Music

Here’s How Taylor Swift Gets Paid

Not from Spotify.

Jamie McCarthy / Getty Images

Taylor Swift shocked fans and industry insiders this morning when she pulled all of her albums from the popular music-streaming service Spotify. But it wasn’t the first time Swift demonstrated that she apparently doesn’t think much of streaming — her latest album, 1989, was never released to streaming services and her 2012 album, Red, wasn’t available to stream until months after its release.

“Music is art, and art is important and rare,” she wrote in an op-ed for the Wall Street Journal earlier this year defending the value of music in the internet age. “Important, rare things are valuable. Valuable things should be paid for.”

Swift, of course, is coming from a special vantage point. In March of this year, Billboard named her the highest-paid musician in America, with estimated 2013 earnings of nearly $40 million. While leaving Spotify may be a blow to her pro-streaming fans, it’s not likely to put a dent in that hefty bottom line.

Here’s where Taylor makes her real money from, in ascending order of estimated value.

Spotify and other streaming services.

While Spotify’s formula for paying royalties is more complicated than a simple pay per stream, rights holders generally make between $.006 and $.0084 per stream. Rates at other streaming services like Rdio and Beats Music are comparable.

Merchandise

From keychains to sweatshirts, there’s a thriving industry of Swift-branded merchandise. Billboard estimates she sells $17 of merchandise per ticket at her shows, helping bring in an additional eight figures per year.

Endorsements

Over the years Taylor has signed a number of high-profile endorsement deals. She currently shills for Keds, Elizabeth Arden, and Diet Coke. While the details of these agreements have never been made public, they’re likely worth tens of millions collectively. As a point of comparison, Beyoncé did a single deal with Pepsi in 2012 worth $50 million alone.

Digital and Physical Record Sales

For iTunes, Apple takes a 30% cut of every sale. The remaining 70% is split between Taylor and her record label, Big Machine Records. While there’s no way to know the exact breakdown, artists typically receive 12% to 20% of sales. Swift’s take would be on the higher end of that scale or even higher, given her privileged negotiating position as the flagship artist of her label, Big Machine Records.

Physical retailers take roughly 30% of the suggested retail price. Again, the remaining 70% is split between Taylor and her record label, Big Machine Records.

Publishing and Licensing

As a writer or co-writer on the vast majority of her songs, Swift earns both mechanical and performance royalties through her publisher, Sony/ATV. Mechanical royalties mean that Taylor and her co-writers split an estimated 9.1 cents per song on every album sold, which, in the case of a 13-song album like 1989, amounts to $1.17 per album.

Swift is also entitled to performance royalties whenever a song of hers is played on television or the radio, the rate of which varies depending on whether it’s terrestrial radio, satellite radio, or internet radio. Additionally, she receives a licensing fee and royalties on occasions when a song of hers is used in a film or advertisement.

Touring

Since 2009, Taylor has headlined three tours. Her most recent, the Red tour, grossed a record-breaking $150 million at the box office, with Taylor herself taking home an estimated $30 million in the first six months alone. Previously, her Fearless tour and the Speak Now world tour made $63 million and $123 million, respectively.

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