Spotify is demonized by artists and fans alike for their low per-stream payouts… Rightfully so, some would argue.
We’ll be the first to admit that Spotify should pay more, but for that to happen there need to be a few strategic moves that the public has to accept before royalties can be increased.
Additionally, Spotify’s numbers aren’t as bad as many make them seem – especially when compared to certain other streaming platforms.
But, they’re far from the best…
Listen now to learn more about how Spotify royalties work, and why you shouldn’t be so quick to judge them!
What you’ll learn:
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#63: SubmitHub Success Strategies | Steve Martin of Ascending Everest
#66: SubmitHub: The Founder’s Perspective | With Jason Grishkoff
Google Play Music (now YouTube Music)
Welcome to Episode 69 of the Bandhive Podcast.
It is time for another episode of the band. I've podcast. My name is James Cross, and I'm here with Matt Hoos of Alive in Barcelona. How are you doing today, Matt?
I am doing pretty fantastic, James. How's everything over there on the East Side? That is wonderful to hear. I'm also doing well, and in fact I'm really stoked because earlier this week we had a clubhouse chat where there were about, I think, 10 to 12 artists who tuned in to talk about their experiences with Submit Hub And you know we've done a couple episodes about Submit Hub recently. Episode 66 with the founder of Submit Hub Jason Risk off an episode 63 with Steve Martin. No, not that Steve Martin, but the other Steve Martin, who is behind the project ascending Everest and he was talking about how he got a 68% approval rate on Submit Hub, which is bonkers.
That's amazing rate like two out of three submissions or approvals. That's great. So we had a chat all about that, and it went so well that the artists who were in the chat asked for us to do one again next week and the week after that and the week after that. So we're now going to be doing them weekly. And if you want to join them and get updates on that head on over to the Bandhive Facebook group, which you can find by going to Bandhive dot rocks slash group or just searching for Bandhive on Facebook and you can join the group and get a heads up next time we're going live on clubhouse.
For the time being, it's every Wednesday at 2 p.m. Eastern time, so we'd love to see you there, and we're always open to topic suggestions for the next week because we want to talk about what you guys and girls want to talk about, so let us know what you want to hear, what you can contribute what you want to learn about any of that stuff, and we might just make that our next clubhouse discussion. So aside from that, sounding a lot like a pitch because it kind of is, I'm really stoked.
How many people showed up to that discussion? I was expecting, You know, like five people and we doubled that, which is great for, you know, the first chat were doing. And I really think that clubhouse is a platform that's going to grow. It's not like the other social media platforms like Google Plus and all those things that were big and then they just died because no one used them. Clubhouse is actually being used by people, so I'm really looking forward to seeing where it goes and what happens with it, because it's like the modern day Internet forum.
I think it's the new Reddit. Let's put it that way. So that all aside. A few weeks ago I saw a comment in the Bandhive Facebook group about Spotify and how it was killing artists, and I did some math and I have to say I disagree. Spotify is very frequently demonised by musicians large and small but the issue I see with that because I agree that Spotify could do better. For rights holders. The issue is people are criticizing the wrong parts of Spotify or just simply don't understand how Spotify works and streaming providers in general work and people complain about that.
Spotify is average payout is 0. 37 cents per song. That is not a lot. It's like That's nothing. That means three places a penny. 1000 plays is $3.70. That seems like hardly anything, but it is a lot more than you think. Because Spotify is royalty, payouts are just shy of 70% of their revenue. Revenue is all the money that they bring in. There's no deductions, nothing like that. Their revenue is all the money they bring in, and it's like 68. 5% or something like that, I believe. In the year 2020 they reported their revenue was €7880 million or just shy of €7.
9 billion. They paid out 5865 million, which is just shy of 5. 9 billion as cost of revenue, which is their royalty payouts and other payments they make for the products or services that they provide. So that could include other things, like the rights to podcasts that they've purchased. But it doesn't include their actual operating expenses that are things like staff rent servers. All that kind of stuff is not included in their cost of revenue. This is why when people say Spotify should double their royalty payouts, I roll my eyes and say That's literally not possible because then Spotify would be paying out almost 140% of their revenue.
