MPs to investigate whether artists are paid fairly for streaming music

[The Elf]

https://www.bbc.co.uk/news/entertainment-arts-54551342

About time. I'd love to think something sensible will come of this, but the realist in my head tells me otherwise...

[muzines]

Pretty sure absolutely nothing will come of it, unfortunately.

I'd love to be proved wrong though...

[RichardT]

It’s hard to see what can come out of this as streaming companies are generally based outside the UK.

[James Perrett]

While I can't see the streaming companies changing what they do, it is possible that recording contracts could be changed to give artists a higher share from streaming. I've seen a few artists moaning about how little they get from streaming but the figures quoted usually show that it is their record label who is actually taking a huge share of the revenue.

[Drew Stephenson]

This ^^^

[The Elf]

Not in my case. I've seen the figures! Somebody is making money, and it isn't me or my label!

[Drew Stephenson]

Well bearing in mind that Spotify are yet to make a profit and by far their biggest cost is licensing, that would suggest that either yours isn't the right kind of label. Or there isn't actually much money to be made once you distribute it across an entire global ecosystem.

Out of curiosity, what would people consider to be a 'fair' payment for a single stream?

[RichardT]

Here’s an interesting article about Spotify:

https://www.rollingstone.com/pro/featur ... s-1038408/

The lower 90% of Spotify artists make an average $12 a month.

[The Elf]

Well bearing in mind that Spotify are yet to make a profit...

I really don't believe that.

[Drew Stephenson]

It's had one profitable quarter at the beginning of 2019 but had slipped to a loss again by the end of the year. 2020 has been heading in the right direction again, but it's not there yet.

[shufflebeat]

I wonder if there's a petition to persuade MPs to ascertain the religious loyalties of the Pope?

It would be as well to be sure.

And while we're at it, does anyone know I might find bear droppings?

I fear the only way any govt. will step in to this in any meaningful way is if they see it as a route to tax money and that will only involve a select few artists over a certain threshold of earnings. The platforms will hold in to the rest in negotiations.

[The Elf]

It's had one profitable quarter at the beginning of 2019 but had slipped to a loss again by the end of the year. 2020 has been heading in the right direction again, but it's not there yet.

There are many ways to make it appear you're not making money, but I doubt that the owners are struggling for another holiday home this year.

[Drew Stephenson]

But that's a very different question, morally, legally and practically.
Are we saying no-one should get paid until a company makes a profit? Obviously not, otherwise no-one would ever be able to start a company (unless they already had a few years of operating costs as loose capital).
So then we're talking about dictating the pay levels of individuals in a private or limited company. That feels like a very dangerous route to go down.
Surely what Daniel Ek gets paid is a matter for the remuneration committee, the board and the shareholders?

Anyway, let's do some maths.
Imagine a non-internet world. And let's make some assumptions.
Let's assume the average cd costs £10 (or € / $).
Let's assume the average cd contains 10 tracks.
The consumer therefore pays £1 per track for their hard copy.
Let's now assume (for sake of easy maths) that our consumer listens to the cd 5 times per year over a 20 year lifecycle. That gives us 100 plays per song and therefore a cost to the consumer of 1 pence per play.
Obviously this will vary hugely from cd to cd, but this gives us a handy multiplication point later.
So, of that 1p per play, 20% goes in tax, leaving 0.8p.
Then you have your retailer costs, say 25% of that penny? Leaving 0.55p.
Then you've got your manufacturing and distribution costs, say another 5%? Leaving 0.5p going back to rightsholders.
Not so different to the 0.4c that Spotify pays out now really.
But, you might say, there are no physical costs for Spotify, and hosting costs are minimal when spread per stream.
This is true, but Spotify is also operating in a global market. CDs may cost 10 £/€/$ across the G20, but that's a week's wages in quite large parts of the globe. If you charge western European prices in sub-saharan Africa for example, you're not going to sell much...

So anyway, what would people consider to be a fair payment for a stream?

[Hugh Robjohns]

The obvious problem with this analysis is that it amortises the value of the music over twenty years, instead of being front-loaded in the record/cassette/CD model.

There aren't many artists that could afford to remain full-time professional artists with that kind of income flow...

[James Perrett]

There aren't many artists that could afford to remain full-time professional artists with that kind of income flow...

That's where the record label advance comes in...

It is also worth remembering that the major owners of Spotify are the big labels themselves. Apparently they demanded shares as part of their agreement to license their catalogues to Spotify.

[The Elf]

But that's a very different question, morally, legally and practically.
Are we saying no-one should get paid until a company makes a profit?

