Apple Music Pays Artists Three Times as Much as Spotify
November 1, 2022 at 3:47 p.m.
Music producer L.Dre recently revealed discrepancies between how Spotify and Apple Music compensate artists. With two songs, each gaining over 4 million streams on Spotify and Apple Music, he found that Apple Music pays three times as much per listen.
Although Apple Music is more generous per stream, L.Dre reveals that Spotify is more profitable overall, having over twice as many paid subscribers as Apple Music. It also offers artists more control over their profiles and better ways to promote their music.
L.Dre pointed out that his success on Apple Music had much to do with luck. Apple Music featured one of his songs on a popular playlist, dramatically increasing streams. Without this good fortune, his track would have done much better on Spotify.
While Spotify enjoys a massive lead over Apple Music, trends show the Stockholm-based company’s subscriber base reaching a plateau, while Apple sees more substantial gains, year over year. In the five years between June 2016 and June 2021, Apple Music went from 15 million subscribers to 78 million — a 420% increase. During this same time, Spotify increased its subscriber base by 330%, from 40 million to 172 million subscribers.
Recent developments have stalled Spotify’s growth. Its deal with controversial podcaster Joe Rogan resulted in slower growth within the past few quarters, as some long-time customers have chosen to leave the streaming provider. Also, Apple Music offers high-definition audio, with many songs streaming at 24-bit lossless quality. There’s no doubt that Apple Music sounds vastly superior to Spotify.
If you search for news on the Spotify deal with Joe Rogan, most established corporate publications claim this was a massive boon. The facts don’t support this. Since Spotify inked its deal with Rogan, growth has decreased compared to the previous year.
Joe Rogan’s content went live on Spotify on September 1st, 2020. The following year, Spotify grew its subscriber base by slightly over 16%. In the previous four quarters of 2019, Spotify boosted its subscriber base by 25%. There’s no doubt that Spotify’s move to incorporate Joe Rogan has been detrimental to sales. It’s also seen some talent leave the company, including employees and recording artists.
Apple has four critical advantages over its competitor. For one, it has over a billion lives and can actively market Spotify to end users. Spotify recently partnered with Microsoft to push its streaming service onto Windows. Most Windows users, including me, saw it as an unwelcome intrusion. Apple can push its music subscription service onto end users without making it seem like malicious actors hacked their devices.
Second, Apple has the moral high ground. None of their featured creators urge young people to avoid vaccines. Apple doesn’t legitimize conspiracy theories on its streaming platform. They don’t rip off musicians like Spotify, giving unequal compensation to a podcaster of ill repute. It matters to some consumers, just as environmentally friendly goods have a higher value.
High-definition, lossless music is yet another advantage Apple has over Spotify. Music listeners have transcended the iPhone’s stock headphones and early AirPods. Newer wireless earphones and hi-fi streaming systems make digitally compressed music, like Spotify, sound cheap. Even a casual listener can hear more details and enjoy better sound quality with Apple Music than Spotify. 24-bit lossless audio on Apple Music sheds new light on albums and songs I’ve enjoyed for decades. I hear more details, richer bass, and crisper highs.
Fourth, Apple has a broadly established infrastructure, providing economies of scale effects for operations. They have massive data centers that generate revenues other than streaming music. Apple is so big that music streaming doesn’t add much to its costs. The Cupertino-based company purchased many of these fixed capital assets before Apple Music’s launch. Apple Music is one of many services that Apple provides from its data centers. Apple TV+, Apple Arcade, iCloud, and other paid services generate revenues and reduce overall operating costs.
Contrast this with Spotify, which hosts its service on Google’s Cloud Platform. They’re not getting this service at cost, and Google can raise rates, much like Leyland Stanford raised crop shipping rates to rob farmers of their land. When a company doesn’t own the means of production and instead leases them, it becomes vulnerable. Future contracts may yield surprise price hikes that ripple across Spotify’s financials. This is partly why so many enterprises strive for vertical integration.
Aspiring musicians wishing to distribute their music may want to take Apple Music more seriously. Spotify’s growth is stalling, and Apple has the upper hand. Remember, Spotify had an almost decade-long head start, as Apple felt streaming services undermined artists. They do. Spotify pays artists next to nothing for their music.
It’s important to note that Spotify still needs to achieve profitability. In 2021, the year after it signed Joe Rogan, the company realized a net loss of $163 million. The year Spotify signed Rogan, the company lost over half a billion dollars. Yes, you read that right. Spotify does not make a profit. It loses money. The company’s stock is also in shambles, now priced lower than the post-IPO gains from mid-2018.
The public perceives Spotify as successful primarily due to biased news articles that fail to examine the data. If Spotify PR reaches out to a major publication to puff up the stock, they’ll do it. The company that owns the publication may be an institutional investor in the Swedish streaming service. Spotify may advertise on their websites. The corporate media is dishonest about Spotify’s success for myriad reasons.
When one examines the data, there needs to be an indication that Spotify is thriving and that recent moves, such as the deal with Joe Rogan, have proven successful. The company seems to be losing money and investors, while Apple is ascending and taking on subscribers at a faster pace. Apple Music will likely outpace Spotify by 2026. Spotify might not even exist by then. Given the company’s financials, surviving a recession is a dubious prospect.
It gets worse for Spotify. Music royalties are increasing, and the company needs to make a tough decision — raise prices or take considerable losses. Apple recently increased the price of its streaming music service by a dollar per month. Given that it supports lossless streaming, however, it’s still cheaper than the competition. This leaves Spotify in a tight spot. If the company increases prices during a recession, it’ll undoubtedly see a decrease in subscribers. If Spotify subscribers start to defect to other platforms or free streaming due to recessionary pressures, the company could fail or face acquisition.