They're a business first and foremost, and no business in their right mind would pay out 140% of their revenue. That's just not possible, because they would literally be losing more money no matter what they do. Then they bring in. They're already losing money, and in 2020 it was 581 million. But that's not to say that there aren't things that Spotify could do to increase their payouts to copyright owners. And remember, when we're dealing with music, we're dealing with two specific copyrights. The song, which is the publishing copyright and the sound recording, which is the master copyright Two separate things.
Spotify right now pays the majority of that just shy of 70% to the sound recording copyright owner for major artists, that is record labels. And that is why when you see a major, artists say, I got a million plays and I got $1200 It's like, Okay, that's not Spotify is problem that is you signing a bad deal, Although rented, it might be a good deal, because if you would have gotten 10 plays without the label, you wouldn't have had $1000. So depending on what the other parts of the deal are, maybe that's not so terrible.
But the point is the artists who complain about low pay offs when they're signed to a major label, Well, that's because the labels taking all the money. If that artist doesn't write their own songs, then they're getting even less because they're not getting the songwriting copyright royalty, either. That, all aside, there are two things that Spotify could do fairly easily to increase their average royalty payout per stream. The first thing they can do is increase their subscription pricing $10 a month for all of the music, pretty much ever recorded and released is nothing that is dirt cheap.
Look at Netflix. They've raised their prices a few times, and, yeah, there's some pushback on it, but they've done it like four or five times in the past decade. And they still have subscribers. And they don't even have all the movies and TV and were made with streaming video. You're looking at a lot more fragmented stuff. Netflix has their own shows who has their own shows. But with music, Spotify has pretty much everything. Increasing subscription pricing is probably the single biggest thing that would make per stream royalties go up, which there's a caveat to that that we'll get to later.
But the second thing, which I think might actually be more important, is Spotify could eliminate or somehow restrict the ad supported plan because that drastically reduces the average per stream. Pale Spotify doesn't want to do this, and they say this in their own fourth quarter 2020 report because most of their paid supporters come from the ad supported plans, and that's why they say they rely on that free plan. But the issue is the people who have been on the ad supported plan for years and have no intent of ever upgrading those people bring the per stream royalty payout way down because the ad supported plan just doesn't earn as much as a paid user.
The problem is, Spotify has dug himself a hole with offering this quote unquote free service that people rely on. This just brings us full circle to a decades old problem that Napster created, which is that people started getting music for free and now they don't want to pay for it. Blaming Spotify For people not wanting to pay for music is not fair. That's not their fault. However, if you look at Apple music, they actually do really well with similar pricing they both charge for a single user about $10 a month.
Apple's payout is more than twice of what Spotify pays out on average, and that's because Apple doesn't have the free plan. The issue is their market share is not nearly as large as Spotify is because they don't have the free plan to get people hooked and bring them in. So there's a fine line between having a smaller market share and actually having a market share but paying well. So there's a couple things that Spotify could change. Unfortunately, I don't think they're ever going to, but this is what would need to happen for Spotify to pay more.
They need to raise their rates, and they need to eliminate or restrict the free plan. It's also very important to note that Spotify hemorrhages money. This is not a company that records profits. This is a company who in 2020 lost $581 million just in 2020. So to put that kind of into perspective, it's like, you know, for people to say like, Oh, we need to double the streaming royalty rate like, Well, if you double the streaming royalty rate, you're literally talking about a company hemorrhaging over a billion dollars. You know what happens when a company hemorrhages billions of dollars?
They go away forever. They're gone. And so, like with business, you know, James, like you were talking about with increasing the subscription rate, one of the most important things that you have to work into your business model, and it's very, very hard and where a lot of businesses fall short is that you have to account for scaling. Your business has to get larger, and if you are progressing, you will be adding more people to your ledger. You'll be adding more expenses, more liabilities. As you start getting more professional, you're going to have maybe tour managers.
You know you're gonna be having booking agents that you pay percentages to you have, you know, maybe day to day managers that you pay percentages to. You have PR companies that you don't pay percentages to, but you play flat rates to as a means to help boost attendance two shows. This is all going to be coming out of your bottom dollar. And so if you're not doing things like scaling the price of your merchandise, you're not going to be able to pay for them. It was a really big hurdle for me to jump over when I was like man artists that charge money to meet them, How stupid.
