More Streams, More Money?: Music Artists Fight for Fair Royalties from Streaming Services

Article by Renesha Poole | 783 words

Music streaming services such as Pandora and Spotify are more popular than ever before thanks to their low cost. All that is required of their users is the creation of a free profile, unless the user chooses to register for premium music streaming with a small fee. With that, music from thousands upon thousands of artists is made available to them.

Streaming Services

Credit: MaximumPC.com

Free is the operative term here. If you ask Taylor Swift, music shouldn’t be free and, in fact, free music undermines the true value of music. She says in her piece for The Wall Street Journal that “Music is art, and art is important and rare. Important, rare things are valuable. Valuable things should be paid for. It’s my opinion that music should not be free, and my prediction is that individual artists and their labels will someday decide what an album’s price point is. I hope they don’t underestimate themselves or undervalue their art.” She’s not alone: many artists have come forth and expressed the opinion that music streaming services have shortchanged them.

A Music Artist’s Small Slice of the Streaming Pie

To better understand music artists’ frustration, you first have to understand how music streaming services work. They use a system called a pari-mutuel royalty system. In the system, all the money the service earns from streaming music goes into a pool, and the service take a percentage off the top. The exact percentage varies among companies. Whatever is left over is distributed to artists based on their share of overall plays. So the more you play your favorite artist’s music, the more the artist earns, right?

Not exactly. Everyone has their hands out when it comes to music royalties. Over 70 percent of what an artist earns from music streams goes to the record label, publisher and distributor. In a joint study conducted by the French trade group SNEP and the public accounting firm Ernst & Young, it was found that major record labels are pocketing nearly seven times the licensing revenue than music artists collect.

On TechHive.com, Paul Lilly gives a very detailed breakdown of what this means money wise for music artists. He explains that major labels take nearly 45.5 percent of money earned from music plays while artist takes only 6.8 percent. Songwriters and publishers split 10 percent and the rest goes to platform costs and taxes.

Lilly offers another way to look at how money from streaming services are distributed. He writes, “If you think that’s bad, it gets even worse when you examine the split after taxes and digital platform fees are paid. Breaking it down that way, labels stuff their purses with 73.1 percent of the payouts, songwriters and publishers split 16 percent, and the artists keep just 10.9 percent.”

How Music Artists have Reacted to this Trap

Singer and songwriter Aloe Blacc reiterates Swift’s sentiments in his piece for Wired Magazine. He explains that musicians, especially songwriters, are backed into a corner when it comes to music royalties from streaming services. “By law, we [songwriters] have to let any business use our songs that asks, so long as they agree to pay a rate that, more often than not, was not set in a free market. We don’t have a choice. As such, we have no power to protect the value of the music we create.”

Blacc co-wrote the Avicii hit “Wake Me Up!”, which was the most-streamed song in Spotify history and the 13th-most played song on Pandora since its release in 2013 with 168 million streams in the US alone. Yet, the song only grossed roughly $12,000 in Pandora domestic royalties. Blacc received an even smaller sum (exactly $4,000) since the money was split among himself, two other songwriters and the publisher.

Simply put, music streaming services aren’t good business for music artists, and they are letting it be known. Angered by the royalty system set in place, Swift picked a bone with Spotify. She demanded that her music be available only to users who have a paid subscription. When Spotify failed to oblige, she removed all of her music from its streaming service. Songwriters, though, do not even have this ability to bargain with streaming services.

As more music artists take a stand against unfair royalty payout, there’s a possibility that less music will be available on streaming services. Understandably, it will be disappointing, but music artists deserve more money than what they receive from streaming services. The other parties involved—record labels, publishers and distributors—shouldn’t be so eager to take unfair amounts of money from artists either. Streaming services should respect artistry by upholding music’s worth in dollars. After all, without music artists, there is no music.

More To Read:

Leave a Reply

Your email address will not be published. Required fields are marked *