How I Skipped Spotify and Made 10 Times the Revenue

Streaming royalty statements are repeatedly showing that Microsoft is crushing Spotify (and Apple Music). They’re not the only one.

Earlier this month, Digital Music News published a report showing wildly better streaming payouts from both Xbox Music and Tidal, with repeatedly low payments coming from Spotify and YouTube. Those disparities were happening across the world, though artists now have a way to dramatically increase their royalties by prioritizing just these two platforms in their distribution and promotional rollouts.

Now, there’s more data demonstrating systematically elevated royalties from Xbox Music, which was actually recently re-branded by Microsoft as ‘Groove Music’ (and, was previously called ‘Zune Music’ if you’re poring through your various royalty receipts). That data comes from a small inspirational label in the US, with a modest roster of artists (many of whom are older and going digital for the first time).

At a top level, here’s what the label discovered over the past year on the royalty front (Microsoft can’t decide what to call its streaming music service, so look out for a bunch of different names).

Over a critical mass of 7,078 streams accrued on Xbox Music during the month of April, 2016, the average per-stream royalty paid by Microsoft was $0.0423, or 4.23 cents.

Across all songs, Groove/Xbox/Zune streams ranged from $0.014-$0.046 per stream (that’s 1.4 cents to almost 5 cents a stream).

XBox/Groove subscribers from the UK delivered an even higher royalty stream rate of $0.067 per stream (or 6.7 cents).

Compare that to Spotify per-stream payouts that routinely fall below the $0.003-$0.004 level, and Xbox Music is easily paying 10 times the amount per play.

This label was also distributed on Apple Music, where royalties came in at 1.13 cents per stream, albeit on a smaller (but still significant) count of 187 plays (almost entirely in the US). We’ll be reporting on more Apple Music royalty data ahead (we’re expecting a lot of information), though a quick read of this data shows that Microsoft is paying roughly 4 times what Apple is paying.

Skipping Spotify.

The most interesting part of these statements was that we couldn’t find Spotify anywhere. That may be part of a decision to skip Spotify entirely based on lower royalty concerns, with all the emphasis going towards paid platforms. A large percentage of free, ad-supported Spotify users is part of what’s dragging those totals, with royalties from the platform routinely dropping well below the $0.004 level from data we’ve seen.

At present, Spotify is showing little signs of shifting away from its free tier, despite heavy industry pressure to vacate the low-rent offering. On top of that, repeated leaks show that per-stream royalties on Spotify are getting worse, for reasons that are difficult to understand. That has many artists skipping the platform, either for practical or philosophical reasons, while others feel the exposure and availability are more important.

(For those distributing to YouTube, the per-stream royalties are disturbingly low, and almost not worth the comparison. Most earn virtually nothing on this platform.)

Which brings us to the next issue: Spotify, like YouTube, have huge numbers of users, but even so, it’s tough to win on volume. Indeed, overall user levels on Xbox Music are lower, but pound-for-pound, this platform crushes Spotify when it comes to cash.

That isn’t just a detail on a spreadsheet, it’s actually helping labels and artists and reformulating rollout strategies. “I must admit that the Zune/XBoxMusic/Microsoft Groove royalties are definitely helping [artists’] secondary residual income,” the manager of the above label told Digital Music News.

The strategic shift not only involves prioritizing higher-paying platforms like Xbox on distribution, but also committing more resources to getting promotional attention and features on those platforms.

The Tidal Factor.

Others are hacking in the same direction, with Tidal the other platform paying much, much more. This is a global breakdown shared with Digital Music News by an independent rap label, whose owner conducted an experiment to determine actual country-by-country per-stream payouts on each service (remember, ‘Groove Music’ = Xbox Music = Microsoft).

Sounds great, though one caveat: word from labels is that payouts from these platforms can be slower, with Tidal guilty of a serious payout lag. Microsoft is also a little delayed: “Depending on the distributor, XBox Music/Microsoft Groove takes between 2-5 months to report royalties,” the first label told us.

So far, it’s seem worth the wait.

Image by Thomas Galvez, licensed under Creative Commons Attribution 2.0 Generic (CC by 2.0).