August 13, 2022

enlamichoacana

Be Part Of Marketing

The harsh reality about the music business, and a pantomime led by clueless self-regarders.

11 min read

Here it is. Amongst all the industry-wide debate over equitable streaming payouts, this has cracked it. Finally, a truly revolutionary idea that ensures an actual fair share of the billions of dollars Spotify makes goes to every artist.

For starters, let’s stop arguing about what royalty share record companies should take from their individual contracts with artists. Let’s just cut those suckers out altogether. You read right: let’s kill the majors! Nighty night you million-dollars-an-hour machines!

Indie labels too. And distributors. No-one gets their grubby mitts on artist money in the new MBW utopia.

While we’re in radical mode, Spotify can do one too. Under our revolutionary new regime, Mr Ek, you and your worker bees, you get nadda. Zilcho. Because this is our fantasy world: SPOT’s now a public utility, somehow running on zero dollars in cost. (We’ll have that $100 million back ‘n all, Mr Rogan sir.)

All these supposed industry middle-men – be gone! Now all we need to do is find a super-fair way of distributing the billions in annual Spotify revenue that we just earmarked, direct to the artists.

Zero tolerance for wastage! No act left behind! All artists have value!

#allartistshavevalue


Spotify logo

Now, let’s run these numbers right into the promised land.

Spotify’s total annual revenue in 2019 was €5.259bn, which exchanges in USD to approximately $5.91bn.

According to Spotify’s prospectus ahead of its 2018 flotation on the New York Stock Exchange, there were “more than 3 million creators and artists” on its platform.

So in 2021, we can be very confident that there are 3 million artists (very possibly as much as 4 million) whose music is available on Spotify today.

The most radical, neo-Marxist solution here, of course, would be to give each of these 3 million artists an equal share of of our just-Robin Hood-ed Spotify billions.

So… $5.91 billion divided equally between 3 million artists, would net each artist… erm, $1,970.

Considering that’s about half the average monthly rent in New York City, this experiment has not only resulted in the death of the modern record industry (bye labels! bye distributors! bye Spotify! bye thousands of jobs!), it’s also resulted in the death of recorded music as a commercially worthwhile medium.

Hmm. Time to invest in BitCoin?

No! keep the faith comrades! There has to be a super-fair way to divide this $5.91bn that means artists can afford rent.

Because, remember, #allartistshavevalue.

Let’s try something different. According to Spotify itself,  90% of all streams on its service are currently shared between just 43,000 artists.

So, simple math, let’s give 90% of our annual Spotify billions – which we’ve netted with no labels on the take, no distributors on the take, and with no Spotify on the take – direct to those 43,000 artists, split evenly.

And let’s give the rest, the remaining 10%, to the other 2.957 million artists, split evenly.

Here’s how that works out. The 43,000 artists would receive $123,697 each. Progress!

The other 2.957 million artists would get… $199.86 each. For the year.

That’s disgraceful, obviously. Who can those 2.957 million artists blame for this unjust plight?

Well, we’ve killed Spotify, we’ve killed the major record companies, we’ve killed the indie record companies, and we’ve killed the distributors. They’re all dead, so it’s no good pointing fingers in any of those directions.

We’ve also entirely omitted songwriters and publishers from this calculation. (Luckily, songwriters are rather accustomed to being forgotten about in streaming royalty discussions, so we should get away with it. If they become uppity, just pat them on the head and call them Secret Geniuses and they’ll soon pipe down.)

So… what gives? We’re living under MBW’s new fantasy utopia for artists, yet barely 1% of all musicians on the planet are getting a comfortable – if hardly superstar – six-figure annual ‘salary’ from their recorded music on Spotify.

In contrast, despite our fantasy parameters, 99% of artists are barely making enough money to afford the internet connectivity required to express their unyielding rage about it.


Welcome to the extremely harsh reality: The vast, vast majority of artists creating music today, around 99% of them, are never going to make enough money from streaming to live on.

Ever.

A tiny minority of artists, the 1%ers (nudging towards the 2%ers), will make enough to live on.

This is not a situation created by Spotify. It’s not even a situation created by the major record companies.

It’s a fact of life based on the only people who matter: the fans, and what they choose to listen to.

Cruel bastards. Don’t they know #allartistshavevalue?


It’s a tough one to swallow, granted: fans, not evil industry machinations, won’t enable 99% of today’s artists to earn a living from their recorded music. But a widespread acceptance of this truism would finally support grown-up conversations about the realities of the modern music business, and how it can be improved.

Those grown-up conversations are especially vital right now, as the pandemic single-handedly destroys important elements of artist income.

