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
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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.
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