Opinion: a proposed new music streaming payment system may change this and ensure the acts you actually listen to get paid more
Over the last few years, streaming has rapidly become the mainstay of the recording industry. Last year, as much as 75% of the recording industry's income came from subscription streaming services. Streaming is extremely convenient for users, and much less expensive to produce than physical CDs or vinyl, but its growth has been almost universally hailed as a bad thing for artists. Indeed, as much as 90% of the money you pay for a streaming subscription likely goes to pay artists you've never listened to.
From the very beginning of streaming, artists have spoken out against the very low royalties paid by the services. Although it is difficult to pinpoint how much a song earns for each stream, the estimates are generally in the hundredths-of-a-cent range.
In the early days, many artists refused to release their music on streaming services. Others have removed their material or delayed the release ("windowing") on the these platforms in an attempt to boycott the services and demand higher royalties. But these tactics are fraught with difficulties and songs not available on streaming services are typically pirated more often, forcing artists to decide if a hundredth-of-a-penny is better than nothing at all.
From BBC Music in 2013, should artists be wary about music streaming?
Although Spotify has taken much of the heat for this, the other major streaming companies (Amazon Music and Apple Music in particular) all offer roughly the same deals, meaning that there is little or no competition in the market in terms of royalties. However, despite many artists' claims, this is not simply due to greedy streaming companies. The 30% that most streaming platforms retain is quite reasonable for a hosting fee (and much better than the 85% commonly seen in record deals), and any service that raises subscriber fees is likely to lose users to its cheaper competition. Low royalty rates may also be down to the deals which acts signed with their record labels.
Earlier this month, French streaming company Deezer introduced an idea that might be a game changer for artists, especially for emerging artists and those in niche markets. The "User-Centric Payment System" would allocate the existing monies differently and make sure that artists are keeping more of the money being paid by their listeners.
In order to understand this better, we need to understand how streaming services currently allocate funds. The current royalty payment system works by combining all users’ subscription fees into one pot and splitting them amongst the total streams for the month.
From Spotify Artists, how the streaming service pays artists
For example, two users each pay €10 a month for their streaming service. User A listens to mostly mainstream artists like Taylor Swift or Ed Sheeran, while User B listens to new songwriters, Irish Trad and jazz. The streaming service combines the €10 and removes their 30%, so that they ultimately have €14 to split between the artists.
When the streams for the month are calculated, the mainstream artists account for 90% of the total month’s streams and the "niche" artist accounts for 10%. The royalties are then split so that the mainstream artist earns €12.80 (90% of €14), while the "niche" artist earns €1.40. This means that 80% of User B’s money went to the mainstream artists, which that user may never have heard and maybe even detests.
Technically, there is no "per stream" payment, despite the many examples that are bandied about. Technically what matters is not how many streams an artist has, but what percentage of the all the streams for the month they get.
From Channel 4 News, Foals singer Yannis Philippakis on why he would prefer fans to steal his record rather than stream it on Spotify
While the above are obviously oversimplified numbers they illustrate the problem with the current, so-called "Service-Centric" payment system. To a certain extent, it also rigs the system in favour of artists with major record labels (and therefore major marketing departments), making sure they get the most streams. The "User Centric" payment system which Deezer has proposed has actually been discussed in the industry before, but Deezer is the first streaming platform to champion it.
Under this system, the money and the streams are divided based on the individual user’s streams. 100% percent of User A’s subscription fee goes to the mainstream artist, meaning the mainstream artist receives €7, instead of €12.80. 100% of User B’s subscription fee goes to the "niche" artists, so they receive €7 instead of €1.40.
Some major artists will lose on this one, but the change in their income is not likely to be massive as most popular artists are the ones with the most listeners anyway. However, those of us who listen mainly to non-mainstream artists can listen happier knowing that more of our money is going to the artists we love. Hopefully, Deezer’s campaign is the first step towards a better distribution of streaming royalties across all platforms.
The views expressed here are those of the author and do not represent or reflect the views of RTÉ