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How Much Do Music Streaming Services Really Pay Out?

Yesterday, Metalinsider reported on music streaming services payout rates. One anonymous independant label revealed their  breakdown on royalties during a six month period. While many services have come under fire for not properly disclosing their payout rates, at least now we have a general idea of what the newest, legal fix for listening to music actually pays out to record labels. Spoiler alert: it's not that much! 

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The unnamed independent label currently boasts 87 albums or 1,280 tracks in total available for streaming on Spotify, Zune, Napster and Rhapsody. The following is the revenue received between July and December 2011.

15,159 plays
$0.028 per song
25:1 Itunes Song Download

30,238 plays
$0.016 per song
43:1 Itunes Song Download

50,822 plays
$0.013 per song
53:1 Itunes Song Download

798,783 plays
$0.005 per song (half of one cent)
140:1 Itunes Song Download

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As  you can see, Spotify pays the least per track, however, due to it's high volume of users, the record label actually collects the most from this source above all the rest. As Vince Neilstein of MetalSucks points out, beyond just the revenue, it also offers each artist free advertising by publishing what users are listening to on their Facebook news feed.

It's clear that Spotify gains the most traffic because it's a free service. At the end of the day the free service business model is actually a win-win for both record label and listener. From this data alone, I think it would be advantageous for the other services to consider moving to this style of service. It would be interesting to see how much revenue spotify pockets compared to the paid services like Napster and Rhapsody.

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