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How much money do stores pay for streams?

Welcome to the most controversial and annoying topic of the digital music industry.

How DSPs get income

This will depend on the type of user and subscription model that the platform follows.

Type of subscription

  • Premium: the user pays a monthly fee to be able to enjoy music without ads or interruptions.
  • Freemium: the user enjoys free music, but from time to time ads appear and part of the user experience is not complete and is much more uncomfortable.

These are the two main ways that streaming platforms receive income. Here it must be taken into account that this income is going to be divided among all the intermediaries that act in the game, that is to say: the streaming platforms, the distributors/record companies/aggregators, publishers, and artists, among others. **The money has to be distributed among all the agents.**

Type of users

It is important to highlight that there is a very important differentiation between users who use premium accounts and freemium accounts. Streams that come from freemium accounts have less value than streams that come from premium accounts. Here is another factor that influences monetization.

Type of monetization

On the other hand, in each country in which the streaming platforms are operating there are premium rates based on the economy of each country, so monetization is uneven in each country within the users who use premium. We must also take into account that the platforms even make an extra differentiation apart from adapting the premium rates, depending on the number of premium accounts that exist in each country in the event that the premium model exceeds 50% of users who use the platform, monetization will be more beneficial, on the other hand, if the opposite occurs, the freemium model exceeds the premium number of accounts, the collection will be much lower compared to a country where the opposite is the case.

Other factors

But not only the politics of the streaming platforms influence but other factors such as the agreement between the streaming platforms and the distributors. There is a determining factor that has governed competition within music streaming, and it is market share. Each distributor will have an agreement with each streaming platform, however, a general rule is usually given, and that is that whoever has the highest market share within the streaming platform will have the best monetization.

These are just some of the influencing factors, there is no single, general answer to this question. So whenever you see a graph that indicates the average of what is paid per stream, it will always be an approximation.