Do Artists Truly Get What is Due Them from Streaming Platforms?

Streaming platforms such as Spotify, Apple Music, and YouTube have revolutionised the music industry, allowing millions of listeners to access various songs anytime and anywhere. However, while streaming has saved the industry from the decline of physical sales and piracy, it has also raised questions about the fairness of the payment system for artists and songwriters.

The facts

According to the Recording Industry Association of America, streaming accounted for 83% of the U.S. recorded music revenue in 2020, generating over $10 billion. However, the distribution of this revenue among the various stakeholders is uneven and complex.

Contrary to popular opinion, streaming platforms do not pay artists directly. Artists are paid by record companies, labels, copyright management companies, or distributors, such as Tunecore and CD Baby. It is the labels that distribute payments to the artists

The amount of money artists receive from streaming depends on several factors, such as the number of streams, the type of streams (free or paid), the country of origin, the royalty rate, and the contractual agreements.

On average, artists receive fractions of a cent for each stream, which, when compounded, can amount to a meagre income. While some of the biggest artists can earn substantial sums, most independent and emerging music artists struggle to make a living from their music alone.

The arguments

Many artists and industry insiders have criticised the streaming model for being unfair, opaque, and outdated.

They argue that the streaming platforms and the major labels are the ones who benefit the most from the current system, while the artists and the songwriters are left with a small share of the pie.

They also claim that the streaming model does not reflect the true value and diversity of music and that it favours popular and mainstream genres over niche and independent ones.

Universal Music Group in January announced its decision to discontinue a deal that allows video hosting service, TikTok to access various songs that are exclusive to the music group.

UMG stated that TikTok had endeavoured to coerce and intimidate them into agreeing to a deal that would provide considerably lower compensation to artists and songwriters compared to other platforms.

In a newsletter titled “An Open Letter to the Artist and Songwriter Community: Why We Must Call Time Out on TikTok,” UMG shared that TikTok is trying to build a music-based business, without paying fair value for the music.”

However, Daniel Ek, co-founder and CEO of Spotify thinks otherwise. He hit back at claims the music streaming service doesn’t adequately pay artists.

Ek highlighted his company’s substantial contributions to the music industry, exceeding $48 billion since its inception.

Meanwhile, in recent years, the streaming platform has come under fire for underpaying musical artists.

Several prominent artists have withdrawn their music from Spotify in protest against what they perceive as inadequate compensation provided by the company. Notably, Thom Yorke removed Atoms For Peace’s 2013 album, and Taylor Swift removed her entire discography in 2014.