All I want is a fair share of what those taking the money out of the company are getting. I don't think that's too much to ask.

[Drew Stephenson]

But how do we define a fair share.

[CS70]

But how do we define a fair share.

An interesting question.

Not sure fairness has much to do with the music market (or any market). A market is about supply and demand, and the revenues are always determined by the product of price and efficiency (of production/distribution). It's neither fair nor unfair, it's just how it is. It's also about enforcing rules, for which it's not possible to steal neither the product nor the cash made from selling it.

But I also think that there's two very different perspective at play, which often get conflated: artists for which there is a strong demand, and artist for which there isn't.

For the former - which are a small percentage - the unfairness lie mostly in the fact that market rules aren't enforced very strongly. They don't get to determine the amount of supply even if they are the source of the product, so they reap far less than the amount that a working market would grant them. Spotify and it's payment policy is not a cause of this imho - but a result.

For the latter - the majority - I suspect that simply the demand is non that much higher than the supply - if it's higher at all. For them, Spotify's payment policy is quite irrelevant. 100% of near zero is still a very small number. This is certainly unpleasant, but not sure if it's unfair.

[zenguitar]

Markets are interesting things, Adam Smith would be horrified by many of the things that are done in his name. Yes, I'm pointing the finger at you, The Adam Smith Institute, among others.

Most industries have a long chain between creators and consumers; and whilst there may be many creators and many consumers, when you look at the steps in-between there are far fewer intermediaries. And it is further confused because many of those intermediaries are active in many creator/consumer chains.

In many cases the real market competition occurs between the intermediate players rather than between the creators and consumers who are reduced to price takers. Lamb is a relatively expensive meat to buy, but that's not reflected in the price a farmer receives at market for a lamb.

Andy

[Drew Stephenson]

Supply and demand was going to be my next point, along with what pricing a market will bear, but you've covered that now.
So for me, the final piece of the discussion is about risk and reward.
Daniel Ek took a number of risks, personal and professional, in setting up Spotify. In doing so he's now able to define his own rewards.
The labels take risks in funding and developing new artists* and they too get to define their own rewards.
The artists also take their share of risks**, but unfortunately 99.99% are never in a position to define their own rewards. There being far more artists than there are label places to fund them they have the shoddy end of the stick.
And it was ever thus.

* Theoretically, different discussion!
** Artist risk is a very variable thing. My full-time musician friends range from owning their homes and doing very nicely (1 of them) to scraping by and wondering how they're going to pay the rent each month. Most of them are at the lower end of somewhere in between. But obviously only one of them is really in a controlling position when it comes to their level of risk.

[The Elf]

But how do we define a fair share.

I'll go 50/50 with whatever Spotify earn from my music.

[Drew Stephenson]

But they make a negligible amount from your music, most of their income is still from advertising. If you're driving enough people to their platform that it's showing on their advertising revenue (Hello Taylor Swift) then you're probably already getting a sizeable monthly cheque.
And for your 50% cut, will you go 50/50 with their debts and investment costs?
Fundamentally it doesn't matter what we want, we're not in a position to bargain. We can use their service on their terms or, if we don't like them, we can go elsewhere. Apple Music, Tidal, Google Play and Deezer all pay higher rates for example.

And to get right back to the opening point, no committee of grandstanding MPs is going to make a blind bit of difference to this. Especially not in the UK, where none of these companies are based.

[The Elf]

Somebody is making money. No-one is making a loss, yet I get peanuts. I doubt any of the Spotify owners are destitute. So why should I be happy sharing a loss that isn't happening?

You asked what would be 'fair' - I said 50/50. If that amounts to peanuts then so be it, but at least it would be fair peanuts. At the moment I'm having my pockets picked and everyone around is smiling and seemingly justifying it!

Go listen to some of what Rick Beato is doing to address this (and this guy is attending court to try to get something done). He understands it much better than me, but he pretty much speaks for how I feel.

[Drew Stephenson]

So pull your tracks. 5 or 6 years ago that probably wasn't an option as the alternative to Spotify was a return to illegal file sharing. But there are alternatives, some of them paying 2 to 3 times as much. If we all did that Spotify would either have to renegotiate their licensing deal with the majors (which is still where most of the money is going) or go bust.
But we don't do we?
Because we want the distribution reach that we get from Spotify.
So if your music is on Spotify you are recognising that the service they offer is worth the price.
Otherwise why are we using them at all.

Fundamentally this is a market problem not a legislative one, so it requires a market solution. But the simple fact is that, beyond a few big names, most consumers don't really care about music. It's largely interchangeable and there's far more potential supply than there is demand.