Scores of music industry insiders including the artists Nile Rodgers, Nadine Shah and Ed O’Brien of Radiohead, as well as songwriters for stars such as Kylie Minogue, have hit out at an “archaic” streaming model that allows major labels to maximise their revenue while some musicians struggle to make minimum wage.
Ahead of the release of a parliamentary report into the issue, notable figures from the industry have told the Guardian that music labels were perpetuating issues that need to be urgently addressed, including a system that still prioritises rights owners over artists.
The Department for Digital, Culture, Media and Sport (DCMS) Commons select committee has been examining whether the business models used by major streaming platforms are fair to songwriters and performers. From witnesses expressing fear that speaking up could harm their careers, to the boss of a major record label being described as “living in cloud cuckoo land”, the hearings have been full of testy exchanges.
Senior figures from Spotify, Apple and other streaming services have commended the virtues of streaming, and few in the world of music would dispute that the platforms saved the music industry. Music streaming in the UK now brings in more than £1bn a year in revenue. But the fact remains that artists can be paid as little as 13% of the income generated, receiving as little as £0.002 to about £0.0038 per stream on Spotify and about £0.0059 on Apple Music.
Many have been asking whether it is right that the split in streaming revenues means about 50% go to labels, 30% to streamers and the rest divided among all other interested parties.
The labels say they are investors in talent and any changes to the system would mean less money spent on A&R and artist development. But those on the other side of the debate say a complete rethink that introduces third-party collecting agencies for royalties or a user-centric model that ensures consumers’ money goes to artists could be the way forward.
Ahead of the publication of the DCMS committee’s recommendations, expected this spring, the Guardian has surveyed more than 25 figures from the world of music. The question we asked was simple: streaming may have saved the industry, but does it now need reform itself?
Nile Rodgers, Grammy award winning composer, producer, arranger and guitarist
It is not the streaming services that we have the problem with – it is fantastic that they can distribute our product in such an effective, wonderful way and keep a great digital trail. It is the labels that are perpetrating the issues that need to be seriously addressed. The fact is the system is unfair. Artists and writers are not remunerated properly or equally. They do not get their fair share of the pie. To fix this we need to have transparency and artists should be paid on a licence, not a sale. Alongside this songwriters should be getting a much bigger share as they are delivering the key ingredient. We don’t even know what a stream is worth and there’s no way you could even find out what a stream is worth, and that’s not the basis for a satisfactory relationship.
Nadine Shah, musician
I may have been misunderstood before: I love streaming. I stream a lot of music myself. The access we have to all kinds of music from all over the world is incredible. But I believe streaming must be fixed. The three major labels are bragging about record profits while thousands of musicians are seeing virtually nothing coming back to them. Streaming is here to stay, as it should. What then can fix it and make it better for artists? A user-centric system whereby the artists you choose to play see direct payment from your subscription fee?
Subscription fees for the likes of Spotify have stayed the same for nearly 10 years, £9.99. Increasing this fee may not be so popular during a pandemic, but it does need to go up. We need a fairer system in place. We need more transparency. I wish it was the case that all artists would realise their power and all stand together and unite and strike, but so many of us are so scared to lose favour with major labels and the streaming platforms. Surely we can find a way to make streaming work for all of us, labels, DSPs [digital streaming platforms], and artists and writers.
Kate Nash, musician
I’ve had enough success in my career to have a voice, get a foot in the door, pay my bills, invest in my art and find my way when I’ve been dropped or stolen from or when a global pandemic takes touring off the table. I’m extremely lucky. What I don’t get is why touring is the main source of income for us. It’s expensive and difficult to do. It’s hard on the body. It makes all relationships long distance, you don’t get a lot of sleep, it’s dirty, you’re in a bar every night, the food is bad. It’s a pretty unstable lifestyle. God I miss it. But what if a musician doesn’t want to tour? Is it possible to have a career in music without it? What if an artist has stage fright or mental or physical health issues? What if they want to buy a house one day or have kids? Or just pay rent? What about health insurance and a pension? Not being paid fairly for our recorded work means our industry is not inclusive and it makes music a club for the privileged.
