If you want to know how to make money on Spotify, it is probably because you are a singer or songwriter. Spotify currently boasts over 165 million active subscribers, making it the go-to place for artists and content consumers. Many content creators are making their money on Spotify, and this article will show you how to join that league.
There are three primary methods to make money on Spotify. These are regular payment streams, mechanical royalties, and performance royalties. However, you will need a publishing administrator or performing rights organizations to access your earnings. You may have mechanical/performance rights or master rights as an artist. In a case where you write your own songs and self-release, you will have both rights.
What is Spotify?
Spotify is an online audio and media streaming service owned by Swedish Billionaire Daniel Ek and Martin Lorenzo. It has over 350 million active users and 165000 premium subscribers. It was founded in Stockholm, Sweden, back in 2006, and has seen a great deal of success ever since.
How to Make Money On Spotify
Understanding how to make money on Spotify will require a general knowledge of how money is made in the music industry. To get it rolling, we highlight three main ways of making money on Spotify.
Online streams like apple music and Spotify will award you mechanical royalties every time your music is streamed. In the case of Spotify, the royalties are not paid directly to the music owners but rather to their administrator. If you don’t have a publishing administrator, you might miss out.
Suppose you are registered as a song composer and publisher. You may need to enlist the services of performing rights organizations like the BMI and ASCAP. Every time your song is streamed, you will be paid through them. Note that you may not be able to claim payment if you are not registered with a performing rights organization.
The Regular Payment Streams
Depending on which one is easier for you, you can call it artist royalty or the master use royalty. Basically, it is a form of payment for streaming licensed sound recording. However, a distributor is needed, and it is acceptable to use services such as CD baby. Spotify will pay you every time your song is played.
What Do I Earn on Spotify when My Music Streams?
Before we get to the actual figures, it is worth noting that the music industry has made actual progress with royalty and copyright issues. The modern methods have improved the practice but are still primarily informed by the traditional approach.
How Much Does Spotify Pay Per Stream?
The amount Spotify pays per stream will change relative to the amount of subscribers and the uploaded music. Spotify currently pays $0.0043 per stream for tracks played for 30 seconds or more. This is clearly not a lot of money, especially when you are just starting your music career. But you will be surprised to know that people earn millions from streaming alone.
How Do Podcasts on Spotify Make Money?
Starting a podcast on Spotify can possibly be a win-win situation for every party involved. In most cases, running a podcast is just about making a normal conversation with people you don’t see. Your stories may end up touching or inspiring some people and a fraction of which could land on your podcast as dedicated viewers.
The most straightforward way of earning on Spotify podcast is by selling their services. For instance, let’s say you ran a successful SEO campaign, and your next podcast is about SEO. Because you already have a good audience, the administrator may strike a deal with you to sell them.
Another potential method of making money on Spotify podcast is getting into partnerships with sponsors. A partnership may cost $25 per 1000 listeners. If your podcast has over 100000 listeners around the globe, you can make good money.
Last but not least, you can maximize the use of affiliate marketing. You might not have a product of your own to sell, but this is not the end of the road. The good news is that you can use the affiliate marketing strategy and still get your cut. Simply use your Spotify podcast to market other people’s products and earn a commission.
Can I Pay for Streams on Spotify?
To survive on Spotify, you should never cheat with streams. It is regarded as fraud punishable by a jail term and fines if you cheat. Also, it can lead to the suspension of your account.
Of course, you will not have any problem playing your track a few times a day. However, if you hire companies that offer stream generation services, you might get yourself into trouble.
Spotify is one of the largest tech companies globally, and stream cheating will easily be noticed through inconsistencies. To be safe, avoid using robots to stream your music. Don’t be too impatient and things will work out in your favor over time.
Selling Merchandise on Spotify
Although not yet fully explored, it is possible to sell merchandise directly to your audience on Spotify. To do this, simply create a merchBar account, add inventory, then connect it to your Spotify account. To learn more about this, check out Spotify users already selling merchandise.
How Spotify Makes Money
Spotify would not exist today, 15 years after its creation, if it were not worth its keep. Simply put, it has been generating income for its founders. Spotify makes money in two ways; through subscription and advertising.
Spotify Premium Subscription
The Spotify premium subscription generates 91% of Spotify’s total revenue. The service offers three subscription plans, including an Individual Plan at $9.99 and a Dual Plan costing $12.60. It also has a family package which goes for $15.90. Subscription is done monthly. By December 2021, Spotify had already registered over 165 million subscribers.
Besides the premium subscription, Spotify also raises revenue through advertising. In fact, Spotify raised a total of $875 million in 2021 from advertising alone. This was about 9% of the total revenue.
Spotify offers direct programs for those with substantial advertising budgets, which allows them to access direct marketing platforms. For those with smaller budgets, Spotify has an ad studio for them. Ad studio enables a self-serving ad platform at a relatively lower cost.
Spotify presents an excellent opportunity for content creators to earn money from their music. As discussed above, there are two primary sources of revenue. These include performance rights, royalties from the master rights, or mechanical reproduction.
You are technically the songwriter and the record label if you write your own songs and release them yourself. That effectively means that you have the mechanical/performance rights and the master rights.
You can also make money on Spotify by selling merchandise directly to your audience and promoting other people’s products. There’s potentially a great deal of money to be made from just one or two sources. But, we recommend that you have multiple streams of income from your Spotify.
Something that must be highlighted is that don’t try to play games on Spotify. Be straightforward and make your money legitimately. Otherwise, you might be deregistered.