Here’s How Much iTunes Radio Pays Record Labels

iTunes Radio has been around since mid-September, and record labels are starting to get their first royalty statements. I’ve seen numbers from a number of labels, and they’re edifying.

iTunes Radio is only available in the United States for now, with other countries coming soon, so the user base is much lower than it will be in, say, a year. Rumors suggest that this service will hit other shores sometime in early 2014.

So, how much do record labels earn? Here’s one example, from a mid-sized classical record label, with a fairly extensive back catalog. Classical music is certainly less popular on iTunes Radio, so it’s hard to apply this to pop music; This might match a small pop label’s numbers. (I’ve altered these numbers slightly, keeping the same amount per play, so the label cannot be identified.)

For 500,000 plays, the label earned a total of $350. The data they get shows plays per track, and one track had around 10,000 plays, for a total of about $7. One album accounted for 70,000 plays, presumable because it was featured on one of iTunes’ curated radio stations.

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It should be noted that this is money paid to record labels, not artists (performers, songwriters, etc.). Just as Spotify does not pay artists directly, this money is divvied up by the record labels. They keep part, as owners of the recordings, and pay part to performers, as well as to copyright holders for works not in the public domain.

Even if iTunes Radio usage increases drastically, and this label gets, say, 5 million plays a month, they’d still only earn $5,340 per month, minus costs paid out to performers and/or rights holders.

For the label used in this example, it’s safe to say that, after they’ve paid out everything that they don’t keep, their monthly payment is likely to be less than their accounting costs to manage it.

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