And then I dove deep into the business side of things. That was when I was a kid. I was like, I would never charge somebody 20 bucks to meet me, and I probably still wouldn't ever do that, I would want to make it like something that actually made sense. Like if they're going to pay 20 bucks. This is like somebody that I want to meet. I believe in developing quality relationships with all my fans. So, like there are things that you can do that are good practices. But the point is, is like, you know, if you're starting off with your T shirts costing 50 bucks by the time that you're doing, regular 2 to 3 week tours on a regular basis like your prices need to be like $25 a shirt and then as you get even bigger and you have, like a pretty high demand in your audience, those prices need to go up to like $30 a shirt.
And the scaling has to happen. Scaling is a 100% necessary part of business, so you need to keep that in your mind when you say, like it's like, Oh, it sucks that Netflix charges $20 a month now instead of $10 like yeah, but you still have Netflix, which means that they still deliver at least $20 a month in value to you. And if they didn't, you would have canceled that. So instead of thinking about how much you're losing and how much you're paying and things like that, you need to look in terms of how much value you are receiving out of what you're paying.
So, you know, if you have a T shirt that cost 10 bucks, somebody's like, Yeah, that's definitely worth $10 in value as you get bigger as you are more in demand. Maybe they're like, Hey, you know what? That shirt is worth $25 in value, and that could be achieved a number of different ways. That could be that your brand is bigger. You've dropped a couple hits songs, you have good quality contracts. Or it could be that you started printing your shirts on American apparel rather than Gildan. And now the shirt is literally a higher quality, and so there's plenty of different ways, and you can do it the wrong way, or you can do it the right way.
You know, if you don't make your products any better, and you just start charging more for them. Yeah, that kind of sucks the point in Spotify increasing their subscription rate would be to add value for the artists. And so, like you have to understand where the value is in order to understand the monetary decision behind it. Yeah, absolutely. And one super important thing to note on all of that is movie and TV streaming providers can negotiate and set their own rates with the people who own the content that they're screaming for Spotify.
Their rates are set by the government. It's a law. So that's why Spotify is paying out that just shy of 70%. It's a law now. Here's the other thing. When iTunes, the Apple store was paying out 70% of every dollar for sales, no one complained about that. So people should not be complaining about Spotify paying out about 70% because it's the same thing. The difference is that Spotify is diluting that because they're not earning as much. Namely, the ad supported a plan and $10. That's what an album costs on iTunes.
So that's being diluted. And that's why they're price needs to go up personally. I would gladly pay $20 a month for Spotify, maybe even 30 but over 30 I kind of feel like, Well, I could just go buy the CD that I have it. But for 20 to 25 bucks a month, dude, why not? Like, I would happily pay that, knowing that 70% of that goes to the rights holders, the artists and the songwriters or the labels in the case of label releases. But either way, the people who were involved in that music gets 70% of what I'm paying to Spotify.
I'm quite content with that. 70% is, to me fair, but it just needs to be a larger sum that's going in, that that 70% is taken from course, 70% for you, 15% to recoup their costs and 15% for them to grow. That is a very, very basic model and 100% in agreeance with you, James. The issue is with society. It's not with Spotify. The issue is that we like the trophy. We love the trophy. It's who we are. I mean, as human beings, you know, like, have you ever gone into somebody's house and seen a school of fish up on the wall that they caught?
No, you've never seen a school of fish on the wall. You know, you have seen a giant marlin on the wall. Oh, they caught a shark. They have a video of them catching a shark. Okay, why don't you ever have videos of people catching one small fish every single day for their entire life? You catch one big fish, you have one big fish and then that fish is gone, and then you're back to having no fish. If you have the ability to catch a small fish every single day, then you have a sustainable life.
This is the same concept. The idea that you're losing out on something by catching the small fish is a bad view. There are two major misconceptions with Spotify, both of which need a paradigm shift. The first is the common misconception. The common misconception is that if you're listening to an album on Spotify, then you're not going to purchase the album. This is not true in any way, shape or form. Generally, if you're listening to an album on Spotify, it's because like that song popped in your head, you're like, Man, I really want to hear that song.
And if it's by one of your favorite artists. There's a good chance you've already purchased that album, or at least a piece of their merch. So before, when you would sell a CD, you sell the CD for 10 bucks, and that is the money that you make on that CD. Your only hope of making more money is off of that person coming up to a show and purchasing some of your merge. Well, what happens when they don't have the CD in their car? Or what happens when you know they get to work and they have a Alexa and they stream music all day on?
