Age of the Internet: What Streaming Does for Musicians Versus Video

by Stephanie L. Carlin

So, the past view weeks I’ve been in a musical spiral, and it isn’t just creative blocks. It’s just pure depression over getting traction in my work, and I’m not alone on that. (You can check out Dom Jones’ article on Danielle Bregoli being signed with Atlantic Records here). Danielle Bregoli is annoying but it’s to be expected, but why does that expectation exist? I understand that YouTube and Facebook obtain a lot of views within all of the entertainment industry, but I began thinking. Is video better for musicians than streaming? When we think about the mega stars of pop music–like Justin Bieber, Katy Perry and Charlie Puth–they’re not necessarily good but they get BILLIONS of views on Youtube and make money without a lot of traction on streaming services. So, let’s dive deeply into the facts and statistics of these companies and we’ll see which is better for musicians because let’s be honest, friends, we have rent to pay and possible yachts to buy.

For YouTube, much of their money is made through ad revenue. This seemingly small thing is what makes YouTube a lot of money. Last year, they reportedly paid one billion back to the music industry alone, making up for 7% of its total revenue. World wide, it accounts for 25% of the music streamed. That’s right. World.

However, for creators, accrual of revenue is surprisingly unequal with popularity of music on YouTube. The platform used to work on an algorithm of views, and, with every 1,000 views, the creator would get $1. However, in 2015, YouTube changed its algorithm to apply for watch time, or how long a video is being viewed by a viewer and if the ad was clicked on. With watch time, according to CEO of the Recording Industry Association of America (RIAA) Cary Sherman, 58 hours of watching a music video accounts for $1 earned. A musician would need to promote so much to get at least a 1,000 views but 58 hours of a 4-minute music video would equate to 3,480 minutes meaning someone would have to watch it 870 times for a musician to make $1. (The exception to the algorithm would be YouTube Red, an ad-free premium service, that pays music video creators by the shares, not watch time).

In addition, Youtube is being scrutinized currently for the “value gap.” Essentially, Youtube, like all streaming sites, has to pay for copyright content to comply with the artists and publishing companies under it. However, many labels are excusing Youtube of finding seemingly legal ways to pay less for use of songs and distribution of music videos. Doing this allows them to make more money for themselves and, with some contract restraints, they don’t necessarily have to pay out as much money as the music video gains more traction. Many music executives point to a comparison of the pirating music scandal in the early 2000’s that made record sales plummet, and it’s pretty scummy of YouTube to do that knowing how many different outlets are on that site (blogging, gaming, cooking, travel, etc.) that make as much if not more and don’t require any copyright whatsoever. Illegitimate piracy is still piracy, YouTube. (For more on the value gap and its impact on the music industry, you can read more here).

Streaming services have actually had an amazing year for the music industry so far. Ever since the release of Apple Music, the revenue in music retail has gone up for streaming from 1.08 billion in 2015 to more than twice with 2.48 billion in 2017 SO FAR. That’s insane. As for Spotify, even for recently losing 581 million due to legal issues, it still manages to hold 3 billion in revenue for 2017. This is because of paid subscription, not free use, and the payout for artists on free subscriptions is a little better. Spotify says that the average artist makes about $.006 to $.0084 per stream. If we multiplied that with the 870 watches that we had earlier and make it streams, that would make the artist $5.22 to $7.31. This is better, but is still fairly difficult to achieve.

Now, I can’t write this article without mentioning the many legal issues Spotify has come across over the years. Many artists are currently attempting to sue Spotify for class action, including The Black Keys, Weezer, Tom Petty, and Bobby Gaudio of the Four Seasons. Even after settling in May and being hit with this bigger suit, Billboard discusses how even in its legal intensity, Spotify still has the money and power to become a publicly traded company.

As for other medias, it’s mixed. Digital downloads via iTunes have fallen significantly, meaning directly bought albums and songs don’t make as much money for artists. Apple has had more success with Apple Music in recent years. Facebook is currently trying to tackle Youtube’s music platform. After noticing that 55% of their revenue comes from video, they have offered the music industry money for many music licenses to use in ads and user videos, meaning cover videos could soon be legal to make on Facebook. Soundcloud has produced many Grammy-winning artists, but doesn’t have the money to sustain themselves through the end of 2018. So, we’ll see what happens there.

What does this mean for you, the artist who might not be so great with numbers? I have to be honest, I thought this question was an easy one to answer, but ultimately what I have discovered with research is that none of these platforms helps artists much. It seems that if you stick with just one platform, you’re really screwed in terms of money. Now, might these stats be a little different if a musician was under a publisher? Yes. Publishers, as sketchy as some of them are, are extremely useful for promoting your work. Still, the majority of the ones complaining about not getting paid an acceptable amount of revenue are labels and publishing.

As depressing as this all may seem, we’ve got to make money, groovers, so the best thing is to use as many platforms as you can because if YouTube is not going to give you the proper payout and Spotify might pay you less based on popularity, it’s still better to be paid something than to be paid nothing at all.

What do you think? What do you use to get yourself out there in the music world? COMMENT BELOW!