From an upcoming article: How to Make A Million-Dollar Song
Here are some fun facts about streaming for you. Put aside sync, live, backend, taxes/net, costs, (and kind of publishing), we’ll get into a breakdown later – here’s what it would take to make $1m on streaming alone if you owned the master/pub rights, were the artist, and had minimal cost distribution.
There is a term called ESR “Effective Streaming Rate,” this is the rate per stream that you average across all DSPs. Now, Spotify and Apple are the dominant sources, and kind of Amazon music – although that is disputed, and we are leaving out YouTube as is not pure play pay, the rest are also-rans in terms of financial inputs of streams. So, having said all of that, we got a really good peek into what the ESR is for top line artists during Katy Perry’s “Dark Horse” trial.
“Dark Horse was streamed 1.8 billion times generating $9.9 million in revenue”
That puts her ESR at .055
So, to make a million dollars you would need to generate 18,181,818 streams. Let’s call it 18.2 million streams.
This would probably breakdown to 10m on Spotify 6m on Apple/Amazon and roughly 2m on Pandora et al.
But, your ESR isn’t .055, in fact, you probably do not know what you ESR is.
I’m sure you’ve heard the .05 number tossed around.
So, if your ESR was .05, how many more streams would you need to hit that million mark? 2 Million more. 12% more. You’d need about 20m streams! That’s right, that little 5 next to the .05 accounts for a full 2 million more streams – or more than most of us will ever get in our lifetime.
But wait, that .05 is not correct at all. Chances are your ESR is actually closer to .0455 – which, would mean you’d need another 2 million streams for a total of 22 million streams to reach a million-dollar song.
Are you starting to see why every fractional penny matters in the digital game?
But, wait, there’s more!
According to the Trichordist – your ESR is probably .04 at most, and depending on whether you have your music on ALL interactive and non-interactive services it may be as low as .037
So, doing the math again…
.04 ESR – you would need to generate another 3 million streams for a grand total of 25,000,000 streams to generate a measly pre-tax $1,000,000 before costs.
That means you’d need 8 million more streams (an increase of 44% more) than Katy Perry does to generate the same million dollars.
This is why every partial penny counts. This is why ownership matters. Take away any piece of that ownership puzzle and you’d need to generate 3 times more.