How Music Streaming works with the Recording Industry Association of America

Sep 10, 2018 | Music Industry

An Entertainment Lawyer Answers Questions about Streaming and Getting Paid

As an entertainment lawyer, every day I help clients find the answers to questions that may impact their creative, or more importantly to some, their financial opportunities. I recently received an inquiry from a client regarding how many units their album needed to sell in order to be certified Gold, and also how much the album would earn from online platforms.

Before we take a look at how you earn a Gold record, lets first understand what a Gold record means and who can award Gold status. The RIAA, Recording Industry Association of America, is a trade organization supporting the music industry with roughly 85% of all recorded music produced and sold in the US being created by RIAA members. The RIAA traditionally awarded Gold record status to singles or albums that sold 500,000 copies. Platinum awards went to albums or singles that sold 1,000,000 or more and Diamond status was given to singles or albums that sold more than 10,000,000 units.

Digital album sales and streaming have changed the way the RIAA awards Gold, Platinum and Diamond records.

In the new music streaming generation, How does the RIAA now certify Gold albums?

1 permanent download of a single song = 1 paid download

150 streams of a single song = 1 paid download

10 paid downloads of a song = 1 album download

So: 1,500 streams = 1 album sale

*it is important to note that “Only official label/company videos count towards certification, User generated videos do not,” meaning that if someone uses the artist’s music and creates their own, unofficial video, those streams/plays do not count towards certifying an album or single paid download. (info from RIAA)

The RIAA now accepts video plays from video services like Youtube as well as on-demand play sites. Basically on demand play sites that allow the user to pick which songs they want to listen to are utilized (such as iTunes, Amazon Prime Music, spotify, etc.), while plays on services like iHeartradio or Pandora don’t count as the users aren’t able to choose which songs they want to hear. Right now, only streams in the US market counts towards certifying an album, so not all plays on Youtube or other such platforms are counted.  (more info can be found here)

Now that you know how to earn that next (or first) gold album, how much money do you make off of each stream or play?

“The music industry is dead!” This is something that we have heard for years but it is actually true? In 2017, the industry broke all previous earning records with the “Big Three” (Universal Music, Sony Music and Warner Music) earning a combined $14.2 Million every single day from online streaming platforms. (click here for more info)

How much do the artists make on streaming?

Let’s take a look at a few of the leading platforms to see roughly how much each pays a copyright holder per stream. (Link to thetrichordist report on music streaming numbers) Listed in order from highest paying per stream to lowest paying per stream.

Groove (Xbox) music: $0.0273 per stream or 36,630 streams to generate $1,000 [highest payout but the smallest market share at only .65% of all streams]

Rhapsody (Napster): $0.01636 or 61,124 streams = $1,000

Tidal: $0.011 per play or 90,910 streams = $1,000

Apple Music: $.00783 per stream or 127,714 = $1,000 [apple has a market share of 22.3% and is subscription based]

Amazon Music Unlimited & Amazon Prime: $.0074 per stream or 135,135 streams = $1,000 [estimated market share of 3.8%]

Deezer: $.00624 per stream or 160,256 streams = $1,000

Google Play: $.0059 per stream or 169,492 streams = $1,000

Spotify: $0.00397 per play or 251,889 streams = $1,000 [51.51% market share with over 60 million subscribers]

Pandora: $.00134 per stream or 746,269 streams = $1,000 [1.7% market share]

Youtube: $0.00074 per play or 1,351,351 views = $1,000

* see info here

Jason Bost is an entertainment attorney that has spent the last two decades working in various capacities within the recording industry (view his profile here).

You can contact Jason Bost by email or give him a call (973) 200-1111 to discuss your entertainment questions or assistance with entertainment based legal issues.

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