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

[MacRumors]

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).

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.

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

 

[fwmireault]

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

 

[captain cadet]

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

 

[captain cadet]

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

 

[robertcoogan]

Maybe a fairer balancing of monies earned from the music, perhaps? I never thought it would come to this, but the EU (and, *ahem* Britain) seem to be leaps and bounds ahead of the US in this department.

 

[Duncan-UK]

Do the record companies still deduct an amount for "breakages" from artists royalties?

 

[captain cadet]

Maybe a fairer balancing of monies earned from the music, perhaps? I never thought it would come to this, but the EU (and, *ahem* Britain) seem to be leaps and bounds ahead of the US in this department.

I mean it appears that both are trying to look more moral than the other after Brexit... just that I will bet whatever will eventually come out of this will be in the record labels favour

 

[captain cadet]

Do the record companies still deduct an amount for "breakages" from artists royalties?

Yes - a friend of mine in music said that label contracts start as low as 5% of sales...

 

[Remy149]

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

This might finally be the thing to force apple to do a price increase. However since it’s primary purpose is to bring value to the apple ecosystem as a whole it will be safe regardless of profitability

 

[Remy149]

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

Considering a majority of users will never benefit from lossless and it doesn’t require much for the services to actually offer it. I doubt that will be the thing to drive up cost industry wide. In fact apples move pushed the industry away from up-charging for it.

 

[-DMN-]

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.

 

[Phogro]

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

For Apple I don't think Apple Music needs to be a profit generator for them it's more about getting and keeping people on iOS (even though it is available outside of iOS). This is definitely the thinking that went into releasing lossless without increasing the price / adding a new tier of pricing.

The other point that ties into this is that competition is so strong right now that it's really difficult to raise your price. The biggest difference between music and video (where Netflix has successfully raised their pricing) is lack of original content. It's really hard to raise your price when you can get 95% the same content on the competition's service.

 

[contacos]

i am actually surprised the music subscriptions have not gone up in years unlike tv/movie streamers. They are all still sticking to the 9,99 price for a single user no? I am sure once someone starts, the others will follow but so far no one seems to dare.

 

[kc9hzn]

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.

 

[ddtmm]

It's good that Apple pays more to artists than most services but it's still pretty dismal. Even Peloton pays over 4x as much to artists than Apple does.

 

[danmart]

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.

 

[sw1tcher]

MPs proposed that royalties should be split evenly between labels and artists, instead of the average current rate where artists receive around 16 percent.

The labels took the risks and created their businesses. If the artists don't like the royalty split, then they can go sign with another label or create their own label and distribution channel that would allow them to keep a larger portion of the royalties in the same way that if app developers don't like Apple taking a 15%-30% cut from App Store sales, then they can go develop their own smartphone, OS, and app store.

Did I get that right?

 

[kc9hzn]

The labels took the risks and created their businesses. If the artists don't like the royalty split, then they can go sign with another label or create their own label and distribution channel that would allow them to keep a larger portion of the royalties in the same way that if app developers don't like Apple taking a 15%-30% cut from App Store sales, then they can go develop their own smartphone, OS, and app store.

Did I get that right?

Plenty of indie musicians do self-publish, and bands do change over conflicts with their labels. It’s considerably easier than creating your own smartphone platform! So that’s a bit of a sarcasm fail, sorry…

 

[dannyyankou]

Doesn’t Apple pay the highest royalties out of all of them, by a large margin?

 

[w5jck]

Sounds like an industry issue, not so much a government one. Government should ensure someone gets the proper royalties, but the industry needs to come up with who gets what. If artists are getting stiffed, then they need to consider dumping the old school record studios and start their own. Why do they need record studios these days anyway when most of the songs are sold and distributed in digital formats, and then streamed? Seems like the record industry has outlived its life expectancy. Maybe the artists need to form coops to pool their resources to produce and distribute their own work rather than be lazy and pay the big boys to do it for them. But the change should initiate with and come from within the industry, not through more government red tape. It is hard to believe the artists are starving, considering how they parade around flaunting their wealth, but if they are, then THEY need to change their industry. This is 2021, not 1960 after all.

 

[Expos of 1969]

Doesn’t Apple pay the highest royalties out of all of them, by a large margin?

I believe they pay the highest but it still goes to the rights holders who pass it down as per contracts. So I guess we can say that Apple does the best towards the artists but from what I understand, it is still quite poor. The way the streams are pooled is part of the problem.

 

[Mansu944]

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.

Yeah it sucks how much concerts cost though. I miss the days of $10 & $20 concerts.

 

[Mousse]

I'm siding with the streaming services on this.

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.

Record labels have long stiffed artist royalties. The sad part is the labels are the one dictating the direction of music today.? I miss the old days when we had real music and singers place greater emphasis on music rather than theatrics. Today's music all sound like noise to me. It's only worth watching on TV, YouTube with the volume turned down.?

 

[Expos of 1969]

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...

 

[supercoolmanchu]

Apple Music and Podcast streaming rates should be the same 70/30 split as what app developers get on the App Store.

Apple needs to get correct on this.