How streaming music pays the artists making the music

Most people nowadays stream their music through Spotify, Youtube, Amazon, Apple Music, etc etc etc. Quite literally any song you can think of is out there for you stream again and again and again. There is literally no scarcity to consuming music.

When there is a nearly infinite abundance of something its price comes pretty close to zero. So what do artists actually make when you stream a song?

There’s a lot of different factors but let’s take a simple example of a music artist who doesn’t write their songs. But they do have a record label.

If you stream 1 of their songs, they get paid about 1 cent for the stream. In reality its typically many times less, but I’m going to use 1 cent as the math will be easier. Ok, so they get paid 1 cent. But wait, the artist doesn’t have their personal bank account tied to Spotify. Nope. That 1 cent gets paid to their Record Label first. According to the contract with the artist, the label keeps its share and the rest goes to the artist.

So let’s say the label is generous and keeps 50% and gives the artist 50%. Then your one stream of their song give the artist 1/2 of 1 cent. Now think about this, if their song is streamed 1000 times, the artist would make $5.

Truth be told, I’m being very generous to the artist in this example because record labels typically keep these payments all to themselves until they are paid back for all of their expenses in recording and promotion.

Don’t get me wrong, you should stream music because you have that choice. Hell, I stream music too! But now you know how little artists make from streaming.