David Brewis, Field Music
I don’t feel that we have any divine right to make a reasonable living from our music, but I think we might be around the cusp where it’s not crazy to think that we could, or that we might have in another era. We’re lucky in that a good chunk of our audience are exactly the kind of people who notice this stuff and who continue to buy physical records specifically because they want to support artists. What seems clear is that the music industry has gone through a massive realignment due to tech developments – fast internet, MP3s – and that regulation hasn’t kept up so there’s been a free-for-all where the big players have been able to set terms to benefit themselves. And it’s thrown up a lot of anomalies. A casual music consumer 10 years ago might have spent £40 buying five CDs a year. Now a casual music consumer might pay three times that for a year’s access to almost all recorded music ever made, while still listening to a similar combination of big, new chart releases and venerable back catalogue they were listening to anyway.
Imogen Heap, musician
It’s fantastic that this inquiry has happened, as it raises awareness of the core issue for our industry, and why, as a result, it largely doesn’t work for music makers. It might be streaming now, but in a few years’ time it will be something else. Change is both needed and guaranteed. What we have to do to protect the future of our profession is for the music community to use this as a springboard for collaboration to create strong foundations for whatever future services may arise. We need to get ahead of the curve instead of firefighting new mediums and trying to crowbar ourselves an income from them. We also need to get our data organised so that we can present a clear and accessible solution that will ease collaboration and improve flow of payment. That would enable revenue-generating opportunities and discoverability to go through the roof in comparison with what it is now.
Tim Burgess, the Charlatans
What we need more than anything is clarity. We have all the numbers and they are updated in real time. Spotify has just been valued at $67bn while the entire live music industry disappeared a year ago and shows no signs of returning any time soon. Spotify Premium has 155 million subscribers, but there are so many stories of imbalance when it comes to those who make the actual music. Tom Gray has been doing some fantastic work with the #BrokenRecord campaign, and with the DCMS committee, there might be a sign of a better future – times are bleak and music has therapeutic qualities. So many people have turned to streaming sites to find some comfort – we need more of the money that comes in to find its way to the smaller artists, the major labels need to step up too. It’s time to start talking, guessing we can all find the time at the moment.
Ayanna Witter-Johnson, singer-songwriter, cellist and composer
As an independent, self-releasing artist, streaming platforms have been incredibly useful in enabling me to more easily reach and build a global audience. At this time, with the near total disappearance of my primary income from live performance, my streaming income has become much more important to me. During lockdown streaming has soared, but the reality is that a single stream only amounts to 0.003p, which means I would need millions of streams to earn at least the minimum wage. Unfortunately, the majority of the income from streaming doesn’t trickle down to independent artists. The lion’s share goes to the streaming platforms instead of going to the creators, who are the lifeblood of the music industry. The current split of income is unfair, dangerous and needs to change because the people who will suffer the most are ultimately music creators like me.
Iain Baker, Jesus Jones
Yes, Spotify throws around a lot of cash, and some of the sums seem immoral – and the money artists get paid isn’t enough. That’s clear. But Spotify pays out 65% of its revenue – that’s quite a lot for a business: if they suddenly paid out 99% (which wouldn’t really be enough to actually run the damn thing) then instead of an artist getting 30 quid for a million streams or whatever – they’d still only end up with 45. So maybe everyone should pay more for Spotify, but they’ve already got 40% of users paying premium, which is a decent rate of users on a higher rate. If they whack up the fees, what happens if people can’t be bothered to pay £25 a month instead of a tenner? Then the users drift away and that artist gets even less than 30 quid for his million streams.
I believe there’s a fundamental argument that needs to be made about the value of content – the well has sadly been poisoned ever since the MP3 revolution when people could suddenly get music for nothing. Trying to reframe that understanding of what music should cost is what we need to focus on. It’s like the car we’re driving is knackered, and going after Spotify is just attempting to change the windscreen wipers instead of looking at the engine.
Tom Gray, #BrokenRecord campaign and Gomez
Many performers currently receive no income from much of their streamed work. We change this by closing a loophole in UK copyright law to give an unwaivable right to equitable remuneration. The major rights holders were able to define the market on their terms without thought for balancing the rewards. This is market failure. However, songwriters and composers need the market domination of the major music groups to be directly addressed. The value of the song is suppressed. A referral to the Competition and Markets Authority would seem the correct starting point to address this.
Milk is a loss leader for supermarkets, so dairy farmers have the protection of the Groceries Code Adjudicator. Music is a lossleader for tech companies like Apple and Amazon. We need the same protection: a regulator to ensure the lawful and fair treatment of music creators. Lastly, we need a limit of 25 years on recording contracts.