Well, now you sold that $10 album to that guy, but now he's gonna go and listen to your music on a streaming platform. So now, every single time that song has listened to that album, you know it was $10. Now it's $10.100.37. Oh, well, he listened to it five times that week. Okay, so now you're actually made $10.1. 5 or $10.3. This is a snowball effect. So you get the one time purchase. Still, especially from all your true fans, and this is why we hit so hard on that. You need to invest in your die hard fans, your true fans, because you go by your CD, though by your merch, even if they don't wear it.
I've literally had people who love our music so much that they buy a shirt just to hang it up on the wall because we didn't have the size that they had. Never underestimate the power and the devotion of your true fans. These things snowball. And so, instead of having $10 on a single album sale per that album per that person, that might end up turning into $15 over the course of you know, the next two years. And so this builds a residual income, a passive income. Passive income is sustainable income that is the best type of income to build when you're in a business, because then you're not going to have drastic changes in influx on money, you're gonna be able to budget more consistently.
You'll be able to make money in the longer scale, you'll be able to back out and say like, Oh, this is really cool. Instead of, you know, making one CD sale. Here we had one CD sales and 500 streams. You can never only look at one piece of the puzzle and criticize the whole thing. You have to look at everything. You have to look at what everything is doing. If you're going to criticise Spotify, you also have to say, Well, then YouTube also sucks and, you know, so does Pandora.
And so does Apple music. And anything that streams is bad. And generally the only people that actually suffer from streaming platforms are people that are already at the top of the game. This is why Taylor Swift when she releases her albums, she does not release it on Spotify until months after she has done a private release because she wants to capitalize on every single possible dollar before she capitalizes on streaming revenues. She has so many people listening to her that a lot of those people might not purchase the c D. She is not investing in her true fans.
She is investing in the market as a whole, and so later on down the road there might be a slight shift. But I can guarantee you she will make all of that money back. It will just be spread out over a long period of time. So this common misconception like if I listen to an album on Spotify, it's not because I'm not going to listen to it on a hard pressed form. Okay, so throw that idea away. The second misconception is what I call the metal detector paradigm.
And this is the idea that Spotify doesn't help people find a particular artist. It helps them find every artist you know. You get on Spotify, it starts rolling you through random. You know it's Here's your smart playlist. If you have the free program, it'll just, you know, spit, you quote unquote like artists. Well, in essence, you're saying, Oh, Spotify just lets me know it's a metal detector. It just lets me know that there's metal in the ground. It doesn't mean that I know what it is. It doesn't mean that it's valuable.
It doesn't mean that I need it. But what people fail to understand is that before the metal detector, no one even knew there was metal in the ground. And so this gives you a spotlight at the forefront you know when you're listening to an artist and you hear this really high production quality song Pop on and you're just in love with it. You don't think Wow, this is a tiny band from New Jersey that doesn't have a substantial fan base and blah, blah, blah this No, you think, man, this song rocks.
I like this band and I'm going to listen to them more. It is a metal detector and you're right. Sometimes they might find a different artist, but beforehand people didn't even know you were there. Now, now people know there's metal in the ground and now they can dive a little bit deeper. Now they actually have a jumping off point, so to speak, in order to find you. Whereas Spotify has been the radio, the radio is what we all listened to for the last two decades in order to find new music.
That's what Spotify is now. Nobody ever criticized the radio for their payouts, so we shouldn't be doing that Spotify either. Now I understand the inclination for criticism towards it because it is hard and then you hear things like you know him come out and say, like you know their their CEO say artists just need to write more music, and he's absolutely right. The more music that you get out and the more diehard fans you have, the more consistently you're going to receive a monthly check. But it's very important to know that this idea that Spotify just makes you one fish in a school of fish.
Well, you might not be the trophy fish yet, but it would still really be nice to be caught. When you're a small fish, right, you want that income when you're a small fish. This is a tool that gives that to you absolutely, and a couple of things I want to note there because all of what you've said is on point that's so well put you brought up radio. In the US, artists do not get paid for radio plays. The songwriters get paid, but the artists do not.
Elsewhere in the world. In fact, most of the world artists and songwriters both get paid for radio plays. But in the United States, the artists do not get paid any royalties from the radio. It's a real shame, and it needs to be changed. But with radio on the way out. I'm not sure how much that's actually going to change, but I have a couple examples here that I want to toss in one of them that since you were talking about the passive income, I looked up earlier today, one of my favorite bands, Pure love.
