Why Taylor Swift Should Make More Money Than She Does

I was recently listening to a podcast about Connor & Breanna Price who are content creators who create their own music and videos and distribute them through various platforms like TikTok, YouTube, & Spotify (Link below in the comments). This was an excellent interview with this young couple who's managed to build a content business on their own which generates over $240,000 (USD) in revenue a month.

One of the most interesting things that came out of this conversation was that even though Connor & Breanna utilize all of these various platforms (YouTube, TikTok, etc), they make the majority of their revenue from streaming on Spotify.

But how can this be? Haven't we all heard how music streaming services pay next to nothing to artists? In fact haven't some artists (including Taylor Swift) pulled their catalogues from services like Spotify at times in the past because they felt they were being underpaid?

Well if we dig into the numbers a little bit, we can see that maybe streaming is more lucrative then people think.

In the interview Breanna disclosed that they make on average about $4,000 per every million streams on Spotify. According to Spotify, Connor has approximately 7.7 million monthly listeners and they disclosed in the interview that they generate on average about 60,000,000 streams a month. That equates to $240,000 a month in revenue from music streaming for this couple. Not bad at all. And since they do most of the work on their own, they get to keep the vast majority of that revenue.

Now even though Connor and Breanna are making millions of dollars a year off their music, at 7.7 million monthly listeners and 60,000,000 monthly streams, they are still relatively small artists. Let's take their numbers and extrapolate what they might mean for the biggest stars in the world.

Taylor Swift is in the midst of the highest grossing music tour of all time. The Eras tour will likely generate billions of dollars in revenue. However tours are expensive and while we don't know the exact figures, the profit that Taylor Swift will personally keep from the tour will be substantially lower than the headline revenue number. Still it's been documented that touring is the main source of income for artists (link below in comments).

Taylor Swift has almost 100 million monthly listeners on Spotify alone and she is currently generating about 100 million streams A DAY on Spotify (link below in comments). That means that if Taylor Swift received the same payouts as Connor and Breanna (for all we know T. Swift might get a better deal), she would be making $400,000 a day from streaming just from Spotify. That equates to $146 million dollars a year that she is generating, again just from Spotify and not inclusive of Apple Music, Youtube, or anything else.

We don't know exactly how much money Taylor Swift makes as it's private, but Billboard has reported that they think she made $92 million from all sources in 2022 (link below in comments). That would include all touring, all streaming services, merchandise sales, and licensing fees for the use of her music. Clearly there is a huge gap between the $92 million she made from all sources and the $146 million she could have generated just from Spotify. Why is that?

The difference between Connor and Breanna's economics on streaming and Taylor Swift's economics on streaming is the music labels. Taylor Swift's music, and the majority of the economics that go with that music is still controlled by her music label Republic Records. As a result she gives up a large percentage of her revenue from streaming to Republic Records. On the other hand, Connor and Breanna have no label and as a result they get to keep all of the revenue that they generate minus small amounts for various service providers.

In the past music labels were a necessary part of making a living as a musician. They were the gatekeepers to the music industry and could provide artists with distribution for their music and with marketing to promote the artist. While this was essential in the past, this has become less and less relevant in today's world as Connor and Breanna have demonstrated. They are able to distribute their music easily through platforms like Spotify, and they are even able to self promote themselves through their creative viral videos.

Now we can't really compare Taylor Swift's massive operation to Connor & Breanna's small family business. Taylor Swift employs hundreds of people and has much more complexity in her operation. She is also an astute businesswoman and clearly still sees value in being signed to a label. But I wonder how long the labels can maintain such a dominant position in the music industry given the obvious financial benefits of being independent.

If Taylor Swift were starting her career over now, knowing all of the difficulties she's had with music labels (she has had very public spats with her former label Big Machine Records), would she still sign with a label? Or would she instead choose to go the independent route? Ironically Taylor Swift was one of the first artists to really utilize social media to build her fanbase and it can be argued that she was more responsible for her promotion then her music labels ever have been.

I don't think music labels will ever go away completely. Providing an artist with advice on distribution, marketing, promotion, and other aspects of the music business is a valuable service and I think it is likely worth paying for. However the question I have is how much is it worth? And would artists be better off to take back more control from music labels?

In all businesses, the value provided drives the amount of compensation that can be earned. If you create more value, then you can demand more compensation. The music labels could demand huge compensation from artists when they were the sole gatekeepers to the music industry. Artists needed them. They could create a ton of value for them. Nowadays it's becoming increasingly clear that artists no longer need music labels nearly as much as they used to. Artists can recreate that same value on their own or with lower cost service providers.

Given this dynamic I think it's likely that music labels will gradually lose market share, particularly as technologies like AI make it easier to create and produce new music. While this is definitely beneficial for artists it will likely also improve the economics of music streamers like Spotify, as the value of providing a platform to distribute on is still very important. Spotify should be able to command fair compensation for that value they're creating for independent artists and with much less of the pie being taken by labels, Spotify should receive a more even distribution over time.

One thing is already clear though, streaming is much more lucrative then even Taylor Swift thought, and musicians who perceive they are not making enough money off of streaming might need to consider why that is. The blame may lie with their music labels and not with the streaming services like Spotify.

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