Spotify is a major power player in the music industry. In fact, Spotify accounts for over 70% of all streaming audio on the internet. With that much control it’s important to understand how Spotify pays royalties, and what you can do to optimize your placement in their system. This article will discuss why some playlists are more valuable than others and provide tips for optimizing your Spotify playlist submissions.
Spotify playlist placements are crucial to a song’s success. Getting featured on one of Spotify’s curated playlists can have an exponential effect on your streams, and in turn, the money you make from them. But not all streams are created equal- there is no universal payout system for artists as it differs depending on where listeners reside and what genre they listen to.
What factors differentiate the stream value?
Based on a handful of factors, like what country the listener resides in, you as an artist or songwriter will get paid a different amount in the form of royalties. Main factors include the country of stream origin, whether the listener has Spotify premium, and who your music distributor company is. On top of that, getting streams from listeners in the right audience are far more valuable because they are more likely to stream multiple times, save the song, and share with others.
These factors are important to be aware of as you market your music and work to get as many Spotify playlist placements as possible. Obviously you want as many streams and placements as possible, but you also want to make sure you’re optimizing for quality and payment per stream.
The country of origin
Image courtesy of Hypebot’s article “What Each Country Pays For Spotify Premium and How It Affects What Artists Get Paid”.
The above image gives you a breakdown of how much Spotify Premium costs in each of the individual countries, which has a direct effect on how much the artists, songwriters, labels, & publishers will be paid in royalties. Look at those numbers between cheapest (left table) and most expensive (right table) those are huge differences!
When you’re marketing you music and submitting for Spotify playlists, you’ll want to have a good idea of where those listeners are coming from. A natural mix is great, but if whoever is promoting the playlist is mainly promoting in Indie, Argentina, Vietnam, etc to keep their ad cost down, you’re going to make very little returns on your streams.
Whether the listener has a Spotify Premium subscription or free account with ads
This concept goes hand-in-hand with the table above. Spotify pays out royalties based on a very complex formula including whether the revenue is coming from ads generated on free accounts, or Spotify Premium subscriptions. Without getting too complicated, labels & artists get paid more stream from Spotify Premium listeners compared to free tier listeners.
Your distribution company and their contract with Spotify
It was only recently that I found out that distributors & labels pay out royalties to artists differently, depending on the contracts they have in place with Spotify. I learned this from Ari’s Take research and article: “How Much Each Distributor Pays For Spotify and Apple Music” – make sure to also take a good look at the image above from their article. Depending on your distributor, you could be earning anywhere from .0025-.004 from US streams.
That being said, I wouldn’t recommend changing your distributor solely based on this factor alone. I actually use UnitedMasters and although I was bummed to see that I could get paid almost 25% more with Tunecore, I have no plans to make that change. I like their services as whole too much when considering other factors – I’ll start putting together a comparison and blog post on why I switched from Tunecore to UnitedMasters in case it’s helpful to anyone out there!
Is the listener the right audience? Here’s why it matters…
For me, this is the NUMBER ONE biggest factor to consider when looking into Spotify playlist placements, submissions, or any promo services out there. This will indirectly but MASSIVELY impact your stream value, your growth, and your potential earnings.
Here’s why: Let’s consider two separate scenarios and the value, growth, & earnings they will bring you in the long run. I’ve seen both scenarios play out with my own music and wish I had learned from someone else instead of having to learn it for myself.
Scenario 1: Even ‘good’ playlist placement services are bad if they aren’t reaching the right audience
You submit for a playlisting service that’ve heard is supposedly high quality and doesn’t have bots in their network. You’re paying hundreds or thousands of dollars, but you are almost guaranteed to get thousands of streams, and they’ve probably even given you an estimate of how many tens of thousands of streams you’ll receive.
Your song gets added to their network of playlists… they’re not bad necessarily, they’re not even that far off when it comes to genres but then you take a closer look at the playlist names or other featured artists. Are the playlists titled after movies, soundtracks, tv shows, etc? When you start clicking on other songs & artists in the playlist are they as high of quality as yours? High enough that someone will really keep listening to the playlist (and your song included)?
Here’s what I saw in my own experience like that: I was added to a bunch of playlists that seemed pretty close to right. But the artists and songs I found featured there just didn’t seem right to me. A lot of them seemed bad and I had no idea where these listeners were coming from. Worst of all, my Spotify stats went down the drain….
I had very few repeat least listeners and it destroyed my stream-to-listener ratio, as well as my saves-to-listener ratio. Stats like these matter because the Spotify algorithm uses them to judge whether or not people are liking your music. Are they liking them enough to repeat listening and save them to their libraries? If the playlist service isn’t targeting listeners that like similar genres/sub-genres as your type of music really well, it won’t work out well for you in the long run.
Scenario 2: High quality Spotify promotion through DIY marketing or custom built for your audience
In Scenario 2, you think long and hard about who your love group or target audience of listeners is. What other bands or artists do they love? What other interests do they have? Can you pick certain sub-genres that are perfectly aligned with your songs?
Then from there you start to build Spotify playlists around those artists & interests that your love group will resonate with. You make a few videos showing off the playlist and you share it on social media, IG, TikTok, even Reddit. You build a few DIY ads for FB Ads Manager and drive that targetted group of listeners to your playlist, with your own songs peppered into the playlists.
Here’s what you’ll see with this 2nd scenario: Repeat listeners that love your music and start to flood over into your social media profiles (YouTube, IG, Facebook), improved stats like your save-to-listener ratio, and all of a sudden the Spotify algorithm will decide to give you a little more traffic. They’ll see this group of listeners liking your music and it will learn from it. It will have a better idea of other similar profiles and will start to put your songs in front of them.
Focus on stream QUALITY instead of stream QUANTITY
A few years ago I worked with a good, reputable Spotify promo company and saw my Spotify profile die from it. When the campaign launched, I was so stoked to see the growth, the streams, and the listeners explode overnight. But the aftermath, the long term results, were more than disappointing – they were damaging. For what it’s worth, I’m adding pictures of my own Spotify For Artist stats below.
You’ll see the promo service results halfway through the chart in the form of a massive spike… and then nothing for more than a year. You’ll also see almost no new followers at the same point as the spike, which is very concerning. Either nobody liked my music or it just wasn’t the right audience.
Then you’ll see that inflection point that I learned to promote and market my music in the right way. Am I getting massive spikes of streams and listeners? Not really, but what I’m getting is consistent, high quality growth targeted to the perfect group of listeners that I feel confident will like my music.
I really, truly hope this is helpful for any artist that read it – and more than anything, I hope it deters you from working with Spotify promo companies or playlisters that will promise you the world.
In case you want to learn more about what I did to change my marketing from quantity to quality, add your email address below. I’m currently working on a course/mentorship program to help other indie artists do the same thing. OR, if you prefer to have someone else do it, let’s chat! I’m working with a very small group of artists to build the same playlist/marketing funnels for their music – just like I’ve done for mine.
So the next time you’re looking at Spotify playlist placements, submissions, or playlisting services, keep this in mind: ALL STREAMS ARE NOT EQUAL. Quality will serve you much better than quantity in the long run when it comes to marketing your music, and more than anything make sure you are targeting the right group of listeners.