Image credit: Peloton
It may come as a surprise but the top two streaming services for paying artists are Facebook and Peloton.
In recent months the discussion around streaming payouts has been ramping up, the UK even had an inquiry into how much streaming services pay artists, which has lead to calls for a “complete reset” in how payouts work. Spotify has also been under scrutiny in regards to how much they pay artists and how it works, this led to the streaming giant releasing ‘Loud & Clear’ a website dedicated to making their payout process more transparent.
The rate which streaming services payout varies between platforms, and surprisingly the two that payout the highest per stream are Facebook and Peloton. Peloton is the most surprising, paying out 3.1 cents per stream, beating Spotify, Apple Music, and Tidal. However, it is worth noting that their payout has decreased over the years, in 2017 they paid 5 cents per stream, and in 2018 they paid 4 cents.
Peloton, although paying higher rates has a significantly smaller catalog of music, with over 1 million fully licensed tracks. This is no doubt because the product is an indoor cycling bike first, and a music player second. The smaller may also be due to the cost of licensing music, something the company has been in hot water for. They were sued by the National Music Publishers Association (NMPA) for a whopping $150 million dollars for using tracks by Drake, Lady Gaga, and more.
As you’d expect music is a core part of the Peloton experience with many classes having you cycle to a beat, or used for motivation. Peloton explains: “Members consistently rank the music we provide as one of their favorite aspects of the Peloton experience.”
They also said in one of their 2019 quarterly reports that: “Our subscription cost of revenue generally increased each quarter as a result of increases in music royalties, streaming, and platform costs.”
The question still remains though, how does Peloton manage to pay significantly more than established streaming services? A recent statement from the company explains: “With respect to musical compositions, in addition to obtaining publishing rights, we generally need to obtain separate public performance rights.” It’s these public performance rights that generate the higher per-stream payout rate. In addition to this Peloton also has deals with BMI, GlobalMusic Rights, and SESAC.