Musicians and Labels want to get their music heard by as many people as possible. And artists need to make a living. But with so many music streaming platforms out there, which ones should artists focus on? In this article, we’ll explain why Spotify and Apple Music are the most important streaming services for artists in 2023 and how they pay much higher royalties than YouTube. We’ll also discuss how tools like Remedy (Rem.link) help artists and labels earn – on average – 10x more revenue from fan interactions.
Spotify, has 551 million monthly active users ("MAUs"), including 220 million Premium Subscribers as of June 30, 2023,1 and Apple has 88 million users.2 The two leaders also have the largest market share in terms of subscriber streaming, accounting for 31% and 14% of the global totals.3 For artists, this means Spotify and Apple Music have the most potential to reach a large and diverse audience and generate significant revenue for musicians, writers, and the entire music industry.
The industry is in fact called the music business and artists need to make a living. So, how much do Spotify and Apple Music pay per stream and how does that compare to the 10,000 pound gorilla, YouTube? Although streaming companies do not pay per-stream fees, we can extrapolate based on total payment figures from the USA. Spotify pays royalty rates of approximately $0.00437 per stream.4This means that an artist would need about 230 streams to earn $1 from Spotify. Apple Music, on the other hand, pays an average of $0.00783 per stream, which means that an artist would need about 128 streams to earn $1. Actual payouts will further vary depending on the listener’s country and location, the type of subscription (free or paid), and the relative pricing and currency in different regions.
However, these streaming rates are much higher than what YouTube pays.5,6
When discussing YouTube, it is important to make a distinction between the nearly ubiquitous ad-based YouTube video platform with a global music audience of 1.3 billion 7 versus YouTube’s paid music subscription service of only 55 million subscribers. YouTube’s large audience for its ad-based videos makes it a crucial platform for music discovery because it allows users to watch music videos, covers, remixes, and other content related to their favorite artists or genres. However, YouTube’s royalty rate is notoriously low, averaging $0.00069 per stream on its ad-based video platform. This means that an artist would need about 1,449 streams to earn $1 from YouTube. Moreover, YouTube’s royalty payments are subject to various deductions, such as content ID claims, ad blockers, and skipped ads.
Therefore, it is clear that Spotify and Apple Music are crucial for musicians in 2023 because they pay more royalties than YouTube. Of course, this does not mean that artists should ignore YouTube altogether, because YouTube’s large audience makes it invaluable for fans discovering music. Therefore, artists should place music videos on YouTube. However, when a fan is already interacting with an artist on social media, musicians should strengthen their artist-fan bond rather than redirecting the fan away to YouTube. Today, over a hundred million times a month, fans are redirected away from an artists’ socials to YouTube, often through smartlink tools.8, 9 Rather than redirecting the fan, musicians should retain their fan’s attention and focus on growing their fan relationship and higher paying streams.
Although YouTube generates a lot of revenue and streams – it does so at the lowest rate of compensation for the industry. If artists and labels converted video views to Spotify and Apple streams, the music business would generate much more recorded music revenue. According to a study by MIDiA Research, YouTube accounted for 47% of global music streaming consumption in 2020, but only 12% of global music streaming revenue.10 Consistent with this statistic, according to Luminate, approximately 36% of streams are video rather than audio.11 In other words, video is over-indexing in terms of consumption but under-indexing in terms of revenue. In many respects, today music videos are promotion activities treated chiefly as a marketing expense. The opportunity exists to move that marketing expense immediately to the industry’s revenue line.
According to Luminate, in 2022, the industry generated 5.3 trillion on demand song streams, 1.9 trillion (36%) of which were videos.12 If all of those videos generated the higher streaming rates at the premium DSPs, that would result in an additional billion dollars of industry revenue. Let’s look at some data from two major record labels: Warner Music Group and Universal Music Group. According to their financial reports, Warner’s streaming revenues were approximately $3.9 billion in 200213 and $1.0 billion for the third quarter 2023.14 Universal generated streaming revenue of $5.6 billion for 2002 and $1.5 billion for the most recent quarter.15 Within these revenue numbers, nearly a third were streams paying at the lowest rate. If only 10% of those video views generated 10x higher revenue, the impact would be hundreds of millions of dollars of new higher-margin recorded music revenue. Of course, this is a hypothetical scenario that ignores many factors such as market share, user behavior, pricing differences, etc., but it still illustrates the potential of these platforms for increasing streaming revenue.
