MPs to investigate whether artists are paid fairly for streaming music

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Re: MPs to investigate whether artists are paid fairly for streaming music

Post by blinddrew »

RichardT wrote:The value of an individual stream is important, but just as important is how many streams each artist gets, ie how is the total revenue pot distributed across artists? I hope they look into that. I would be very interested in seeing what they come up with. Is the long tail a myth or a reality?

There are already different ways of doing this. Some sites pay per stream (Tidal, apple music etc) some pay with a percentage of the pot (Spotify) - this is why the arguments that Spotify should just triple their payments (one of the themes doing the rounds) is nonsense - that would take them to 195% of their revenue.
So if you take CS70 and DC Choppah's suggestion of limiting supply, it's still not going to change that payment. You need to make the pot bigger. Which means getting more people to sign up for the paid service, which means giving them a reason to do so.
- maybe that's a limit on streams, but do they just hop onto another service when the first one's full? We're back to that infinite supply thing.
- maybe it's a better payout rate (surveys suggest more people would pay (or those paying would pay more) if more went to the artist), but if Spotify is paying 65% to the rights holders but only 13%* is making it back to the artist then maybe the problem isn't with Spotify?

Again, I have no solutions here (other than investigating the contracts between artists and their labels), but 20 years of trying to stop piracy by limiting access achieved nothing but falling revenues. Streaming has turned that around, if we make it unworkable for those operations then we're not going to go back to the glorious 70s, we're going back to the terrible 2000s.
I reckon. But I'm no economist. ;)

* According to one study.
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Re: MPs to investigate whether artists are paid fairly for streaming music

Post by James Perrett »

blinddrew wrote:if Spotify is paying 65% to the rights holders but only 13%* is making it back to the artist then maybe the problem isn't with Spotify?

Isn't that where we started on page 1?

For the cases that I know about there are two people getting paid apart from the artist - the distributor and the label. The artist ends up with quite a bit more than 13%.
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Re: MPs to investigate whether artists are paid fairly for streaming music

Post by CS70 »

blinddrew wrote:And if the user decides that the value of an item that can be infinitely reproduced for practicaly zero, or is virtually replaceable with another from a near-infinite pool, is zero?

Of course, yes. The economic value of something is zero if people don't want it. If the something can be infinitely reproduced is zero even if people want it. It's just enough that it's very abundant. :)

Let's face it, even if you restricted every song on spotify to one play, there are 50 million songs on the platform... at 3 mins a track that's nearly 300 years of solid listening. We're near as dammit to infinite supply. Demand, however, is finite because we have other pressures on our time.

But absolutely! We discussed this already, if I recall. Whether we like it or not, music in generic terms has no economic value at all. It's never had it. What has value is music (like anything else) that is scarce.

So a musician has to create scarcity. There's a limitless supply of generic music, but a very limited supply of music by, say, you. If you manage to create scarcity around _you_ and your name, the music you produce has economic value.

Voss water and all that.

So how do you propose to limit supply? Because that really hasn't worked very well over the last 20 years...

I don't - and never did? You cannot limit the supply of music in generic terms. Not much has changed in that respect - anyone could pick up a guitar and make a song and sing it in the street in times past. But you can create scarcity around a specific artist - by the usual tools of good product and marketing.

And if we're going to talk fairness, an alternative view might be that if you can make all the worlds art and entertainment available to all the world for free (your infinite supply), would that not be the fair thing to do? Fair is a very nebulous term, especially when dealing with the digital economy but it translates into the material one as well. There is more than enough food in the world but millions starve every year, is that fair?

The thread is about fairness for the artist. I was under the impression that what we were discussing here "fair" as in a way to enable artists to reap the economic value of their work.

I've been giving a simple advice - just the same as I would if someone asked how to operate a compressor: as an artist, given that you can produce a good enough product, focus on create scarcity around yourself - i.e. focus on marketing and any activity that create a traction on your name. Or have someone else do it for you, of course - which was the old labels' job.

That will increase the economic value of what you do - streaming included.

It shouldn't be particularly controversial - it's just how things work in the world.

As I have already said, there are other types of value than the economic one - and I for one find them superior. But in terms of making money for your work, we're talking about economic value.

I digress, but basically I don't think your argument that "A fair environment is an environment where supply is not infinite" is logically sound. Hence I don't think the rest follows... ;)

Perhaps the clarification above helps. :)

As of fairness.. I don't think it's so hard either. Fair is when there is a balance between someone's work (can be a musician, can be a miner) and the demand for that work. With music, means that if enough people want a piece of you, they get it, but you get to make a living out of it. Not rocket science, I'd say.
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Re: MPs to investigate whether artists are paid fairly for streaming music

Post by CS70 »

blinddrew wrote: So if you take CS70 and DC Choppah's suggestion of limiting supply, it's still not going to change that payment.

