In recent Spotify news, Weird Al claims that he earned enough from Spotify royalties to buy a $12 sandwich, and Snoop Dogg claims that he made $45,000 from 1 billion streams.
It's always fun around this time of year to see friends' Spotify Wrapped, and it's almost equally entertaining to me to see the backlash against Spotify that inevitably follows. Admittedly, the $0.003-$0.005 that gets paid per stream isn't much, but times that by 1 million, and you're looking at $3,000-$5,000 per million streams.
My own music that I release through Distrokid as well as other clients I've helped with distribution tend to fall right in the middle around the $0.004/stream range, and when I calculated royalties at the label I previously worked at, we typically told our artists to expect around $3,000 for 1 million streams.
So where's the disconnect here?
At the end of the day, when these royalties are paid out, they go through a funnel of splits, especially when an artist is signed to a label. Right off the top, a label may take 20%-50% depending on the deal, more may be put towards recouping an advance for recording budget, marketing, or administrative fees, and even more can be distributed to co-writers or other personnel involved in the creation of the song.
So although Weird Al's video was meant more as a joke, it's important if you work in music to understand the payment system used to calculate royalty payouts- whether that comes from Spotify, Apple Music, Tidal, or others.
Sources:
(https://www.billboard.com/music/pop/weird-al-yankovic-wrapped-video-slams-spotify-payout-system-1235518374)
(https://www.complex.com/music/a/backwoodsaltar/snoop-dogg-one-billion-spotify-streams-45000)