Accepting the harsh truth of the ‘1%’ rule would lead us to appreciate that there is a very specific subsect of artists out there – a not particularly-numerous subsect – whose lives could be genuinely transformed by bold changes to the current streaming model. (Songwriters, chill; I will get to you, I promise.)

Specifically, I’m talking about those artists who are within the 1%, but at the lower end of the 1%.

These are artists who could be, and arguably deserve to be, earning a liveable amount of money from streaming. Yet perhaps due to individual contractual circumstances, or perhaps due to structural industry obstacles, they’re in the club with the ‘haves’… but sadly at the wrong end of the strata of popularity.

How many artists are we talking about? And how many streams does it take to join their ranks? Humor me.

Within the 43,000 artists in Spotify’s 1% club, we can roughly expect – based on SPOT’s current global revenue breakdown (see below) – that around 37% of these acts reside in the United States (i.e. around 16,000) and around 10% (4,300) reside in the United Kingdom.



Earlier this month, the BPI – the UK’s recorded music trade body – put out stats that showed that the thousandth most popular artist in the United Kingdom in 2020 racked up over 21 million streams on audio platforms. The 999 artists above that act in popularity terms pulled in more than 21 million.

Yesterday, Lee Parsons – CEO and co-founder of Ditto Music – expressed his excitement about this fact in an open letter on MBW.

To Parsons, it’s proof positive that, slowly but surely, the elite riches of the record industry are beginning to be democratized, and spread amongst a gradually more numerous group of artists.

Parsons pointed out: “A thousand artists earned at least $84,000 (21 million X $0.004), again just from streaming platforms, and just from the UK, in one year, in 2020.”

“Just from the UK” – very important that bit. Because when global streaming earnings are added up (from over 180 other countries), we’re actually talking about many more – likely multiple thousands – of UK artists earning that kind of money annually from streaming.

Parsons, whose pugnacious style on Twitter doesn’t exactly detract from conflict, was swamped with criticism on the social platform for daring to suggest that the gradual stretching of the 1% club – the welcoming of more artists, especially more independent artists into this exclusive crucible – was a good thing.

Many of those who don’t wish to acknowledge the root reality to this tale – that it’s ultimately fans, not distributors, not record labels, not even Spotify, who crown the 1% as streaming winners, and leave the 99% in the cold – were livid with him.


Today, this misguided fury became amplified yet further in the UK’s corridors of power.

This morning (January 19), I watched in disbelief as a group of politicians grilled the three heads of the UK’s major record companies on camera as part of a DCMS Select Committee.

This was a once-in-a-generation opportunity for elected officials to zone in on the inequities of streaming, and work towards a progressive conclusion that benefitted those getting screwed most rawly by the current system.

In particular, this means those at the bottom-end of the 1% – where 90%-plus of streams reside, remember – whose fallback of live touring income has been cruelly stolen from them by Covid. Or to keep it short: artists actually popular enough to have a feasible chance of making a living from streaming.

With this in mind, this group of MPs should have smashed three very particular, and particularly tough, posers for David Joseph (CEO, Universal Music UK), Jason Iley (CEO, Sony Music UK) and Tony Harlow (CEO, Warner Music UK).

These are questions guaranteed to make major music company CEOs squirm. But they’re also rooted in the principle that a government-aided push in the right direction might actually lead to market improvement.

Those questions are:

  1. The current streaming system sees payouts based on the ‘one big pot’ system, whereby subscriber money from around the world is divided based on total market share of plays for each artist and label. This clearly screws the “bottom of the 1%-ers”. It also means that my $9.99 per month Spotify money goes to artists I don’t even play, which is madness. Are you in favor of a user-centric system, whereby if I want to play a single artist all month, the entirety of my money (minus costs) goes to that artist?
  2. Songwriters. (Told you I’d get to you, you Secret Genuises you.) Under the current streaming model, as negotiated by – and accepted by – the three major music companies, Spotify et al are paying publishers and songwriters less than a quarter of the money they are paying artists and record companies. This doesn’t seem fair. The fact that the three biggest record companies are owned by the same parents as the three biggest music publishing companies – and that it’s seemingly in the profitable interest of those parents for the % of the pie handed to publishers, rather than labels, to remain low – seems a bit… dodgy? Explain.
  3. You all spend a huge amount of money on the signing and development of artists (A&R). But the money fuelling that system comes predominantly from proven back catalog, with artists who signed life-of-copyright deals at a time when the odds were stacked against them, and royalty rates were much lower than they were today. What have you done to bring these historic deals closer to modern record arrangements, where rights reversions are typically shorter, and royalty rates are significantly higher for the artist?

