byÂ Paul Resnikoff
Signing to a major label used to be the only way to succeed. Â Now, in a world dominated by streaming music, it can cost an artist dearly.
Perhaps the number one question we get from artists is the following: â€˜what do streaming services actually pay?â€™ Â At first, we had no idea, and none of the streaming services would tell us.
Then, we started asking artists to send us their streaming statements. Â Since that point, weâ€™ve gone through scores of streaming statements and millions of streams, trying to answer that question. Â Most of the time, the statements were provided confidentially by the artists or labels themselves, and never from streaming services or major labels.
Weâ€™ve tried our best to cobble together some numbers from all of the data. Â In the end, we landed at estimates of what different streaming services pay artists. Â Hereâ€™s one of our latest breakdowns.
These are per-stream royalty figures, which offer some guide on what artists can expect to receive from services like Spotify. Â But that assumes the artist is collecting those royalties directly. Â What about artists signed to major labels, like Warner Music Group?
How much are they getting paid in the end?
According to to new calculations released by Manatt, Phelps & Phillips, LLP, signing to a major label can cost an artist dearly when it come to streaming royalties. Â Specifically, an unsigned artist can expect to receive nearly four times the royalty from streaming than an artist signed to a major label.
Hereâ€™s a quick breakdown of what a major label artist can receive from every dollar of streaming revenue. Â This assumes that the artist wrote 100% of the music, and is the sole performing artist.
In the end, the major label artist received 18.4 cents out of every $1 of streaming revenue.
A few clarification points. Â The 58.25 cents is the amount that a service like Spotify pays the recording label, with another 12-13 cents for the publisher (oftentimes itâ€™s all the same company). Â As you can see, publishing is split into a performance license (for the playback) and a mechanicals license (the right to â€˜reproduceâ€™ and use that recording digitally).
As you can also see, the major label and publisher take a huge percentage of all those streams, leaving the artist with a 16% overall cut.
Letâ€™s compare that to the unsigned artist.
By extremely sharp contrast, the unsigned artist gets a far greater cut. Â In fact, according to Manatt, the unsigned artist can expect 64.18 cents out of every streaming dollar. Â Which is nearly four times greater than the payout from a major label.
Take a look.
A few details on this one. Â The research assumes a 10% cut from a digital distributor like Tunecore, with a PRO collecting the income. Â So there are still middlemen, but nothing nearly as large as a major label.
The last point is this: a major label does take a bigger cut, but they could end up spending a huge amount of money to make an artist into a superstar. Â That could be all the difference in a career, but if an artist already has fans, itâ€™s definitely not worth signing to a major label!