Music Streaming Services Point to Labels in Inquiry into Unfair Artist Royalties

Royalties from music streaming services, including Apple Music and Spotify, are weighted unfairly against artists, according to a committee of Members of Parliament in the UK (via BBC News).

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An investigation by the UK parliament's Digital, Culture, Media and Sport (DCMS) committee into music streaming found that artists see "pitiful returns."

The committee called for a "complete reset" of the market in the UK, with artists being given a "fair share" of record label earnings from streaming. All of the money streaming services currently pay goes to rights-holders, who then pass on a small share to artists. Labels and publishers currently keep the vast majority of profits.

MPs proposed that royalties should be split evenly between labels and artists, instead of the average current rate where artists receive around 16 percent. Other recommendations included new legislation that allows musicians to reclaim the rights to their work after a certain period of time, improves artists' rights to adjust contracts, and increased transparency about how much money is flowing from streaming services.

The British Phonographic Industry (BPI), which represents the recorded music industry in the UK, said that streaming was "enabling more artists than ever" to earn a "long-term, sustainable income" and that any new policies should be properly examined to prevent "unintended consequences for investment into new talent."

The music industry's three major labels, Sony, Universal, and Warner Music, warned that any disruption could damage investment in new music and argued against the idea that streaming was comparable to radio, where artists already receive an equal 50/50 royalty split.

Representatives from streaming services, on the other hand, were not directly opposed to changing the royalty system but noted that 70 percent of their income already goes to labels, publishers, and artists, suggesting that it should be labels who reduce their share of royalties to give more to artists. Nevertheless, ‌Apple Music‌'s Global Senior Director of Music Publishing, Elena Segal, cautioned:

It is a narrow-margin business, so it wouldn't actually take that much to upset the so-called apple cart.

‌Apple Music‌ is believed to pay better royalties than Spotify and YouTube, which made it less of a focus for MPs, who were more concerned about the fact that YouTube accounts for 51 percent of music streaming while contributing just seven percent of music industry revenue.

The committee also said that streaming services should ensure that curators who make playlists adhere to a "code of conduct" to avoid bribes and favoritism toward certain artists that could lead to some music being unfairly overrepresented.

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Top Rated Comments

captain cadet Avatar
10 weeks ago
Media is basically the lowest Demonitor - people like media but do not seem to be willing to pay for it.
This appears that most of the money is going towards the Record labels themselves, with very little regard to the actual artists themselves. It's just artists are getting further screwed due to pay-per-play where ~100 streams = 1 purchase

Legislation should focus on the split of royalties more than streaming service as the problem
Score: 10 Votes (Like | Disagree)
kc9hzn Avatar
10 weeks ago
The artist pay issue predates streaming, royalties for music recordings have always been poor. Unless this inquiry leads to changes in compensation rates for physically distributed music, then it’s another “new media bad” or “foreign businesses bad” situation. That last angle is seldom explored, but I think one of the next major political and economic issues of the next couple decades is going to be digital protectionism.

But, for years, it’s been a general rule that artists make their money from touring and live performances. The artist that doesn’t tour is the poor artist. In a certain sense (that’ll seem almost perverse to most people, based on how we usually view this issue), this seems almost fair. It’s the label that makes an ongoing expenditure on the music, not the performer (maintaining copyright and the issues that come up with legal rights holdings, reissuing albums in newer formats, ongoing promotion of tracks and albums, re-printing albums that have gone out of print [less of an issue in digital, but the vinyl resurgence suggests it’s still a going concern], and, much like in any employer-employee relationship, the label takes the brunt of the economic risk of an album [a poor performing album won’t directly bankrupt a performer, but it CAN bankrupt a label]). Additionally, if I perform work for a company and leave for another opportunity, even if the work I performed for the first company results in greater profit, I generally don’t get paid for that, and that’s common for most professions. But because the performer is the public face, we identify more with them than the label. Anyway, touring is far more lucrative because of the merch sales that accompany the tour, the direct pay for time worked, the difficulty in accurately bootlegging a live performance (a live stream is not the same thing as the real deal, even a professional live stream). Touring/live gigs is even more important for self-published indie groups, for all those reasons, and because it’s their major promotional channel, and this despite the fact that they have full legal rights to their music and directly earn the money that would usually be the label’s cut.
Score: 8 Votes (Like | Disagree)
captain cadet Avatar
10 weeks ago

This kind of legislation would definitely bury Spotify (who already have relatively narrow margins), but Apple Music could afford it with a slight price increase I guess
I mean I would not be surprised if generally streaming goes up in cost soon - similar to how everyone announced on the same day they were going to support lossless
Score: 5 Votes (Like | Disagree)
Expos of 1969 Avatar
10 weeks ago

Yeah it sucks how much concerts cost though. I miss the days of $10 & $20 concerts.
I miss the $7.50 days. One of my first concerts in Montreal...




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Score: 5 Votes (Like | Disagree)
danmart Avatar
10 weeks ago
The full article is worth a quick read if you can access it (I’m in the UK). The Select Committee isn’t massively critical of the streaming providers, they are focussing on the publishers.

There is also an interesting infographic showing the change in revenue mix by format over the years, too.
Score: 4 Votes (Like | Disagree)
TVOR Avatar
10 weeks ago

As a full-time music producer/engineer myself, labels aren’t necessarily screwing over artist, that’s not to say they don’t have their fair share of greed like all large corporations. Labels offer larger advances in exchange for smaller royalties percentages, you can also just have a publishing deal with a label and keep a much higher percentage of your royalties. At the end of the day you could still be a successful independent artist, it’s not like labels are the GATEKEEPERS to making any sort of income in the music industry.
As an ex full-time producer I couldn't agree more! Yes...as you said there are good deals and bad deals, but on the whole, the deals where the artists get low percentage splits are where there have been large advances so that's a big financial risk for them as they have no idea what the income will be like. If you are Rihanna then you probably get a fairly substantial advance and a good royalty because you are somewhat of a known quantity. But if you are a new artist in your first deal, it's a huge risk for the record label so the risk/reward ratio will be tipped heavily in their favour.

The other thing is that people are acting like these poor, oppressed musicians are forced to sign to a particular label at gunpoint or something! They all have the choice not to sign a particular deal. If they feel that the deal doesn't give them what they want then don't sign it! It is analogous to going for a job interview, being offered a job for a lower salary than you were hoping, accepting said offer, and then bleating about it on social media to try to bully the company into paying you more! And I am sure that some people reply that that's OK if you have choice but when there is some kind of industry-wide collusion and price fixing then you don't have the choice to say no. Actually...you do...if no labels are offering you the deal you want then go the DIY route (as you suggested) or...and you might want to sit down for this...perhaps consider that you don't have what the labels want and therefore they aren't prepared to take the financial risk...you know...perhaps consider that you aren't actually entitled to a record deal on the terms that you want and either accept what you are offered or go do something else...

Just saying....
Score: 4 Votes (Like | Disagree)

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