The Economic Reality of Music Streaming

The Australian music industry is contributing between $4 billion and $6 billion to the economy in an average year, according to estimates by Music Australia. With a number that large, you'd be forgiven for thinking that Aussie artists are getting a fair piece of pie. They're not in many situations.

Although artists are paid for their songs, the rate of pay per stream is usually very low. It adds up for famous artists who gather millions of streams, but the results are tiny for those who want to make a name for themselves. Although variables such as the listener's country, the type of account they hold, and the artist 's unique royalty rate (if any) all play a role; the average rate for an artist is around $0.004 per stream for Spotify, while others put it higher at $0.007. The element in the cuts made by labels and distributors and the final payment for artists is still slimmer.

With this in mind, it should come as no surprise that only about 16 per cent of Australian musicians make more than $50,000 a year, a fraction of which comes from streaming alone. Using some rough math an Aussie four-piece band will have to cross about 632,656 Spotify streams every month just to cross the base Newstart amount of $500 a fortnight.

To put that number into perspective, the band will have to do better than the famous Australian artist Montaigne, who averaged 608,333 Spotify plays per month in 2019. Montaigne can be considered a popular artist by a variety of metrics – she mostly performed on national radio, won the ARIA Award for Best Breaking Artist in 2016, and reached number 4 on Australian music charts with her album Glorious Heights. Even with this remarkable track record, it is reported that the artist made just $46,634 of Spotify's 7.3 million plays last year.

Making it big in the music business needs a certain amount of good luck. After all, no one can really know that the music they make is going to resonate with millions of people around the world. If this is the case, how can a mid-tier artist or band make a living out of their passion? They've got to be smart.

Although streaming platforms don't make it easy for artists to survive in the modern era, they are definitely a better alternative to the rampant piracy of the early 2000s. Some claim that streaming – and even piracy – is in the long run beneficial to artists as it helps spread their music outside their immediate market.

At the end of the day, it comes down to what the user is willing to pay for, and while streaming platforms have made a respectable move forward, it's hard to argue that it's a fairer choice for musicians.

There's plenty of discussion about what comes after downloading, with some even pointing to video games as a possible vector for artists to distribute and monetize their work. Either way, the desire to increase financial support for creators will be welcomed by many.