What do I need to know about streaming?

Streaming. It’s the most divisive concept in the modern music industry. In one corner, you have the haters, like Metallica manager Peter Mensch (who declared YouTube “the Devil”), Taylor Swift (who attacked Apple Music for expecting musicians to finance its three-month trial) and Thom Yorke (who dismissed Spotify as “the last desperate fart of a dying corpse”).

In the other corner, you’ve got the musicians who insist that streaming has given them a platform, scored them advertising tie-ins and helped them bypass the machinations of the old-school industry. Just ask Psy, who would probably still be doing his Gangnam Style dance in a Seoul dive-bar, had 2.57 billion YouTube hits not turned it into a (dubious) global phenomenon.

Love it or hate it, if you’re a musician, you can’t ignore streaming. So what’s the truth about this rising form of music consumption, and more importantly – can it actually make your band any money?
How big is streaming?
Huge – and getting bigger. According to a report by The International Federation of The Phonographic Industry, global streaming grew by 45% last year, and accounted for over £2 billion of revenue (overtaking physical sales for the first time). There are reasons to be cheerful – streaming sites now boast over 68 million paying subscribers between them – but also to be fearful. Worryingly, YouTube believes that only 20% of modern listeners are prepared to pay for music, and the 900 million punters who streamed music for free last year suggests they might be right. Plus, while the average signed artist receives around £1.90 per physical CD sold, when the same album is streamed, they’ll get – ahem – a lot less (we’ll come to that).
How many streaming sites are out there?
Even your grandparents have heard of streaming poster-boys like Spotify, Napster and YouTube. But these days, there’s a head-spinning array of streaming platforms, from Tidal and Rhapsody to Google Play and Deezer. The latest behemoth to join the market was Apple Music, which launched last June and had chalked up 13 million paying subscribers by April.
Can my band get onto streaming services?
Yes, in the sense that there’s no quality control. Whether you’re the next Bob Dylan or a man shouting into a bucket, you can get your music onto the major streaming sites. While signed artists can expect their material to automatically be made available for streaming (unless you’re a superstar and you kick up a fuss), the great unsigned have a few more hoops to jump through. Typically, you’ll need to sign up with an artist-aggregator like Tunecore or CD Baby. For a fee, they’ll act as mediators, getting your music uploaded to streaming sites, dealing with licensing and handing out your royalty payments.
Where does the money come from?
That depends on the site. Free sites like YouTube make their money from advertising, but that generates relatively little money (revenue from unpaid sites was around £437 million last year, which represents just 4% of total global revenue). Sites like Spotify also have a ‘free tier’ (ie. supported by advertising), but the hope for musicians is that more punters will stump up to move to paid subscriptions (which puts far more money in the pot). In any case, remember that royalties are paid to rights holders (the owners of the music). If you’re a signed artist, that means your record label (who will hand on a percentage, depending on the specifics of your contract). If you’re unsigned, it goes to you (via the artist-aggregator).
What sort of money can I make?
That’s a slippery question. Let’s assume you’re unsigned. On Spotify, you’ll make around £0.0048 per stream, on Tidal it’s £0.029, while Rhapsody coughs up around £0.0084, and YouTube about £0.0012. That’s not the full picture, though, as the more users a streaming service has, the more likely you are to get streams (and therefore make money). To give you an idea, back in 2015, Tidal had a relatively measly 500,000 users, compared to Spotify’s 60,000,000 and YouTube’s whopping 1,000,000,000 viewers. It’s best to be realistic: just 0.3% of unsigned artists on Spotify made the equivalent of the US minimum wage through royalty payments last year. There are some more revealing statistics here.
So is streaming the Devil?
That depends who you ask. Pick up any music magazine and you’ll find an artist claiming their song was streamed by the entire northern hemisphere, and they received a cheque for 27p in return. Countering this are the cases of indie artists like Perrin Lamb, who made £38K after his song Everyone’s Got Something was streamed ten million times. Spotify, meanwhile, claims to pay out nearly 70% of total revenue to rights holders, and insists that it wants to give artists a viable future in an industry where physical sales are tanking and downloads aren’t making up the shortfall (“Our goal is to convince millions of people around the world to become Premium subscribers and by doing so to re-grow the music industry”). Watch this space…