They broke up seven years ago. In 2014, they released one album on Spotify in 2013. It's out of print. You can only find the C D or the record second hand. You literally cannot get it anywhere except from somebody who's already paid the band. The band's not seeing any more money from that, but they have 11,000 monthly listeners now, assuming that each of those listeners only listens to a single song, which I highly doubt is the case, I'm betting most of those people are listening to more than a single song, but just making it super easy.
A single song that's $40. 70 in royalties every single month. Now that's not a lot, but this is a relatively small band who broke up almost a decade ago, and they're getting $480 per year in royalties from Spotify. That's money that they would not have ever had because their Web store doesn't exist anymore. Their band camp does not exist anymore. He can't get their CDs, you can't get their vinyl. This is literally free money because they wouldn't have had any way to make that money if the songs weren't on Spotify.
Now, to further put this into perspective, let's say that you, as a small D i y artists, are going to release an E P with five songs on it. You're planning to do a really small run of 100 CDs, which, according to disc makers, if you do, did you Pack is going to be a dollar 28 per CD. You're going to sell them for $5 each, which results in a $3. 72 profit per copy. That's not too bad for an EP on such a small run. Now, to earn 3 72 on Spotify, you would need someone to stream the entire EP all five songs 201 times.
That sounds like a lot if you think about it for one person to stream it 201 times. That's a lot. I have streamed some songs far more than 200 times. I don't know the exact account because I don't think Spotify tell you that. But looking at iTunes, there are songs that I've listened to 300 times or more in the past three years. Since I last reset, my play counts. I do that every 2 to 3 years just to see what I'm listening to right now. Now that I don't use iTunes as much because even if I own the music, I go listen on Spotify for the exact reasons you were talking about Matt, where if I stream it, the artist gets just a little bit more so that's worth it to me.
Even though I have it on my hard drive, I will go listen on Spotify because just a little bit of a trickle for the artist and the songwriter. If you have people streaming that 201 times, then you've earned one sale, Okay, but now break it down. You could have one person streaming at 201 times because there are super fan and they listen to it every single day of their lives, or you can have many more fans who are casual fans and might not have ever purchased a city in the first place.
But they'll stream your songs so you might have 10 people listening to you instead of one. Guess what? Now they only need to listen to that e p 20 times each. That's easy. If they had it on repeat for a day. You know, while they're sitting in the office or something, they just like, Oh, this is really good. They can stream an EP 20 times in a day and you've earned a sale in one day. You know, like when I work, typically, I'll just pick an album and put it on.
Repeat and I will listen to that all day unless I'm doing editing or mixing or something like that. But if I'm just doing office work or writing, then I'm listening to music. Lately, I've listened to a bunch of four years strong and a bunch of inter trickery. I've streamed those their newest albums hundreds of times by now, throughout the last few months, and then to Zachary. I've been listening to their newest album since last April or May, whenever it came out because it's that good. Guess what?
My fiance asked what I wanted for Christmas, and I told her I want the new introductory record on vinyl. So now they have all that income for me streaming their music hundreds of times and a record sale, because that's what I asked for for Christmas. That all adds up so you can have the 10 people streaming your E P 20 times. Or let's say you get one super fan who streams at 100 times just 100 times not 200 and then 10 more casual fans who stream at 10 times each. That is a very likely scenario because you can now reach so many more people.
The numbers are starting to work out in your favor because, like I was saying earlier with a CD once it's sold, there's no more money in that. If somebody resells the CD later, the artist and songwriter don't see anything from that, but on streaming platforms, as long as someone's listening, you're getting paid. One thing I also want to throw in here in business, we tend to look at money for a second. I want to look at a different metric. I want to look at a time. Okay.
Time is something that no matter how hard you try, you cannot scale it. We only have a certain amount of years on this Earth. There is no renewable time. Resource. You can scale your money. You can scale your skill. And actually, it's time. Plus your scalable skill that actually allows you to scale your money. So instead of looking at skill and looking at money, I want to look at the time metric. I will use a live in Barcelona as an example. We have roughly 2. 5 million streams on our first album that came out.
So if you have 2. 5 million streams and the average song is three minutes Okay, that is 7. 5 million minutes. Okay, Now, if you divide that by how many minutes there are in an hour 60 that works out to 125,000 hours. Okay, if you divide that by 20 for how many hours in a day that works out to 5208 days. Now, if you divide that by 365 the number of days in a year that works out to 14 and a quarter years. So for one person to have have played our music 2. 5 million times, it would take 14 and a quarter years of their life.