You know how many of these questions got asked?

I mean, like, any variation on these questions? Zero. Zero. Fucking zero!

In an hour and 45 minutes of questioning, ill-informed MPs, drunk on the self-regard of insulting the “Mr Bigs” of the UK industry, ballsed it up royally.

Across those 105 minutes, according to MBW’s ears, the word “songwriter” and “songwriters” jointly got mentioned just three times – twice by Alex Davies-Jones MP in questions about charities, and once by David Joseph.

No-one else amongst the NINE politicians jabbering away for nearly two hours asked ONCE about the streaming splits between recorded music and songwriters… and no-one went near the idea of the majors owning both the largest labels and the largest publishing companies in the land.

Clueless.

Literally: even Spotify seems to care more about songwriters than these MPs.


What of user-centric licensing? Perhaps the most pressing and crucial potential change the streaming industry could make in favour of the lower-end-of-the-1%?

We had to wait 55 minutes (55 minutes!!) for it to be brought up. And it wasn’t brought up by a politician. It was volunteered by one of the supposed boogeymen of this milieu – Universal’s David Joseph (pictured inset).

Joseph noted that certain artists with smaller, passionate fanbases are more heavily reliant on live music than recorded music, and that they’ve been particularly screwed by Covid-19’s deletion of concerts. Joseph also noted that “unfortunately, it’s not possible and it’s not logical that that [lost touring income] will be instantly replaced by the money that they make from their recordings”.

However, Joseph suggested user-centric could help, and that politicians might want to discuss with streaming platforms how “all of the streams are coming to [labels] and artists based on popularity, and there are other ways we could look at that”.

Yes: a leading representative for the biggest music rightsholder on earth just made positive noises about the prospect of entirely changing the licensing structure of streaming services to benefit smaller artists.

The MPs’ immediate response said everything. John Nicolson MP replied to Joseph’s user-centric point by saying this: “Musicians have told us, privately and off the record, that they’re scared of you. Not you specifically. But bosses – record company bosses like you – and they’re too scared to speak in public. That must make you feel very ashamed.”

Jeepers macreepers.

Well Mr. Nicolson, my mate’s sister’s cousin’s dog says you just missed an OPEN GOAL to help alter the fortunes of thousands of artists, via a practical change to a rigged streaming payment system that’s gone on way too long.

You specifically.


It went on and on like this.

There was, amongst the dross and the droning, a smattering of decent exchanges about digital breakage payments, the variation in record label deal types, and whether the majors’ stakes in Spotify were anti-competitive. (In reply to this, Jason Iley, UK boss of Sony, revealed that of the $768m in Spotify stock Sony banked in 2018, it then paid out over $250m “directly into the pockets of artists”. Sony previously confirmed it did so while overlooking unrecouped balances, which explains why that number is quite so high.)

Artist (and artist advocate) Sandie Shaw was quoted, making the interesting point that “there’s no such thing as the UK record industry” these days, due to the fact that multi-national companies now own its largest record and publishing companies.

But, in the main, the event was hogged and derailed by politicians who knew they were on camera, and revelling in the pantomime. They were clearly straining to be seen to bruise their phantom Mr Bigs – and evoke cheers from digital hecklers – rather than collecting evidence to make meaningful change.

In defence of his team at Universal Music UK, David Joseph said that major record companies sometimes suffer from a “depiction of Slytherin” rather than his experience of “a company of Gryffindors”.

Julian Knight MP, rattled back: “I think the performance has been more Hufflepuff today, to be honest with you, Mr Joseph.”

Too true, sir. From all quarters.


At one point, Joseph dared suggest that Universal’s current roster of artists were happy with the advances and royalties they’re being paid by the company.

John Nicolson MP fired back: “I think you’re in cloud cuckoo land, if you really believe that. I mean, we’re not experts in this field… our job is to sit and listen to people in the industry. You’re a very unhappy industry; artists are not happy. [Though] I’m sure the very rich artists are happy!”

“I”m sure the very rich artists are happy!”

Well, yes. Those rich artists reside deep in the 1%; the cruel, unfeeling, unapologetically discriminatory 1%. A place powered by fans, far beyond the reach of self-regarding, crusading politicians, who don’t even do the basic research required to ask taxing, consequential questions of major music company heads.

Meanwhile, far away from the Parliamentary bickering and brickbats, the domain of the 1% continues to grow in size, gradually, year after year.

It’s a fact worth celebrating, but it’s also a place that beams out a harsh light, illuminating an even harsher truth:

#allartistshavevalue #butnotallmusic #isworththesameMusic Business Worldwide

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