Just to clarify: "limiting supply" in this context meant simply that - if someone wants a track, a book or a car - stealing it is not an option (or is an option the same way as with any other product - it's a crime, and if you're caught, you face consequences).

That said, it's not a given at all that this has an effect on the payment - because payment depends on both supply and demand, and enforcing the market rules does not produce additional demand (or there's not much demand in the first place), the payment will stay the same.
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Re: MPs to investigate whether artists are paid fairly for streaming music

Post by blinddrew »

It's been a long week and i'm really not following some of your positions and points here, so to cut to the chase, do you think that the streaming services offer fair payments? And if not, what would be fair?
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Re: MPs to investigate whether artists are paid fairly for streaming music

Post by CS70 »

blinddrew wrote:It's been a long week and i'm really not following some of your positions and points here, so to cut to the chase, do you think that the streaming services offer fair payments? And if not, what would be fair?

Ahah, sorry! Having a glass of wine on the side helps.

I have no clear opinion yet, but mostly I do, yes. I think they offer fair enough payment given the current situation - same as you, I understand?

It's the current situation that is not fair. If - as DC mentions - the situation gets fixed, then they may have to increase payments (not sure, haven't made the math).

Apologies for the headache! :D
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Re: MPs to investigate whether artists are paid fairly for streaming music

Post by DC-Choppah »

Ok, lets take Spotify as an example to see how flawed the current system is. The fix is so simple too.

Spotify says that they pay 70% of the REVENUE to the artists. The key here is that the amount that artists gets is proportional to (70% of) the REVENUE that Spotify makes.

There is no fixed cost that Spotify pays for the right to copy your music. They do not simply pay a price for each mechanical copy they make, where the are duplicating and then transmitting the mechanical copy of your song to someone's device. The artist is cut into the game as a fractional stakeholder. If Spotify makes no money, you make no money. But Spotify can't lose. If everybody streams for free, then the artists gets zero, because revenue is zero. But Spotify still makes money on the advertising they sell while people come to hear all the free music. The artists gets zero, or a tiny fraction of the ad revenue. Spotify takes zero risk, and you the artists devalue your copyrighted properly at a massive scale. Do you see this?!? Please tell me you do!?!?

Follow the risk, not the money.

Now then, of the revenue that Spotify makes you get your fraction. So if your song was streamed 1,000 times, but total streams was 10,000,000 for that revenue period, then you get 1/10,000'th of the total revenue.

So the bigger their service gets, and the more customers they get, the less you get, even though your fan base may stay constant.

This business arrangement is completely exploiting the artist, while Spotify gets zero risk profit.

Now, how to fix it? Simple.

If you copy a song from your server to someone's device, you must pay the fixed rate for that copy. No fraction of revenue, no fancy math, you must pay for that copyright. That is what copyrights are for. You must take the risk that you will or will not recoupe the money.

I am NOT in business with you, and I don't want a deal that drives my share to zero over time as you grow, and devalues my music since you benefit by giving it away for free.

My only defense against the exploitive arrangement is that you must pay an upfront, fixed cost for the right to copy that music. I appeal to common sense that this is what copyright is for.
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Re: MPs to investigate whether artists are paid fairly for streaming music

Post by DC-Choppah »

I realize that my line about a stream is the same is a download is tiring, but I mean this in a business sense.

The fact that the businesses (Spotify, Youtube, etc) have figured out a business plan that exploits the artist is because they have been able to make this clever distinction. That distinction (stream not download) allows them to avoid the cost of the mechanical royalty, and preserve for themselves a risk-free business plan, at the expense of the rights owners of the music.

The most expensive part of distributing music is the cost to pay the rights holders. By claiming that a stream is some magic 'something else', they cleverly get around the burden of paying a fixed cost and set them self up with a risk free business plan. The distinction is made for the regulatory/business purpose.
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Re: MPs to investigate whether artists are paid fairly for streaming music

Post by blinddrew »

CS70 wrote:I have no clear opinion yet, but mostly I do, yes. I think they offer fair enough payment given the current situation - same as you, I understand?