That's longer than alive in Barcelona has been a band by twofold. So if you were constantly touring and your only way for you to get your music out there and the only way for you to make money on it, or rather the best way is while you're playing shows in front of people, you would have had to play your music for 14 years in front of people. This is 14 linear years to this is every hour you're asleep. So if you were to actually think about it and say, like you're only awake for 16 hours of the day and if you were listening to it for every waking hour of the day, this would actually be 21 years.
So 14 years is almost half of my life. This is a metric to me that is more powerful than anything because a fool will look and say I only have 2. 5 million listens. I only have 2. 5 million streams. And me, I say, Wow, we have scaled our time by 14 years because guess what? We didn't stop playing shows. We still toured. This is compounding this. Stacks are on top. This is the icing on the cake. This does not supplement the cake. This is the beauty of time. Scaling and Spotify again is a tool that allows you to do it.
And it's really easy to look at that small fish and say, Uh, you know, it's not a marlin. It's not gonna feed me all day. It's not going to feed me all week. I have to catch a million of these just to stay sustained. But once you do, that starts to snowball effect that starts to compound. It travels downhill, and as long as you're staying active and relevant in your industry, you know, Post Malone Last year made like $200 million often streaming royalties or something absolutely asinine like that.
I mean, this is all passively. He's still going and playing shows. He's still getting $50,000 guarantees. He's still selling all that merch to all these fans, but selling merch does not scale your time. Playing shows does not scale your time. But you know what does Streaming royalties? Yeah, absolutely. It's really the future of the industry. And even as things like N. F. T s are coming about which we'll talk about in a future episode, streaming is still going to be around. And that's just a fact. If people can't get their heads around that and I'm just going to complain, those are the same people who probably won't end up going anywhere in this industry.
Because as much as it sucks to say, music is a business, you have to have a passion for it. You have to have Dr but it is a business. You also have to go through it as an entrepreneur, and if you're not doing that, you're gonna be shooting yourself in the foot. I want to toss out just a couple more numbers here because I compared Spotify and Apple music because remember earlier I said, Apple music pays a little more than twice what Spotify does. So taking that same five song EP to cover one sale you would only need 95 streams of the full EP on Apple music.
Ironically, the provider that pays more than any other streaming service is Napster. They started all this, and now it's not the same. Napster Rhapsody bought out the Napster name a few years ago, so it's not the same company, but it's the same name. 39 streams of the full EP would equal one sale compared to 200 something, I think 201 on Spotify. The true villain, On the other hand, and the streaming picture is YouTube, you would need 1000 and 78 plays of the entire E P to be equivalent to one sale. That's abysmal.
That's 1/5 of what even Spotify plays. That means people would literally need to listen to your music over 5000 times to actually pay for one physical copy. I just did the math. It's 400,390. That is insane. If you listen to music on YouTube, stop go pay for Spotify or Apple Music or title or Napster subscription. If you're listening to music on YouTube, that is, he was killing artists, and that brings me to my point. Ultimately, whose to blame about the low payouts on streaming services. The consumer who doesn't want to pay for music is the person to blame, like you were saying that it's society.
The platforms, like Spotify, who are paying out 0. 37 cents per stream, can do better, but only if the consumers let them make the changes that are necessary for those platforms to continue to run a business and even thrive. Because just like you, said Matt, if a business is losing money, eventually, they're not going to be around anymore. They are going to close in short, tools in the music industry are used for totally different things. You would not try to use a hammer on a screw where you would not try to use a tape measure when a drill is required.
Okay, you need to know the place and time for each tool to be used. So looking at Spotify and saying, Oh, you know, this is terrible. This is this is cutting our profits down instead of me making you know, uh, a dollar per song. Now I'm getting paid pennies per song. It's like, Well, I guess like you were saying earlier, James, you have some songs that you listen to quite a bit. I can tell you right now that on iTunes I have listened to Dido's white flag over probably 5000 times in my life.
I used to fall asleep with that song playing. It was my nighttime calm down music as I would start to fall asleep and I would put it on, repeat literally just eight hours of a three minute song over and over and over again. And you know what? They did not make a penny off of me Residually playing that song and that Spotify existed back then and I was able to put on that song on Repeat. I mean, they literally would have made, like, an extra $20 off of me.
