Ask LH: Which Online Music Store Pays Musicians The Most?

Hey Lifehacker, Which online music service/store gives the most amount of money back to the musician? Is it iTunes or Google Play or Spotify or Pandora or somewhere else — which is best for the artist? Thanks, Music Fan

Picture: Frazer Harrison/Getty Images

Dear MF,

The short answer: none of them pay enormous amounts, and exactly how much depends on a host of factors, including:

  • The act's level of fame If you're a highly famous band like AC/DC and you negotiate a deal to appear on iTunes, you're likely to receive a higher royalty rate than if you're a struggling unknown. Specific contract details are usually kept secret in those circumstances, and that means there's no single definitive answer.
  • Existing contracts. Many musicians signed contracts in the pre-digital era, which means their entitlements are unclear. Some unscrupulous record labels have argued that content licensed to (say) iTunes shouldn't earn the same royalty rate as physical copies.
  • Is the performer also the songwriter? Royalties for songwriters are generally paid separately to performers. This isn't a digital-era development; radio play typically earns a small sum for the songwriter, but none for the performer.

In really simple terms, artists are going to make more from selling through any online store than through streaming services, because larger sums are involved. If you pay $2.19 for a track on iTunes, then Apple will (typically) take 30 per cent, and what's left has to be split between the songwriter, the performer and the label. The label will typically get the lion's share, which makes self-releasing more appealing than signing with a major in many circumstances. I'm not aware of Google's arrangements being particularly different, but again it would depend on the artist and the label involved. Regardless, there will be more cash than for a streaming service reliant on ad revenue and paid subscribers.

For streaming services, the sums are much lower. As we've mentioned before, Spotify pays some artists just $5 for 10,000 streams. From that perspective, a handful of paid downloads will give a much better return.

For songwriters, the returns can be even worse. Earlier this month, songwriter Ellen Shipley disclosed that 3 million streams of the track 'Heaven Is A Place On Earth' on Pandora netted her just $39.61. Despite that low figure, Pandora is pushing to lower its royalty rates.

All this underlines the key point: making money from recorded music is hard. When someone with Jay-Z's level of fame finds it more rewarding to do a deal with Samsung and make his music available as an app (as he did for his most recent release Magna Carta Holy Grail), it's clear that we're seeing a big shift.

If you're keen to support an artist, the sad reality is that these days you can probably do more for them by attending their concerts and buying their T-shirts than purchasing their music. Buying downloads or using paid streaming services will earn them more than pirating, but not a lot more.

Cheers Lifehacker

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Comments

    Also, if the artist has it, Bandcamp and CD Baby provide a much larger cut than any of the big corporate stores or streaming services (They take somewhere around 1/6th), and they'll give you your music in any format you like without DRM. Some artists also run their stores through Big Cartel or other web stores and sell direct, sans-distributor, these give an even higher cut.

    Bandcamp all the way to get dollars into the pockets of artists.

    Does the label still get the "lion's share" for streaming services? I'm guessing the answer is yes.

    Also, how does a matching service like iTunes Match affect royalties? Do artists and songwriters get a share of that?

    Some artists have official websites where you can buy the music off them directly (some though just link to itunes etc...). The independent scene does this quite well. Often streaming a few songs on sites then linking to their page.
    Other sites like Jamendo often let you download albums for free, but have a donate option where you determine how much they get.

    I agree with buying direct. It's the best way to support the artist fully, but some of the bigger artists can't do that (record label contracts and such). Perhaps the digital music era will see more artists ditching record labels and selling online?

    Toni Childs (of Stop your fussin', I've got to go now etc. fame) has gone independent, and has made enough money to do another album and tour, and even ran a Kickstarter (I think?) to get there, offering things like a Skype video call to chat, hand-made paintings, a personal concert in your back yard, or even for her and her husband to come over to your house and cook for you.

    But she nearly spammed the living crap out of everyone reminding everyone to back the project..

    Direct purchase. I don't bother unless that is an option.

    I remember seeing a video of a band and the singer showed the invoice with all the sales of their songs on iTunes. Anyway, I think they ended up getting around $0.12 for each song and they couldn't cash the cheque until they accumulated about $20.

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