Why Increased Streams ≠ Corresponding Increase in Revenue

The streaming sector of the music Business is a complex one.

Several figures have since been bandied about but only few have practically rationalized how they arrived at these figures. Most of these figures are mere averages that are calculated based on artist's number of streams and amount of royalties received; which could be a flawed approach towards determining how much artists make from streaming platforms as every artist's differ.

First thing to know about the Streaming thing is that – NOT ALL STREAMS ARE EQUAL. "Equal" in what sense? There are DIFFERENT buckets in which [revenue from] our streams go, before they are divvied up to artists depending on the number of streams they have amassed within a period. How your music is streamed, where your music is streamed from - influences how much you will likely earn per stream. I’ll break it down as we go. All these serves as a basis for the amount you'll get paid by the platform.

Some determinant of how much you earn per stream are:

Subscription Tier: Was the music streamed from a Freemium or Premium account? The subscription tier of the listener influences the amount of your revenue. The amount you’ll earn from a Freemium stream is not the same you’ll earn from a Premium stream.

Market: The country/region your music is streamed from also influences your revenue within a period. Revenue when a UK Spotify or Apple user streams your music is different from when an Indian, Swedish or African user stream your music. I elaborated on this below.

Bundle/Value Added Service: While this could be appealing to consumers, it also influences your revenue per stream. This is usually streaming from some bundle offer. You know when companies bundle multiple services for an appealing amount to customers? Such a case would be if Apple bundles its Apple Music, Apple TV and some of its other services for a single price, the value of such stream will differ from that of a wholesome subscription. For lack of a typical example in Nigeria,  one would be Sprint’s “Unlimited Premium” bundle plan in the US, pegged at $40 monthly for the following service:

50GB monthly hotspot

Amazon Prime Service

Tidal music streaming service

Lookout Premium Plus

Hulu Limited subscription

Global roaming in 185 countries

Unlimited talk, text and data in the US, Canada and Mexico

All these for $40 monthly. Now, the value of streaming revenue from such a bundle cannot be same with the aforementioned, as the $40 will be shared between the services. Do you understand it now?

Like artist's streaming numbers, their revenue is a constant flux per time as these factors do come to play.

So why did I say Increased streams ≠ corresponding increase in revenue.

To expatiate on the Market factor, courtesy of this tweet here and why it influences artists’ earning per stream, if your stream is coming from a place like India, where platforms had to beat down their subscription fees to compete with local platforms in that region, you earn different. In the US, Spotify premium is valued at $9.99 monthly but in India, Spotify beat the price down to the equivalent of $1.7 monthly, to be able to compete with India’s local streaming platforms. It’s a no-brainer that this will affect the revenue pool from India, which in turn affects how much an artist earns when his music is streamed in that region. In the UK, Spotify premium is priced at £9.99, which is an equivalent of $13.12. In France, Spotify premium is priced at  £9.99 which is an equivalent of $11.72. You can tell artists will most likely earn higher when their stream comes from the UK, France than when it comes from the US or India.

For context, Have a glimpse of what Spotify is valued at across different countries and their equivalent in dollars:

Philippines: 129 pisos / $2.42

Indonesia: 49,990 rupiahs / $3.44

Brazil: 16.99 reais / $ 4.49

Thailand: 129 baht / $3.89

Mexico: 100 pesos / $5.26

Malaysia: 24.99 ringgit / $6.15

Japan: 980 yen/ $8.80

Australia: €7.59 / $11.99 / $8.90

United States: €8.52 / $9.99

Sweden: 99 kroner / $11.18

France: €9.99 / $11.72

United Kingdom: £9.99 / $13.12

South Africa: R59.99/ $4.06

So, Spotify going from an equivalent of $13.12 in the UK to $1.7 in India tells you all there is about how the market where your stream comes from affects your earning. In this vein, contrary to what we might think, when Spotify comes to Nigeria, they most likely won’t price Premium access at an equivalent of $9.99 as their aim would be to compete with already existing streaming platforms here like Boomplay, YouTube music & Apple music already priced at N900, an equivalent of $2.99 (that gets deducted).

Bringing it home, Apple music has just launched in over 50 countries, including 27 African countries like Tanzania, Cote d'ivoire, Cameroon etc. A closer look will have you see Apple Music’s pricing go from USD $2.99 per month in markets like Angola, Cameroon and Zambia to $10.99 per month in Iceland. So, for countries like Tanzania with considerable streaming muscle, an artist might do well with an increase in streaming number BUT the revenue might not match that increase. Artistes might be getting your most stream from Nigeria or Tanzania but making your most money from the UK or France.

In Tanzania, Apple Music subscription is TSh6,900, which is an equivalent of $2.99. With the Family plan, going for TSh10,900 per month, an equivalent of $4.71.

So, if a region like TZ backs you, you can record some significant % increase in Streaming but don't expect a corresponding % increase in revenue, as you can see.

PS: There's nothing to lose here however as the numbers can be repurposed for other things like Marketing, pitching, clout etc.