PLEASE Stop Evaluating Streaming Services Over How Much They Pay Per Stream

*Taps the Sign (Again)

Today I saw this video, that has a premise I really like: A tier list of different music streaming services, mostly based on ethics.

However, this reinvigorated my annoyance with the over-reliance on the payment per stream metric.

The most straightforward reason for why this metric is useless is that that’s simply not how the deals with the music streaming companies work. At all. It’s not like there’s a set payment per stream (that’s lower on Spotify than Tidal), and if my band got streamed twice as much next month we’d earn twice as much.

Every streaming service I know of does just about what Spotify does:

1. They collect the revenue, and keep 30% of it.
2. They then pay the rights holders 70%. Let’s call this the rights holders' share (RHS).
3. They divide the RHS by grouping together all streaming on their platform — and if Taylor Swift had 1% of all streaming on the platform, she would get 1% of the RHS.

I get that it’s a metric that makes sense to people. But that doesn’t beat out the fact that it doesn’t reflect the reality.

Here’s what I, both as a user and artist, want to know when evaluating services:

1. How large is the RHS?
2. How does the service balance increasing the revenue per customer and reaching more customers?
3. How do they split the RHS among rights holders?
4. And of course: Is the service owner someone you want to support or not?

1) How large is the RHS?

To me, this might be the most important. But boringly enough, I haven’t found anyone who doesn’t split the revenue 70/30. Please tell me if you know otherwise — but I’ll be assuming this going forward.

I’ll also pretend the regular price for music streaming is €10/month, to simplify calculations.

2) How does the service balance increasing the revenue per customer and reaching more customers?

A couple of years ago, I switched from Spotify to Tidal. And a significant factor was the payment/streams metric. However, at the time, you had to pay twice what I had paid for Spotify to get hi-fi streaming.

Does this mean it would’ve been just as ethical of me to just pay for a second Spotify account and not use it?

And now that Tidal isn’t twice as expensive any more, and has the same price as Spotify, does it even matter what I pay €10 for? I mean, if €7/month goes to artists no matter which one I pay for…

Heck, I could create a streaming service, charge €100/month, be the only customer, and look amazing on the “payment per stream” charts! 🤘🏻 Similarly, maybe Amazon is doing so good on the chart above because their users don’t use Amazon Music a lot, and just got it through Prime or something? And if the service did become popular, it would look just as bad as everyone else.

The main reason that Spotify looks bad on these lists, is that they have an ad-supported tier, with lower revenue per customer than €10. Now, artists could absolutely argue that this tier is giving away “all the world’s music” way too cheaply. Like, if Spotify set their subscription price to €1/month, that would also suck for artists. At the same time, it’s not like removing the add-tier would make all those users become paid members…

I’d say that it does hold some value that Spotify provides a way for customers to provide “less than €10, but more than €0” in revenue. But what you can criticise them for, is not having ways to create customers who provide more than €10. That’s why this point is about balance.

Qobuz is an interesting case study here

I like that they try to be more open about their payouts, with posts like this. (Even though it falls into the same payout/stream trap. I give them a pass, though — as they probably know that’s what people, wrongly, want to know.)

But let me comment on some claims they make in the post above:

Qobuz takes an approach that benefits artists

Founded by music enthusiasts who wanted to preserve the integrity of the works and promote musical creation, Qobuz stands out for four key characteristics that directly benefit artists:

1. No ad-supported free tier: Its exclusive paid model ensures higher compensation for all actors in the music creation.

2. High-quality subscriptions: All offers provide access to uncompressed (lossless) and high-resolution (Hi-Res) audio quality, as well as exclusive editorial content, justifying a premium positioning that ensures fairer payouts.

3. High-quality download store: Qobuz’s online store allows users (not limited to streaming subscribers) to buy albums in Hi-Res and CD quality, offering rights holders direct and higher compensation. This model, which complements streaming revenue, is particularly key in supporting music outside of just Top 40 hits, as over 51% of downloads on Qobuz come from genres like rock, classical, and jazz.

4. Spotlight on diverse range of artists and music genres: Qobuz highlights artists and genres that are often underrepresented — such as jazz and classical releases. The editors' selections, playlists and awards give a more eclectic selection of artists greater visibility, allowing lesser known releases to garner more streams, and overall generating more revenue for a wider range of artists.

— Qobuz

1. (No ads) As someone who can absolutely see the point that Spotify is giving music away too cheaply (and as someone who doesn’t like ads and tracking in general), this point is OK. But for the reasons mentioned above, it’s not a slam dunk, IMO.
2. (Hi-res streaming) This is a pure win, as the extra costs for providing hi-res music come out of the streaming service’s share. Listeners get a better music experience without the artists having to pay for it.
3. (Download store) Them having a focus on this, is my favourite part about them. Not only does it provide a way for customers not to be stuck with nothing if they cancel their subscription — it also provides the mentioned avenue for Qobuz customers to provide more revenue than €10/month.
4. (Diverse spotlight) This is also great — as one issue with the way RHS is divided, is that most of the revenue goes to huge artists.

However, interestingly enough, even Qobuz doesn’t give more than 70% of revenue to rights holders!

3) How do they split the RHS among rights holders?

An alternative way of splitting the RHS would be that the €7 I contribute to it would get divide among the artists I listen to. I do think there are arguments for this being more fair. And it would provide even more incentives for artists to get their fans to use a specific service and actually stream. However, not even Qobuz does it like this. (And I’m not totally convinced that it’s better.)

4) Is the service owner someone you want to support or not?

This is also something I wish more people thought about. And the video linked above, which I’m sort of criticising here, did well on this point!

And, to be fair, I give higher marks to Qobuz here than to Tidal, which I’m currently using.¹

I already linked to some reasons not to support Amazon, Google/YouTube and Spotify. And I’m sure you, dear reader, know of a lot yourself. In addition to this, I have two reasons why I don’t want to use Apple Music (and why think you should consider alternatives as well):

One is simply that they’re already rich, large and powerful enough. Apple Music already have a much higher market share than it would’ve got without all the benefits Apple gives it.

The second is the following: Today the revenue share is:

• Rights holders: 70%
• Streaming service: 30%

But Apple fights with tooth and nail to have the share be like this, if the sub started on an iOS device:

• Rights holders: 49%
• Apple: 30%
• Streaming service: 21%

It pisses me off to no end that Apple both grab share from artists and claims to provide more value in that chain than the service provider. If they had any decency, they would at least only take their 30% out of the streaming service’s share.