What is the typical revenue split between labels and artists for streaming royalties?
Artists splits with a label depend on the following factors:
- The success of the artist (whether the artist is new to the industry or a well-established platinum artist);
- Whether the artist is signed to a major record label or an indie label.
If the label is a major record company, the artist split can range from 13% to over 20%. These artist agreements will often come with album advances. For indie labels, the split can be as high as 50%, but will often not include an advance. (An advance referring to an advance payment that will be recouped/recovered against the sales revenue of the album).
As far as the actual dollar amount of streaming royalties per stream, the answer is not a lot. Streaming royalties are derived from two sources: advertising and subscription revenue. Being that this revenue is competitively split among all of the labels that stream within the duration of the promoted ads or listener’s subscription fee, the average revenue per stream can range from $0.0059 to $0.01682 as of 2018 (in the world of streaming, stretching the decimal points matter).
In each accounting month, the label will receive their share of the revenue from the digital service provider (Spotify, Napster, Tidal, etc.). This revenue amount is from the number of streams played multiplied by the revenue per stream. This amount is then split out among the artists that were played in that duration. The artist receives the amount after the artist split gets applied (so that can hypothetically be 13% times $0.0059 per stream). For an idea of how much streaming revenue amounts for an artist, this article covers how an artist incidentally climbed Spotify’s playlist to be streamed one million times to payout just a little under $5,000 back in 2016.
While streaming revenue can appear extremely competitive in today’s world, it is becoming increasingly critical for artists to know their numbers, whether it’s streams, downloads, purchases or otherwise. When revenue for artists is now equating to less than pennies a play, it is becoming increasingly vital to gain such transparency and insights across all of the platforms where music is played.