Digital Service Provider Fee
Commission percentage taken by streaming platforms and digital retailers from gross revenue before distributing payments to rights holders.
Definition
Digital service providers like Spotify, Apple Music, and Amazon Music retain platform fees from subscription and advertising revenue before distributing remaining funds to music rights holders. These fees typically range from 15-30% of gross revenue.
Platform fees cover operational costs including technology infrastructure, marketing, user acquisition, and content moderation. The remaining revenue pool is distributed to rights holders based on streaming market share and platform-specific calculation methods.
Why It Matters
Understanding DSP fees helps artists and labels accurately calculate streaming revenue potential and evaluate the true value of playlist placement and promotional opportunities across different platforms.
Platform fee structures vary significantly between services, affecting total payout amounts and making some platforms more profitable than others for artists depending on their listener demographics and engagement patterns.
Examples in Practice
Spotify retains approximately 30% of subscription revenue for platform operations, distributing the remaining 70% to rights holders based on pro-rata streaming share calculations within specific markets.
Apple Music's fee structure differs from Spotify's, offering slightly different payout rates that can result in varying revenue amounts even with similar streaming numbers across platforms.
YouTube Music combines advertising and subscription revenue streams with different fee structures for each, creating complex payout calculations that vary based on how users access specific content.