One of the great outcomes of Eurovision this year has been Teya and Salena's song Who The Hell Is Edgar?, which has the verse "0.003/Give me two years and your dinner will be free/Gas station champagne is on me/Edgar cannot pay rent for me", where 0.003 is a reference to the amount Spotify is estimated to pay artists per stream of their songs.
I've heard people talk about this, ask me about this recently, and many are quite shocked at just how bad this model is for artists, because it gives us this ridiculous situation where you have artists with millions of monthly listeners getting paid £12 a month for their music. (This isn't a number I'm making up, it's an actual figure reported in 2020 by a singer with 5 million monthly streams. Unfortunately I cannot remember who exactly she was, but the number really stayed with me).
I'm so glad that Teya and Salena talked about this on the kind of world stage that Eurovision is, I'm glad they've introduced the idea to so many people who are hearing about it for the first time, and I'm glad that people have been talking about this!
Since a few people online and in real life have been asking me about this because of the song, I want to take the opportunity to explain a little bit about how streaming payouts and the music industry works, so I hope you won't mind me putting this in the Eurovision tags.
The 0.4c or $0.004 is a figure from 2020, so it might be even worse now, but current figures say an estimate of payment per stream on Spotify is about $0.003 to $0.005. It's not much better with other streaming services either. Here's a figure chart the musician and activist Tom Gray from the UK band Gomez shared in April 2020, and everyone should really check his Twitter (@ MrTomGray) to keep up with matters related to this and other news in artists' rights in the music industry: labels and contracts, streaming services payouts, venues taking merch cuts, festivals not paying artists, ticket merchants like Ticketmaster (you've probably heard a lot about that one recently because of Taylor Swift's tour tickets!)
But Tom Gray covers them all and he's been advocating for artists for the last few years now under the campaign name Broken Record, which is worth checking out if you are at all involved with music, as a worker or a fan! This chart is from his pinned thread:
Apple's is the best amongst those, YouTube's is so bad it's shameful, but really, they're all just really bad.
But these are estimates, they doesn't tell the whole story, really, because Spotify doesn't pay per stream—things would be much simpler if it did. Instead, there are factors that affect how much an artist is paid: everything is weighted and then the numbers are multiplied up.
How much an artist makes depends on which country their listeners are listening (paying for a subscription) in—listeners in some countries may lead to a higher payout than others, which is a bit absurd.
It also depends on whether they are premium users (the * in the chart above refers to this) or "fremium" users (ads and no subscription), which is a little strange because the implication is that if your fanbase is poorer/doesn't pay for Spotify, their streams will be valued less in the multiplier.
But the worst of these multipliers is that of an artist's percentage of streams, as a fraction of all streams that month. This is the "pro-rata model", and stands in contrast to the "user-centric model", which is a pay-per-stream model.
Imagine that you had a song on Spotify with 1000 streams. If we had a simple user-centric model, and the stream payout was fixed at $0.01 (1 cent) per stream, then you would imagine that you would be paid 1000 streams x $0.01 = $10. This is how CD and vinyl sales used to work! This is also how iTunes used to work! (Though of course, we have not yet come to talk about record label deals, which would take a % of an artist's revenue based on a split decided in their contract—anywhere from 50-50 (less common) to 90 (label)-10 (artist) (horrible). 90-10 is rarer today thankfully, but still they are insidious and out of date in today's music world, and we'll talk about that in a second, but right now we are only talking about the streaming platforms.)
The way the pro-rata model works is different. Imagine Spotify made $100 billion in revenue from subscriptions in a particular month. Also imagine that adding up all the streams in a month from all the artists on Spotify, they had 5 billion streams on the platform in total. Now say Drake received 1 billion streams and Ed Sheeran received 1 billion streams. Drake and Ed would both get a percentage of the total revenue, i.e. 1/5 of the total = $20 billion each (again, simplified).
This starts to become a problem when you're a mid-level artist. Say you received 5 million monthly listeners on Spotify. Sounds pretty successful, right? If even 5000 of those 5 million fans bought your album for €10 each, you'd make €10 x 5000 = €50,000, which would be amazing! (This is in total, not monthly of course)
So what about monthly, and what about streaming individual songs? Well, if Spotify had the hypothetical user-centric model we talked about above, paying $0.01 per stream, and your song was streamed even only 500,000 times in the month, you'd receive $0.01 x 500,000 = $5000. Still not bad for a monthly royalty cheque!
The trouble comes when you have to pit something like 50,000 or even 5 million streams against the fact that there are a total of 5 billion streams.
All of a sudden, you have 5 million/5 billion = 5,000,000/5,000,000,000 = 1/1000. Whatever happens with the other multipliers we talked about above, further gets multiplied by 0.001. So you can start to see where the “$0.003 per stream” comes from...
Spotify had an annual revenue of $12.35 billion in 2022, so let's say that's an average of $12B/12 months = $1 billion per month. So maybe you are now wondering, isn't 1 billion, 1,000,000,000 x 0.003 = 3,000,000? That's $3 million! That sounds great for an artist with a few million monthly listeners, right?
