money there is to go around, the better rates for pay-outs you'll get.
The second main criteria that contributes to your royalty rates is, what kind of listeners stream your music, free or premium listeners.
As we calculated earlier, a Premium users stream, is way more valuable than a stream from an ad-supported user. Historically, Spotify have generated way more from their premium users, than they have from advertisements.
So if your audience consists of mostly premium users, you'll get paid more, than if your audience was mostly free users.
To summarize, if you want your income to reach it's full potential, get all of your listeners subscribed to Spotify.
How Can I Get My Music on Spotify?
Getting your music on Spotify may seem difficult at first, but it's really cheap and simple. Spotify have experimented with a free Upload feature on and off over the years, but it's never come to fruition.
Presently, you have two options:
- Option one, is that you are working with a record label, who is doing all the publishing and distribution on your behalf. If that's the case, getting your music on major streaming platforms should be absolutely no issue.
- Option two using a distribution service. Aggregate services, also known as digital distribution services, companies like Distrokid, Ditto and TuneCore let you upload your music to streaming services for a fee.
Choosing the best distribution service for you can be a difficult process. Here's our guide to the best distribution services around to help you decide which is best.
Most of these services offer a yearly membership plan, with unlimited uploads. But some take commission, and each service has different advantages/disadvantages over the next.
It's important to take a look into each company and decide which one works best for you.
Spotify vs Apple Music – Money Paid Per Stream
To answer it quickly:
Apple Music pays out on average $0.005 per stream, compared to Spotify's $0.003 per stream.
But as you expect, the answer is a little more nuanced than that. While it's true that Apple Music has a higher average pay-out, the subscriber base of Apple Music is much smaller than that of Spotify.
According to the 2020 reports, Apple Music has amassed around 72 Million premium users. Compare that to Spotify's 144 million premium users in 2020, and you can start to see how that pay-out gap gets justified.
And those are only premium users. Add to that another 176 million free users, and you get a total of 320 million active users on Spotify vs the 72 million on Apple Music.
So even though Apple Music, on average pays 1.5 times more per stream, Spotify boasts a solid 4x lead over Apple Music when it comes to active users.
Of course the argument of dilution could be made. The existence of an ad-supported version of the platform, brings the overall average revenue down, since those 176 million free users aren't paying for a subscription. This, however, is a debate, in and of itself, and honestly, you shouldn't really care.
Overall, Spotify has the biggest & most solid grasp on the music streaming market.
Apple Music has the best value per stream, at 25% of all streaming revenue, from only 6% of total streaming consumption. But, Spotify accounts for a whopping 44% of the entire streaming market revenue, at 22% of global streaming consumption.
If we throw the consideration of user base aside for a minute, and just compare numbers, Apple Music is the clear winner in terms of money paid out.
1 million streams on Spotify will land you around $3,000 to $3,500. Apple Music on the other hand will pay around $6700, for the exact same amount of streams.
Either way, you should release your music on every possible streaming platform and maximize your potential pay-outs.
How Many Streams on Spotify To Earn A Decent Living?
To earn a solid living (minimum wage US):
Based on the average pay-out of $0.003/stream & average salary of $7.25 per hour, you'll need at least 400,000 streams/month on your Spotify tracks.
That's the figure, but it's not always the exact case.
First of all, we need to find out, how much money we would consider to be the threshold of being able to earn a living off of Spotify. This entirely depends on where you live, since living expenses are much different in the US, than they are in Ukraine, for example.
To standardize however, we'll make our calculations with the US minimum wage in mind. The average salary in America is $7.25 per hour, with the annual figure for a full-time position starting from around $15,000.
So let's say, you need to earn 15 big ones a year, to be able to quit your day job. Let's divide that 15,000 figure by 12 months. Doing this, we get that you'll need to earn around $1250 every month.
Considering from our previous figures that, 150,000 – 350,000 streams will land you $1,000, adding on a quarter, we can get the final figure. This is around 300,000 – 450,000 streams, depending on how kind the Spotify gods want to be to you.
Annually, you'll need to get anywhere in the range from 3.5-4 million streams, to earn a minimum wage from Spotify (US).
But, if you release on all available streaming platforms (including Spotify), your income will be much bigger, at the point of getting 3.5-4 million streams on Spotify every year.
Can I Earn A Living From Spotify Streams & My Music?
It's absolutely possible to earn enough to make a living doing music if you diversify your releases, and maximize your potential earnings.
Additionally, signing up for a performance rights organization (PRO), such as PRS, will add another boost to your total income.
This is especially the case if you're getting radio play. All royalties from plays on the radio, will have to go through a PRO service, so, if you're aiming to maximize your income every month, signing up for a PRO is a necessity.
Then you can also sell merch, sample packs, preset packs etc to top it all up.
Check out our definitive guide to generating success as a DIY artist to start growing your fanbase more rapidly (it's free)!
How much does Spotify actually pay per stream, and what number of streams do you need to earn a living? We hope this article helped you get to a solid answer to these questions.
For 1000 steams on Spotify you will make anywhere between $2 – $4. This is based on the average payout of $0.003/stream.
Here's a quick list of everything else we went over:
- $0.003 on average per stream
- $3-$4 per 1,000 streams
- 300k – 350k streams to earn $1000
- 350k+ streams per month, to earn a living (based off US minimum wage)