Remedy is a tool that empowers music rights holders to immediately drive streams that chart and pay at – on average – 10x higher royalty rates. Remedy’s proprietary technology takes a stream from a premium DSP such as Spotify and Apple Music and stitches the streaming audio into the artist’s visual content. As a result, the video views immediately chart and pay.
Fans are 4x more likely to watch video content and then are 85% more likely to take some other action,16 such as pre-save songs, join artists lists (email and text), and buy more merchandise and concert tickets, etc. Moreover, because fans stay engaged for longer, they watch more of the artists’ videos. In addition, artists and labels can curate their entire Remedy-powered playlists of their own songs, whereas, by contrast, YouTube’s algorithm often follows one video view with unrelated ad-based content ranging from videos by different artists to totally unrelated non-music content. As a result, not only does Remedy help immediately drive greater audience engagement and monetization, but it also empowers artists to strengthen their bond with their audiences, own their fan lists, and analyze actionable data insights about their fan base.
Where do fans consume these higher paying video views?
Artists leverage Remedy to drive streams anywhere a URL can be placed, including: smart links, link-in-bios, in Instagram stories, websites, emails, texts, blogposts and news articles.
Link sharing services are tools that allow artists and labels to create custom links that direct fans to different platforms where they can access their music. Some popular examples include Linktree, Linkfire, and Komi. However, Remedy is the only smart-link provider that enables artists and labels to immediately drive higher paying video streams. These services can be useful for simplifying marketing campaigns and increasing discoverability of music across various channels. However, they can also have a negative impact on streaming revenue if they redirect fans to YouTube instead of Spotify or Apple Music.
Email and SMS are additional ways to increase streaming revenue by leveraging these channels of communication with fans. These channels can help artists stay in touch with their audience, inform fans about new releases, and drive streams. However, artists need to be careful not to spam or annoy fans with too many messages. Musicians also need to track the performance of email and SMS campaigns and optimize them for conversions.
PR, news articles, and blogs with music videos, are another way to increase streaming revenue by using news articles with music videos as a source of traffic and exposure. News articles can help reach new audiences who may not be familiar with an artist’s music or who may be interested in learning more about their story. Music videos can help showcase talent and creativity and entice viewers to stream videos.
For example, when musicians post a Remedy-powered music video on websites or blogs or in a news article about a latest release or tour announcement, they can use Remedy’s real time analytics to see how fans behave, what actions they take, and what is resonating with their audiences. As a result, artists use Remedy to monetize fan interactions. For example, if 10,000 fans from a website or blog or news article click on a Remedy-powered music video, and 1% of them stay engaged for 30 seconds, artists could generate 100 streams from that fan interaction. Of course, this is a very rough estimate that depends on many factors such as the quality of the article, the popularity of the video, the relevance of the audience, etc. Notwithstanding, this demonstrates the potential of using Remedy to immediately drive streams that chart and pay.
What this means for the music industry is when fans consume Remedy-powered videos – everyone benefits. Fans have a superior experience of consuming the music they have selected, without ads. The music rights holders generate more higher paying streams. The DSPs grow their market-share of artist-fan touchpoints, increase the value proposition of a premium DSP subscription, and generate greater conversion of monthly users to paying premium accounts. As a result, the size of industry-wide recorded music revenue grows. Ultimately everyone in the music business makes more money.
To sum up, not all marketing tools, smart link providers, nor streaming platforms are created equal. Some offer more value to artists and labels than others. By using Remedy, artists immediately drive higher paying streams on Spotify and Apple Music. This simple tool can have a profound impact for aspiring artists as well as C-suite executives at large record labels who are currently leaving money on the table. We think those lost opportunities for fan engagement and monetization are a problem, check out Remedy at rem.link.