Well, I wish, because the pro-rata model is only the beginning, it is only half of the truth. There is more. Firstly, Spotify itself of course is not a charity, they want a cut for hosting an artist's music too. They take a 30% cut of all artist payouts. Here are the numbers from Tom Gray's pinned post from 2020:
“Streaming company keeps 30%. The Recording gets 57%, the Song gets 13% (of which publishers get half). So that’s 6.5% that goes to the writers of which, on any song, there may be multiple”.
These other numbers, “recording” and “song” get into the record contract side of things, that artists sign with record labels. Songs copyrights are typically divided into writing, recordings (like the actual mastertapes), publishing and performing.
The songwriters get a cut of the song and hold some copyrights to the song. The performers are musicians that perform on the actual recording. (These might be the same people as the songwriter, but there are obviously cases when they differ: when you have non-performing songwriters in pop music, or when you record a cover of a song.)
The publishers were initially companies that managed rights to publishing sheet music, but as recorded music became a thing, their role expanded to cover intellectual property as well, so it's sort of a management thing: publishing will take care of things like licensing your music for commercial use, e.g., if a restaurant, radio station, sports stadium or a TV show wanted to use your music, they would talk to your publishing team. They will manage the legal details of properly licensing and making sure you are paid royalties for these usages. In return, publishing obviously gets a cut of your music. Can you do this on your own? Perhaps, especially if you are independent, DIY or running things at a smaller scale. If you're a bigger band, and especially if you're signing to a major label, it's best to get someone that actually knows what they're talking about to deal with legal matters!
Then the “Recordings” mentioned above would be the to do with rights to the masters (original recordings) and the record label you are signed to. In many deals, the record labels own the copyright to your song's masters. You may remember artists talking about that a lot some time ago, about how you can be on a label for 20-odd years and still not completely own the rights to your own music.
That is true! Artists used to worry that signing to a label was like signing your soul away. That's because record contracts can really fucking suck. We were talking earlier about 90-10 deals, where the recording company takes 90% of what an artist makes, and they get only 10%. You see less 90-10 splits, but 80-20 or 70-30 are still common. Back in the days of physical music, there were musicians who were legitimately millionaires in spite of these deals, though can you imagine, if 20% of what they brought in made them millionaires, how much their record labels must've been making?? Absolute billions. They can afford to pay their artists properly.
50-50 splits are slightly more common nowadays than they used to be, but there are different types of deals that determine what the label pays for: recording, marketing, touring, etc., and in return what they are allowed to recuperate the costs from: record sales, sponsorships etc. I won't go into that here, but whether these deals are actually beneficial can depend on many different factors.
Even then, even for really successful artists, things are not rosy. There are weird things in the industry, like publishing advances. The label gives you money in advance to go make a record. For repayment, they then recover the advance from YOUR CUT of the revenue your music makes! So in a 70-30 deal, the label takes their 70% cut clean and shiny as gold. Then they may recuperate the cost of booking a studio, recording the album, going on tour, printing physical copies of the album etc. etc. etc. from YOUR 30% (What costs they recuperate, like I said, depend on the type of record deal). Is that messed up or what? And often, at the end of all that, there's little left. You need to pay your management, you have to pay other assorted bills, and if you're in a group, you need to split that amongst your group members.
If the album doesn't sell as well as the artist and label had predicted and the labels aren't able to recuperate the advance from the artist's share of the money, then the artist owes the label money. This will then spill over into the next album they make. Many, many artists will go years, and multiple albums before they stop making losses and actually make any money from recording their own music.
And so on. This is just the tip of the iceberg really, because there are so many things I haven't even mentioned, like the costs involved in touring. On top of that, as more people move to streaming and less people buy physical records, artists find their payments disappearing completely, and so the true amount artists get may actually be closer to 0.003¢ or $0.0003 per stream. (Here's more on how labels work, if you're curious.)
Even knowing some of this stuff publicly is hard, most of the things we know about streaming and label payments, we know mostly from working backwards, talking to artists who are willing to reveal their earnings (some are even on NDAs and cannot talk about them even if they want to), and people have done the maths backwards to work out estimates like $0.003.
No one actually knows the numbers. Record labels and streaming companies don't reveal their numbers. And I'm not a person who works in anything close to a streaming company or record label, I'm just a music fan who can't stop reading about music and talking to musicians... so what I've said could turn out to be bullshit or it might actually be worse.
Some organisations like the Union of Musicians and Allied Workers (UMAW) has a campaign to force Spotify to pay their artists at least 1 cent per stream, and to adopt the user-centric model so that small and medium artists don't have to unfairly compete against top 40s charting heavyweight pop stars to make a living. It's called Justice At Spotify, and UMAW also has other cool campaigns like one to make music festivals like SXSW pay artists that perform there (SXSW doesn't pay artists for a whole week of performing). Worth checking out!
But yeah, that's the "€0.003" that Teya and Salena were singing about, and I love them for broaching this subject to SO many more people!
Oh, and it might also be worth saying, since I've seen a lot of lovely posts saying things like 'support Käärijä, stream the hell out of his music!' If you're able to, support him outside of streaming even, that goes a much longer way than 0.003 ;)
