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How Do Artists Make Money on Spotify & Monetize Soundcloud?

People Assume Artists are Paid Per Stream, but thats Not the Case…Spotify’s Algorithm has Many Variables that Affect Final Payment to the Rights Holders, and their own Pockets.

So….How Do Artists Make Money on Spotify and Monetize Soundcloud?

Most people don’t buy music anymore, they just use a streaming app. If you still do buy music, you’re the shit. Instead of buying albums, people can subscribe to a streaming service, but it is a tiny cost when compared to how much one can stream. All it takes to use Soundcloud and Spotify (free) is an email address or Facebook account. There is an option to use Spotify Premium which takes away the advertisements while streaming, but costs $9.99 per month. The average amount of money spent by download consumers in the US is under $5, so artists don’t make as much money as they used to from music sales. They have to make some money off these streaming websites though right? So how do artists make money on Spotify and Soundcloud?

how do artists make money on spotify

How Do Artists Make Money on Spotify? Royalties

How does the Spotify business model pay artists? Spotify pays royalties for all the listening that occurs through their services and claims to distribute roughly 70% of total revenue back to the rights holders, which are distributors, labels, publishers, independent artists. The rights holders have a royalty rate to determine how much the artists make. This portion takes pay per stream into account. The other 30% of Spotify’s revenue is retained. It is thought that they pay the rights holders per stream, but that is not the case. There is a formula they use that determines how much they pay out:

spotifyroyaltyformula

SMR=Spotify Monthly Revenue 
Spotify creates more revenue for the music industry than if it did not exist. Free members streaming music hear advertisements which are obviously paid for. The money from these ads goes into paying the labels and publishers. Paid subscribers do not hear ads, but their subscription costs help pay the royalties. The $9.99 monthly charge is more than the average amount spent by download consumers ($>5 per month) thus increasing music industry revenues. Compare this to iTunes, where the average account only produces $12 in music revenue per year. It makes streaming cheaper, but makes more than piracy does! However, this does not mean the artists are making more money; there are more artists to be paid so it spreads the royalty pot a little more thin. Spotify creates revenue for the music industry by reducing piracy rates; 55% of 18-29 year olds pirate LESS when offered a free, legal alternative. Music is actually getting getting paid for through Spotify, but not all is going to the right people. Also, Spotify profits are declining at an alarming rate.The artist’s royalty rate can differ by countries based on where their listeners are. Streams in the US may be worth more than streams in Brazil. If there are a higher number of paid users streaming their music compared to the total number of users overall, the artist will make larger payouts. Paid subscribers (Premium members) generate a more money in royalties than free members do because of the subscription costs.

How much, on average, do Artists make when on Spotify?

An analysis of data from December 2014 that Spotify released to music publishers shows that a song streamed using a paid account (Premium) made the artist 0.68 OF A CENT! Free users make the artists even less money, about 0.14 of a cent! 500,000 listens on Spotify will pay you between $3,000 and $4,000. This is not nearly what artists make from album sales, but remember: their content being pirated makes them $0. How do artists make money on Spotify? Be famous and fuckin’ huge.

how do artists make money on spotify

How Do Artists Monetize Soundcloud Streams?

Soundcloud started as a type of social network that allows you to follow musicians and bands, but the basis of the site is uploading music. It is an amazing place to gain exposure and see what listeners think about your art, but there wasn’t an option to monetize Soundcloud through the site until the On Soundcloud partner program started (along with the ads). This program works like Youtube’s program does; artists earn money every time an ad is heard while their music is being streamed. This is also done by skipping the middle man. With no publisher or label to take a portion of the profits; it goes straight to the artist!

There are 4 Tiers of the On Soundcloud Program

These subscription fees, along with advertising, make up the Soundcloud revenue.

