Streaming royalties confuse most artists because the rate is not fixed — it changes every month based on platform revenue and total streams. Here is exactly how the calculation works.
There is no fixed per-stream rate
The most common misconception about streaming royalties is that there is a fixed rate per stream — that Spotify pays exactly $0.004 per play, or Apple Music pays $0.007. These figures are averages cited in industry commentary, not published rates. The actual royalty you receive per stream varies every single month, because it is calculated using a formula that depends on total platform revenue and total platform streams — two variables that change constantly.
The pro-rata model
Most major streaming platforms use a pro-rata royalty model. The calculation works as follows: the platform pools all its royalty-eligible revenue for the period (subscription fees and advertising income, minus platform costs and rights holder advances). It then calculates what share of total streams each recording accounted for. Each rights holder receives that share of the total pool.
A simplified example
If a platform has £10 million in royalty-eligible revenue in a given month, and 10 billion total streams occurred, the pool per stream is £0.001. If your tracks accounted for 10,000 of those streams, your total recording royalty from that platform for that month is £10. The per-stream rate in this example is £0.001 — but in a different month, if total streams increased without a proportional increase in revenue, the rate would be lower.
Recording royalties vs publishing royalties from a stream
Each stream generates two separate royalty pools:
- Recording royalty — typically 55–65% of the total royalty pool goes to recording rights holders. This is passed to your distributor and then to you.
- Publishing royalty — typically 10–15% of the total royalty pool goes to songwriting rights holders. This is split between a performance royalty (collected via PRS) and a mechanical royalty (collected via MCPS).
Why your per-stream rate changes month to month
Your effective per-stream rate is different every month because: total platform revenue changes (advertising revenue fluctuates seasonally; subscriber numbers change), total platform stream volume changes, and the mix of free tier (advertising-supported) versus paid tier streams affects the rate. Paid subscribers generate higher royalties per stream than free tier users. An artist whose audience skews toward paid subscribers on a high-revenue platform will see a higher average rate than one whose audience is predominantly free tier.
The user-centric model: an alternative
Some smaller platforms — notably Tidal and Deezer — have moved toward a user-centric payment model. Instead of pooling all revenue and distributing based on total stream share, each subscriber's subscription fee is distributed only to the artists that subscriber actually listened to. This benefits artists with dedicated listeners rather than those who benefit from passive playlist streaming. It is a meaningful philosophical difference but currently only relevant for a small portion of total streaming income.
What the per-stream rate does not tell you
Focusing on per-stream rates misses the larger picture. The most significant variable in your total streaming income is not the per-stream rate but whether all three royalty streams from each play are being collected: recording royalty (via distributor), performance royalty (via PRS), and mechanical royalty (via MCPS). Many independent artists are collecting only the first of these. The per-stream rate might be £0.003, but the total royalty value of a stream when all three components are correctly collected is meaningfully higher.
If you want to understand how much of the total royalty value of your streaming activity you are currently collecting, our free Catalog Assessment will give you a clear and honest answer.