How Cheap Music Works.
In today's digital age, music feels virtually free. However, the low cost of streaming music comes at a cost largely invisible to listeners but deeply felt by artists, big and small. The economics of subscription-based music streaming are woefully detached from the economics of making and recording music. Even at the most modest level, creating professional-quality music requires significant investment. Let's break down the numbers.
These costs include recording time, mixing, mastering, session musicians, and, if they’re fortunate, basic marketing. Streaming rates are based on Spotify's 2024 per-stream rate of $0.003-$0.005.
The Real Cost of Recording Music
A professional-quality album (roughly one hour of music) typically costs:
Independent Artist: $5,000 - $15,000
Mid-Level Studio Production: $25,000 - $50,000
Major Label Production: $100,000 - $500,000+
The Average Music Listener
Streams about 30 hours of music per month
Pays about $10-$11 per month for a subscription
Which comes out to roughly $0.33-$0.36. per hour of music
The Real Cost of Listening?
Between $150,000 and $15 Million in recording costs per 30 hours of music.
$1.50 to $2.57 paid to the artist per 30 hours of streaming.
Equalling $0.05-$0.08 per hour of music streamed on Spotify.
You might wonder why we pay so little for streaming subscriptions. The answer is simple: cheap subscriptions sell.
Let's look at some quick history to understand how we got here. In the early 2000s, as high-speed internet, MP3s, and music piracy converged, Spotify developed its streaming model. Their initial plan was to offer free, ad-supported music to listeners. However, they faced a major obstacle: they didn't have the right to use the music. While this was a significant setback, the music industry—pressured by rampant piracy—was in a vulnerable position. Ultimately, Spotify negotiated a deal with the labels by introducing a premium subscription option.
Twenty-plus years later, here we are. Spotify's premium tier subscription service represents less than half its monthly active users. That means that over half of the people who listen to music on Spotify - roughly 402 million users - do not pay for it. Instead, they are subsidized by ad revenue, which not only represents far less than income, but these streams pay out even less.
The economics of this model have created a troubling incentive structure for the creation of music. Because artists need massive numbers of streams to generate meaningful income (and come anywhere close to paying for the cost of recording), many are forced to optimize their music for algorithmic success rather than artistic merit. This has led to the rise of what we might call "cheap music" to complement the cheap streaming model - songs specifically engineered to game and thrive in this system. The result is music that disproportionately benefits the streaming services, not the artists.
The democratization of music that streaming promised was built on the mechanisms of capitalism, where a business owns the means of production and operates that for a profit. While the streaming sites own the means of streaming, they do not own what is really being paid for - the music. Spotify's and others' sole goal is to maximize subscriptions, which actually has little to do with music. The two parties involved do share the same interests.
For this model to truly work for streaming services, it needs cheaper music. However, for this model to truly work for dedicated artists and musicians, it must pay more.
This dynamic of market-maker-meet-music-maker is at the heart of today’s music industry. Ultimately, streaming providers use their surmountable lobbying power to influence the laws that dictate what they pay artists. This threatens the foundation of musical creativity for independent and label-backed artists who are pressured to create faster, cheaper, and more in line with the streaming provider's bottom line. In the case of Spotify, they are actively pitting manufactured music against real artists. This creates a vicious cycle in which the universal connection of music is distorted for corporate benefit under the guise of uplifting artists.
Consider Your Listening.
Every time we expect music to be virtually free, we're contributing to a system that makes it harder for talented artists to create the very music we love. While removing yourself from this system is incredibly difficult, you can make a difference!
Direct Support: Consider supporting our mission, where your contribution goes directly to helping musicians create new music
Buy Music: Purchase albums and merchandise directly from artists or through Bandcamp.
Tip musicians: If you see a busker or musicians at a restaurant or bar, show your appreciation of music.
Spread Awareness: Share this reality with other music lovers - many don't realize the true cost of music production
Attend Shows: Support live music when possible - it's often the most direct way to help artists.
