Swimming Against the Stream

For most people in the music industry the House of Commons Select Committee hearings are not their first-choice for internet browsing. Yet during November and December 2020, the Digital, Culture, Media and Sports, Select Committee embarked on an investigation that may have far reaching implications for the industry. They are reviewing the ‘Economics of Music Streaming’.

The Committee will have a wide look at the industry.

“With streaming currently accounting for more than half of the global music industry’s revenue, the inquiry will look at the business models operated by platforms such as Spotify, Apple Music, Amazon Music and Google Play."

The significance of this can again be found in their terms of reference:

"Music streaming in the UK brings in more than £1 billion in revenue with 114 billion music streams in the last year, however artists can be paid as little as 13% of the income generated.”

If Spotify and the others are the potential villains it would be hoped their investigations stretch as far as YouTube, perhaps the greatest source of under payment. For example, an artist who has 100,000 streams on YouTube only receives around $69 for their labours or alternatively if they wanted to earn the USA minimum wage, they would need over 2 million streams to achieve that basic earning level. Little wonder that as Google, the parent company revealed in 2019, YouTube generated £15 billion dollars in revenue. As a friend of mine put it.

“I get thousands upon thousands of hits but it only pays enough to buy a pot noodle a day”.

Pot noodle? He’s lucky. If he wasn’t an independent artist, 80% of his snack would be eaten by his recording company!

Interestingly, a comparison is often made between the music industry and football, where top footballers like top musicians earn huge sums. Yet such a comparison is far from accurate because whilst there is a strong trickle down the leagues in football in terms of earnings, that is hardly true in the music industry. For example, a footballer in the English Championship (the second tier) earns on average £29,000 a week, with even the lowest paid estimated to get £8,500 or £400,000 a year. Even in the league below the average wage is still estimated to be over £4,000 per week or eight times the average musician’s salary.

In football the money is paid regardless of whether players are ‘performing’ or not, or how many people come to watch them. In the music industry whilst ‘premier’ artists earn high revenues, lesser artists, who fill up the catalogues of streaming services, get vastly less. Spotify currently pays between $.006 and $.004 per stream and YouTube much less at $.0007. Consequently, for major artists their big earnings come not from streaming but from tours and merchandising. For example, in 2018 Beyonce earned $27 million from tours but only $4.2 million from all her streamed work.

Buzzfeed explores why, using Taylor Swift’s digital recordings, to illustrate the point.

“For iTunes, Apple takes a 30% cut of every sale. The remaining 70% is split between Taylor and her record label, Big Machine Records. While there's no way to know the exact breakdown, artists typically receive 12% to 20% of sales. Swift's take would be on the higher end of that scale or even higher, given her privileged negotiating position as the flagship artist of her label, Big Machine Records.”

So back at the House of Commons, the Committee is currently receiving oral and written evidence, although how extensive this might be is under some threat as at the start of proceedings the Committee chair was moved to say:

“We have been told by many different sources that some of the people interested in speaking to us have become reluctant to do so because they fear action may be taken against them if they speak in public. I would like to say that we would take a very dim view if we had any evidence of anyone interfering with witnesses to one of our inquiries.”

Given the Committee’s brief is to…“Examine what economic impact music streaming is having on artists, record labels and the sustainability of the wider music industry.”

…it will be interesting to see how keen MP’s and eventually the government will be, to take on some of the giants of the music industry in return for a fairer deal for artists.



See also

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