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Musicians: How to Receive More Money for Each Track Sold

TL;DR: Musicians can make more money for each song sold by reaching out to their payment processor. After giving some context this article explains how to go about it.

I’ve just finished putting together the tenth NHAM mixtape which will be released on April 1st. In doing so it occurred to me that when I pay the small fee of £/$/€1 to buy a single track from an artist, no matter what fee the platform fee is (even it’s nothing as could be the case with Mirlo (@mirlo) or on promo days on some platforms), it is likely that at best only two thirds of that would make it to the artist anyway!

Why? Because the payment processor takes a ‘small cut’ of each transaction. The trouble is, that ‘small cut’ is not small in percentage terms when the transaction is so small. Roughly speaking the payment processors’ small cut is something along the lines of 3% plus 30p / 30c per transaction. That 30p / 30c is only 3% for a £/$/€10 purchase (and less for greater) but of course it’s a whopping 30% for a £/$/€1 transaction.

This poses a problem for musicians when £/$/€1 is standard price for a single track.

So last week I had a chat with @benpate at Bandwagon, aware that he is looking to set up the payment feature on Bandwagon imminently. I wanted to see if we could find any kind of remedy or solution before he began implementing a payment feature in to Bandwagon.

I had already had a sniff around but the best kind of solution I could find was digital wallets, which wasn’t ideal because you’d be requiring the buyer to take the effort to set up an account with the digital wallet platform. Not ideal.

Then Ben told me about ‘micro transactions’ being a buzzword in the industry. As such I added that to my searches and found that hidden deep in the back pages of the major payment processors was information that they do give exemptions within certain ‘markets’ for sellers to be eligible for micro transaction fees.

I was curious as to whether the music industry might be one of those ‘markets’. The two major payment processors used by most fair music platforms appear to be Paypal and Stripe. Paypal’s small print said you’d need a Business Paypal account before you could request eligibility for micro transaction fees. Stripe were ambiguous, saying to reach out to support with questions about availability.

What are micro transaction fees?

Micro transaction fees are where smaller purchases (e.g. a single purchase lower than £/$/€5) are given a different transaction fee where a few more percentage points are added but the flat fee comes down to something like 5p / 5c instead of 30p / 30c.

For a musician selling a song at £1 this means a difference of losing 10p (5% + 5p) instead of 33p (3% + 30p) per transaction*.

*Please note that the actual amounts I’m giving in this article are for illustrative purposes only and the actual rates can vary slightly between different payment processors as well as for different currencies.

How can musicians register for micro transaction fees?

Stripe

This is how I managed to obtain micro transaction eligibility for my personal Stripe account. I hope any musician with a Stripe account is able to follow this same process to achieve the same:

First I went to Stripe live chat and chatted for 15-20 minutes with a support client. I said I’m a musician hoping to sell songs for £1/$1/€1 at a time and wondered if music sales was a market that could be considered for micro transaction rates as a result.

They asked me to wait while they raised it with the specialist team before saying someone would get back to me within 24 hours. I’d had no response in three days at which point I replied to the email with the chat transcript that had been sent to me after the chat finished. I asked whether anyone had tried to reach me because I’d not yet received anything. Later that day the positive response came:

Hello Sam,

I’m pleased to inform you that the micro-transaction fees have been successfully applied to your account. The new rates should be reflected in your account within the next 24 hours.

The rates are as follows:
Transactions under £5: 5% + £0.05
For all other transactions, standard rates will apply.

If you have any questions or need further assistance, please don’t hesitate to reach out!

Best regards,
[Stripe Support]

So that’s it! If I ever sell a song for £1 I’ll only lose 10p to the payment processor instead of 33p.

Paypal

As I don’t have a Paypal Business account I didn’t try this with Paypal but it does look like a similar process for them. As per this page you’d need to contact their customer support team to apply for the micro transaction arrangement. Follow the same method as above for Stripe and hopefully you’ll be eligible.

Best of luck to all musicians out there hoping to make a little more from each track sold. Let me know how you get on by replying to/commenting on this post. It will be interesting to see whether we’re deemed eligible across the board or if there will be some cases where other musicians are deemed ineligible.