The past year has seen the whole world come to a standstill as Countries entered lockdowns to slow and stop the spread of the COVID-19 virus. Businesses have had to close their doors for the duration, and in some unfortunate cases, for good. In the music industry, festivals, events and clubs had to close their doors. Artists have seen a dramatic loss of revenue, with many relying on gigs as their primary source of income.
However, there has been a positive trend in increasing digital streams, online performances and virtual events, but with a handful of companies controlling music royalties distribution, are they all paying the artists their fair share?
Pay Per Stream Services
Digital music streaming became more and more popular since its introductions many years ago. The freedom to listen to music and DJ sets without paying for the privilege has become the norm. We all know of the streaming services such as Spotify, Soundcloud and Apple Music, but just how much of the revenue they make each year goes to the artists, and how has the global lockdown affected their profits? Public statistics will show us that the three leading players in the digital music world have dramatically increased their revenue over the last year.
Currently, the most famous music streaming company, Spotify, has recently come under fire, with protests over the pay-outs of its artists. The last few years have seen massive growth in the company, with paying users leaping from 124 million to 155 million from 2019 to 2020 and has more than doubled since 2017 (Business Of Apps). In terms of what the artist makes in royalties, it is pretty shocking; Despite having over 70 million songs in its library, stats show that only 13,400 artists made over $50,000, and below that, only 185,000 artists made $1000. Compared to the $9.4 billion the company made in revenue as of 2020 (Spotify Quarterly Results), these stats pose the question, is Spotify paying its artists fairly?
The oldest of the three companies that lead the streaming service market has grown over the years, becoming a named force within the industry. The streaming service has become more and more popular by linking its music service with the online store accounts. But when looking at the stats, its artist pay-outs compare to the low rates that Spotify pays. A recent study shows that Amazon Music pays its artists $0.004 per stream, which according to Music Gateway, would require artists to hit at least 366,169 streams to earn a monthly wage in the US. A measly increase from Spotify’s going rate, but still far from what artists deserve.
The second-largest streaming service, Apple Music, has recently published what it pays artists and royalty holders. Using the same pay per stream model as Spotify, but with a few caps on the top tier artists, the company looks to pay a fairer rate than its most prominent competitor Spotify. Boasting a $0.01 payment to artists for every stream puts it higher than Spotify’s rate, currently an average of $0.0038, a dramatic difference that has led to lots of comparisons between the two companies. However, when compared to the $4.1 billion Apple Music made in revenue as of 2021 (Business Of Apps), this $0.01 payment system is only a tiny step in the right direction.
Alternative Business Models
Breaking away from the usual streaming services, Soundcloud recently announced that it would be changing the way it pays artists. It will reward them based on the number of listeners and duration, moving away from the industry-standard ‘Pro-rata’ payment system.
As a company focusing on single releases, DJ sets and podcasts, this could be a step in the right direction for artist’s fair pay. Last year, the company hit a personal best in its revenue, reaching over $200m for the first time. (Forbes Magazine). With an increase of users putting the company at over 76 million users as of 2021, this new business model could be the future for paying artists fairly. It will be interesting to see its results over the coming years (Business Of Apps).
Mixcloud has a unique system that differs from SoundCloud’s new model and the usual pay per stream model. It offers a specific subscription service, allowing users to subscribe directly to preferred artists or labels. That means artists get a fairer share of the subscriptions’ revenue than with the more standard model that gives users access to the whole music library from their monthly subscription.
Stats show that the company pays out over 87% of its revenues to the artists, keeping the service intended, promoting longer pieces of music, and rewarding its creators.
What can you do as an artist?
Spread out your distribution
Having your work uploaded to multiple streaming services will not only increase the distribution, but it will allow you to find a balance between the companies that pay fairly and those that don’t. Not only streaming services, but it is good to get your work out there to a variety of platforms. You can send demos or full work to thousands of multimedia companies looking for soundtracks, vocals and even samples. TV and commercial broadcasts are always looking for music and have deals that provide artists with advance royalty payments and revenue from their streams.
Help make a change
For creators, uploading your work to streaming services is hard to avoid, especially during the lockdown period when live shows and events could not occur. Using the leading three companies is a great way to spread your work, and although the payments from the platforms are still low, there are many people out there trying to change this. Here is a petition making efforts to change the amount Spotify pays its artists to 1 cent per stream. It has already received over 80,000 signatures and can help make a change to these multi-billion dollar companies.