And that's $20 that was lost in the ether that at the time just didn't exist because there was no there was no pathway. There was no bridge connecting that streaming royalty with the artist. So Spotify is not this curse. Spotify is beautiful. And yes, I understand that it is difficult. But like even purely the analytics of Spotify, purely the analytics is a business metric that is worth making that available to your fans like nobody bats an eye when you're like Oh yeah, we obviously have to put our stuff up on YouTube.
But then, when you realize they literally pay less than 1/5 of what Spotify does, you can even get on YouTube and watch videos of how much money YouTubers make. There's a reason that they've dropped like flies over the course of the last decade, and that's because the royalty rate constantly gets slashed. On top of that, there's more people coming into the market constantly. There's so it's just epic competition constantly and so, like these larger businesses, it's on them to kind of compete for your business. But at the same time, they also face an even harder problem because they also have to be adding value to the artist's life.
So they have two different consumers in their business model. Their consumers Are you the people listening to music? But their consumers, in essence, are also the producers, the people who make the music because they have to appeal to us as well. So don't get this idea in your mind that having a metal detect there really just gives you an ocean of problems and know where to start. It doesn't. It gives you everywhere in the world to start. And as long as you're developing quality relationships with your fans, you're developing these true fans.
Then start building your snowball, man, that compounding money is beautiful. And more importantly, when you see how many streams you have and you crunch those numbers and you take a step back and you say Wow, you know that like 5000 streams that we have total at three songs like that's 15,000 minutes like 15,000 minutes, that's that's a hefty chunk of time. Is that going to inspire you? Or is that going to break you down? Never, ever, ever be discouraged The fact that you're scaling your time, that is the most important thing that you can do with your life because a not only does it make you money but be it frees up your time to be able to continuously work on your music.
If you end up putting out 50 songs and each one of them gets, you know, 15,000 streams on it and you stay consistent, you release a song every two months and you stay consistent with these numbers. Eventually, you're going to get to the point where you're getting $500,000 checks each month. And then as you continue to do that, eventually you get to the point where it's like, Hey, all of this passive revenue actually pays my bills, which allows me to actually go ahead and tour more. There's less liability for other things for other ventures in the industry that are also just as crucial and just as important.
Spotify is a piece of the puzzle. Okay, still a piece of the puzzle. Don't criticize the puzzle based on one piece. Mhm, mhm, mhm, mhm, mhm! That does it for another episode of the band. I've podcast. Thanks so much for tuning in and listening. We know this is kind of a controversial topic, but it's something we felt that really needs to be talked about, because it's something that affects every single artist out there and having that negative mentality. Saying that Spotify is victimizing artists and rights holders, that's just not good.
That is not going to help you in your career in any way. When the big artists talk about Spotify, they get some press. But if you as a d I y artist are doing that and complaining about Spotify, people are not going to care. It's not going to make the news. It's not going to do anything for your career. And in fact, like we said in the episode, it's actually not as bad as it seems when you hear those figures. So in the episode we talked about that five song EP with 100 physical copies at this cost and this sale price and how those numbers go together for Spotify, Apple music and Napster.
Well, the good thing is that I've done all the math for you. You don't need to do that math. If you want to have that calculation done for you, just head on over to Bandhive dot rocks slash calculator. You put in how many songs are on your release, how much it costs you to have X number of copies printed, whether it's CD, vinyl, whatever that will give you the cost per copy, and then you tell it what you're going to charge per copy, and within just about 5 to 10 minutes, you will receive an email that tells you how many songs need to be streamed and how many times the full E P needs to be streamed on.
Spotify Apple Music, Amazon Music, YouTube, Google Play Music title, Napster Deezer and Pandora Premium. Those are the nine biggest streaming providers in the US So if you want to have that calculation done for your release and see how the numbers pan out for you, you don't need to go and do all the math because, like I said, we've done that for you. Just go to band. I've got rocks slash calculator, and you can get those numbers emailed to you in a nice little table. That explains it all. Clearly.
So again, that's banned. Hive dot rocks slash calculator Thanks again for listening. We'll be back with another new episode next Tuesday at 6 a.m. Eastern. Make sure to follow us and subscribe in your favorite podcast apps so you don't miss a single episode. Until then, we hope you have an awesome week. Stay safe And, of course, as always, keep rocking
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