Yep, pretty much. With the exception of youtube - the fact that they pay an order of magnitude lower than most of the rest suggests some under-cutting. But I guess they would argue they are a video platform not a music platform and have to spread their costs over a much wider base.
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Re: MPs to investigate whether artists are paid fairly for streaming music

Post by blinddrew »

DC-Choppah wrote:Ok, lets take Spotify as an example to see how flawed the current system is. The fix is so simple too.

Spotify says that they pay 70% of the REVENUE to the artists. The key here is that the amount that artists gets is proportional to (70% of) the REVENUE that Spotify makes.

There is no fixed cost that Spotify pays for the right to copy your music. They do not simply pay a price for each mechanical copy they make, where the are duplicating and then transmitting the mechanical copy of your song to someone's device. The artist is cut into the game as a fractional stakeholder. If Spotify makes no money, you make no money. But Spotify can't lose. If everybody streams for free, then the artists gets zero, because revenue is zero. But Spotify still makes money on the advertising they sell while people come to hear all the free music. The artists gets zero, or a tiny fraction of the ad revenue. Spotify takes zero risk, and you the artists devalue your copyrighted properly at a massive scale. Do you see this?!? Please tell me you do!?!?

I don't, because I don't think your premise is correct. Yes, if Spotify makes no money, you make no money, but if everyone streams for free they still make advertising revenue, which is then distributed the same way as paid membership revenue. The artist gets the same cut of revenue regardless of source. It will be less if there are no paid memberships, but it won't be zero.

DC-Choppah wrote:Now then, of the revenue that Spotify makes you get your fraction. So if your song was streamed 1,000 times, but total streams was 10,000,000 for that revenue period, then you get 1/10,000'th of the total revenue.

So the bigger their service gets, and the more customers they get, the less you get, even though your fan base may stay constant.

Again, that's not quite correct, if the revenue grows as well as the user-base but your plays remain constant then you get a smaller share, but of a bigger pot. The question is, which grows larger? The pot or the user base?

DC-Choppah wrote:This business arrangement is completely exploiting the artist, while Spotify gets zero risk profit.

Something that they've only managed for one financial quarter.

DC-Choppah wrote:Now, how to fix it? Simple.

Take your music off Spotify? ;)

DC-Choppah wrote:If you copy a song from your server to someone's device, you must pay the fixed rate for that copy. No fraction of revenue, no fancy math, you must pay for that copyright. That is what copyrights are for. You must take the risk that you will or will not recoupe the money.

I am NOT in business with you, and I don't want a deal that drives my share to zero over time as you grow, and devalues my music since you benefit by giving it away for free.

My only defense against the exploitive arrangement is that you must pay an upfront, fixed cost for the right to copy that music. I appeal to common sense that this is what copyright is for.

Indeed, I remain very surprised that the major labels agreed to the 'share of the pot' approach rather than the standard principle of the per play licence. But it still leaves open the question of what the fair rate for that copy is, as I shall address in your next post...
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Re: MPs to investigate whether artists are paid fairly for streaming music

Post by blinddrew »

DC-Choppah wrote:I realize that my line about a stream is the same is a download is tiring, but I mean this in a business sense.

The fact that the businesses (Spotify, Youtube, etc) have figured out a business plan that exploits the artist is because they have been able to make this clever distinction.

It's not a 'clever distinction' it's a different set of physical properties. They are different things. Desmond, Sam and I have all been through this already on this thread. You've even said the same thing. Different things with different value propositions.

DC-Choppah wrote:That distinction (stream not download) allows them to avoid the cost of the mechanical royalty,

Because it is not a mechanical copy. It's a transitory stream. Something between radio play and download.

DC-Choppah wrote:The most expensive part of distributing music is the cost to pay the rights holders. By claiming that a stream is some magic 'something else', they cleverly get around the burden of paying a fixed cost and set them self up with a risk free business plan. The distinction is made for the regulatory/business purpose.

It is something else. You yourself articulate some of the ways in which it is something else in your post at the top of the previous page. I can't argue this again, so I'll just come back to the same question: what do you think is a fair rate for a stream?
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Re: MPs to investigate whether artists are paid fairly for streaming music

Post by DC-Choppah »

blinddrew wrote: I don't, because I don't think your premise is correct. Yes, if Spotify makes no money, you make no money, but if everyone streams for free they still make advertising revenue, which is then distributed the same way as paid membership revenue. The artist gets the same cut of revenue regardless of source. It will be less if there are no paid memberships, but it won't be zero.

Spotify concedes that advertising is a very small piece of revenue. The money is all in subscriptions. People are paying to have access to the pile.

Making money on advertising works when you give away access for free (Youtube) and have lax copyright enforcement that allows people to post other's works to add to the free access pile.
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