How Do Artists Make Money From Music Streaming Services?

Some artists and musicians don’t believe in earning money through their arts. On the opposite end of the spectrum, you have individuals who have monetized their creative skills. Music streaming is one such domain which allows artists to earn income.  If you want to know how music streaming services enable artists to make money, then this post is for you.

The global music streaming market experienced its fourth consecutive year of growth in 2018, generating over $19 billion in revenue. Music streaming now accounts for almost half of that revenue with 255 million paid users worldwide.

The Music Streaming Industry Revolution
Growth Of Streaming Apps
How Do Music Artists Make Money?
Innovations And Music Industry

The Music Streaming Industry Revolution

A complete transformation in the streaming music industry began with the launch of Spotify, the music streaming Stockholm based startup. Spotify came into being on October 7, 2008, at a when music streaming was considered as the consumers' wildest dreams and only accounted for 1% of the global music sales.

By 2013, Spotify had almost 30 million active users along with almost 8 million premium subscribers.

The digital music industry now rests in the hands of Apple Music and Spotify, and has become a mega contributor to the revenue generated in the music industry. This research was conducted by the Wall Street Journal.

The data included paid as well as streaming subscriptions; it also reported a jump in subscriptions for both apps by 31%, which equated to 62% of the industry’s total gross revenue. In 2019, Apple and Spotify reported an 18% shift in revenues valued at 5.4 billion dollars.

Also read : How To Make Career In Music Business

Although most of it came from music streaming, physical media sales also went up unexpectedly. Both vinyl and CDs saw a massive jump in sales in the past few years.

Still, this notable increase in physical media sales can’t compete with the music streaming force industry, an area backed by artists like Taylor Swift, Ariana Grande, and Drake. Although these artists aren't paid huge in music streaming, an appreciable segment of their customer base relies on music streaming.

Growth Of Streaming Apps

Physical music services, in the form of CDs and similar mediums, were the primary source of listening to music till early 2000s. With the advent of iPhone in 2007, the availability of high-speed internet, and a more digitally inclined crowd, these physical mediums started declining from 2008.

The launch of Spotify and other audio streaming services launched at nearly the same time got a major boost; people were exploring the wonders of audio streaming. And with the emergence of 4G, better smartphones, and everything transitioning to cloud, these streaming apps are now mainstream. The younger generation is now addicted to music streaming and can't survive without it.

Also read : Spotify: A Beat for Everyone

How Do Music Artists Make Money?

Artists make a lot of money. How? Almost 70% of their revenue comes from online subscribes as well as advertisements.

The allotment strategy adopted is pro-rata allotment in which a fixed percent is allocated to the artists out of the total streaming base (in the form of royalties). However, artists and musicians desire the payment to made on the basis of who the audience likes and listens to the most. Deezer, a music streaming app, is pushing for this change and pressurizing the big giants to do the same.

Also read : Apple Acqui - hired music analytic startup

Innovations And Music Industry

Inventions and innovations are the part and parcel of every industry. The growing competition is encouraging a huge transformation in the music industry. The newest innovations emphasize on understanding the listening habits of an individual and directing them towards tailored recommendations.

The new era is about competition between Netflix, Amazon Music, YouTube music, Spotify, and others. Spotify took a major step in acquiring Gimlet Media, taking the initial step towards original content. The acquisition is also a way to recover the lost revenue by enabling more music platforms for streaming coupled with hiked subscription rates.

The connection and intimate bonding with listeners has become stronger with the launch of live streaming. Music is now not just about pleasure and enjoyment, but a platform to make money. These streaming platforms continue to provide more avenues to musicians, a medium to be in front of appraisers and audience with some help from tech giants.