  • Partner– cannot make money, but gain exposure
    • Free for beginners
    • 3 hours of free uploads
    • Basic stats to start growing your following
    • Ability to join their Insider Group for free tips
  • Pro– increase exposure, no money
    • Costs $7 per month or $63 per year
    • Geo-based statistics allow you to see where your fans are
    • 6 hours of uploads
    • Ability to pin 5 tracks to top of profile
    • Social statistics tell you what sites you’re being shared on and where
  • Pro Unlimited– increase exposure, no money
    • Costs $15 per month or $135 per year
    • Geo-based statistics allow you to see where your fans are
    • Unlimited amount of uploads
    • Social statistics tell you what sites you’re being shared on and where
    • Ability to pin 5 tracks to top of profile
  • Premier– finally make money, invite only
    • Account manager to help improve account
    • Exclusive music promotion opportunities
    • Make money straight from ad firms, skips Soundcloud as a middle man
    • Must be in good standing with Soundcloud community to be invited

 Soundcloud is My Personal Favorite

The amount of exposure to be made on this platform is exponential. Anyone can post new audio to be seen by the world. “It’s hard to say that we would be where we are today without Soundcloud… it’s a great platform for our fans and new fans to check out our music.” – Big Gigantic

It is the best place to find new tunes and remixes. The opportunities are endless! Search your favorite song and I am sure you’ll find a remix of it that you have never heard. Soundcloud just added a couple new features. A streaming radio feature that is similar to Spotify in a way where it randomly selects songs based on what you have chosen first, and charts that show which songs are being played the most right now.

how do artists make money on spotify

Soundcloud breaks down their charts by genre, then by Top 50, and “Hot and New.” They also utilize tags and hashtags to help find different genres and categories. There are so many different types of publishers on SC; you can find crazy mixes from DJs, self-talks, and even speeches by public speakers. This platform is key to musical success.

How Do Artists Make Money on Spotify, but Not Through It?

Spotify does not personally pay these royalties out to stake holders. They use a third party firm, but this firm cannot handle the whole workload that comes with providing services to Spotify. This causes payments to be late or, in the worst cases, never go through to the artist at all.

So Finally…Again…How Do Artists Make Money on Spotify and Soundcloud?

What money? There ain’t any for artists on these platforms unless you’re topping the charts, getting millions upon millions of plays, or spamming the system.

At least the exposure increase through both platforms does lead to different ways of monetizing music- creating more demand for performances and appearances. Without further a due (is that how you use it?), I’m going to increase some artist’s exposure now….

So here’s some new tunes to listen to – unless you’re a square.

BTW this song is smoooooth as black ice.

 

 

 

Comments ( 244 )

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    you need to do some more reserch... Yes you gain more exposure off soundcloud unless your invited but you can makemoney on spotify of course your not gonna be making thousands of dollars unless you get millions of views but they do pay you need to get a aggregator which if you go on spotifys website ( https://artists.spotify.com/guide#list-of-aggregators ) they offer some, if you dont know what they are they are a service which gets/helps your music on spotify for you including itunes and other various streaming websites and services without them you cant but spotify pays about somewhere between $0.006 and $0.0084 ... anyways my point is you can get paid off of it especially if you promoteand not give up remember the harder you work and put time into it you never know what can happen, dont let someone tell you that you cant get money off something you can!
  6. ReplyLil Burnt
    you need to do some more reserch... Yes you gain more exposure off soundcloud unless your invited but you can makemoney on spotify of course your not gonna be making thousands of dollars unless you get millions of views but they do pay you need to get a aggregator which if you go on spotifys website ( https://artists.spotify.com/guide#list-of-aggregators ) they offer some, if you dont know what they are they are a service which gets/helps your music on spotify for you including itunes and other various streaming websites and services without them you cant but spotify pays about somewhere between $0.006 and $0.0084 ... anyways my point is you can get paid off of it especially if you promoteand not give up remember the harder you work and put time into it you never know what can happen, dont let someone tell you that you cant get money off something you can!
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  10. ReplyJ.Clark
    The thing most people are missing is you don't just put your music in 1 or 2 places and hope for the best, put it in every crack and crevice the internet has to offer in every form you can and then do it again because its a never ending sea of opportunity. No, you will not become a millionare by posting on just soundcloud or youtube or spotify but, if you monetize everything and release your music correctly by registering with a pro,soundexchange and so forth and use a distributor to put your content all over the biggest networks including internet radio that $0.006 begins to add up, don't be close minded and use the doors that are already open for you you may find that there are others waiting to be opened for the right person.
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