How are Streaming Payouts Calculated?

Imagine a streaming service X has made $1000 in revenues in one month, with a 70% payout rate. Out of that 70%, 57% is the cut of the recording owners, and publishers claim the remaining 13% in performance and mechanical royalties.

Now, if there were a total of 1 million streams on the platforms over the period, and your music generated 100,000 streams out of that million, your total payout would make $57 = (1000 * 57% * 100,000/1,000,000). Your songwriter would get another $13.

This model is not without its flaws, and some professionals in the music business are calling for a shift to user-centric payouts — which is a topic we might explore in the future. For now, however, the payout that you get from any streaming service (except for YouTube video-streaming, and, as of late, Deezer’s user-centric payout) is a function of:

  1. Total DSP’s revenue pool
  2. Negotiated global payout as a percentage of that revenue
  3. Total number of streams on the platform
  4. The number of your streams on the platform

Not All Streams are Created Equal

However — and here is where things get interesting — there is no such thing as a global, all-in revenue/content pool. Instead, there are dozens of separate buckets: for every subscription tier, every local market and so on. All the different types of streams create distinct content pools, and that means one simple thing. Not all streams are equally valuable. You wouldn’t try to cross a river because it is 4 feet deep on average. Accordingly, you shouldn’t judge the artist’s earnings on the platform based on the average per-stream payout.

For any artist out there, the per-stream rate will be in constant flux — simply because there are hundreds of factors affecting the overall revenue. The payout rate depends on who, where and how much streams your music — which is precisely the reason for inconsistency between the quotes you can find around the web. With that in mind, let’s look at the data once again, and put some real-world context behind it.

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