Billy Bragg, musician
Part of the problem of low royalty rates on the streaming model is down to the fact that many artists have recording contracts that reflect physical rather than digital distribution. Before the internet came along, artists were willing to give record labels the lion’s share of the royalties because they did all the heavy lifting: pressing the records, distributing them to shops, collecting royalties. Standard contracts divided profits 85% to 15% in favour of the labels. Streaming services don’t pay directly to artists; they pay rights holders – usually the record company – who then pay the artist according to the contract they have with them. Given the amount of legacy material on streaming services, those payments will likely reflect the physical distribution model, despite the fact that most releases are made available by the click of a mouse.
Royalty rates need to be reformed to reflect the way music is delivered today, both for legacy and contemporary artists. An industrywide 50/50 split on digital royalties would begin to redress the balance in favour of those who create the music we all enjoy.
Laura-Mary Carter, Blood Red Shoes
I have nothing against Spotify or other streaming services. I think it’s a good way for people to hear music, but I have an issue with how the artists are paid. As a musician you go into this business and you don’t understand how everything works. No one tells you and especially with streaming there’s absolutely zero transparency. There are many issues within the music industry, but I think this one’s a pretty clear-cut one; streaming just needs to be more transparent because there’s loads of things about it that we don’t know. When you ask a label or anyone in the industry to get a breakdown of financial stuff it’s like pulling teeth. There is not much protection for artists. I think musicians are worried about speaking out about it because you feel like saying something is going to hinder your career. I’m at the point where I’ve got nothing to lose.
You’re so used to getting the crumbs in this business as an artist, so when it comes to Spotify or streaming services you accept it. That’s the problem: musicians are used to accepting shitty terms on everything and that’s where I think we as musicians need to stand up and say: “Hang on a minute, we’re worth more than that.” We’re the reason why everyone in this industry has a job.
Imogen Williams, songwriter and U25 board director at the Ivors Academy
Streaming is immensely valuable to me as an independent artist in granting me unparalleled access to a growing fanbase, and them to me. But, like many, my wealth in streams has amounted to little financially and I cannot currently sustain myself from music. While remuneration is the obvious argument, the lack of transparency is of equal concern – especially to younger artists like myself who’ve only known this version of the industry. If the DSPs and major labels were to agree to even some requests borne out of the discussion so far, it would at least be a gesture towards delivering the clarity that artists, whose value these platforms are built on, deserve.
There is a collective fear among emerging artists that speaking out will endanger our professional opportunities, for playlist spots or other key support. This feels like a dangerous power dynamic. Isn’t the value in the song? This isn’t a battle against streaming services but a call to make this potentially incredible system work for everybody.
Crispin Hunt, the Longpigs and director of Ivor Novello awards
Streaming is amazing: what more could you want than not all the music in the world for a tenner a month. But the reality is that the major labels are still controlling it as if it were still a manufacturing industry and it isn’t anymore, they’re a marketing industry. They can’t expect to take the manufacturer’s share any longer. Performers need an equitable remuneration right within streaming – there needs to be money coming from play one direct through collecting societies to performers. Those are the same kind of rights performers and songwriters have with radio broadcast and we need those transferred to streaming because there will be no radio in 10 years time. That income will disappear.
The government needs to regulate the data. They need to make sure that you can’t put anything up on a streaming platform without knowing who to pay for it. There’s no way that the record label should be able to put a track on the streaming platform without knowing who the songwriters are. We’re in a digital world where 100% accuracy is viable.
Bonnie ‘Prince’ Billy, musician
I don’t stream music. I don’t have to because I own records, CDs, cassettes, and a radio. I have friends who recommend music and I know of good record dealers, in real life and online, whom I trust. An algorithm may suggest to me some music that I would appreciate, but I don’t have it in me to care about an algorithm’s sense of what I should listen to. When I take the recommendation of a human, I know that listening to the recommended music, whether I like it or not, will help me to understand that person better and so ideally bring me closer to that person, and to people in general. That’s why I make music, to connect with other human beings.
Steve Mason, the Beta Band
I got signed in about 1997 – that was pre-internet, pre-streaming, pre-piracy. I remember watching the internet slowly become a way to deliver music, and I watched the record companies bury their head in the sand and pretend it was going to go away. I think in a way that is what they’re doing at the moment. They’re making so much money at the moment that they think this is going to last forever, but the problem they’re going to have is that a career as a musician is not going to be viable any more. So what you’re doing is just slowly strangling the very thing that you need to stay alive.
I don’t think they really see the big picture and see the damage that is being done. I believe everything can be fixed. The problem that you’ve got, is that these people are making so much money and are so powerful with all this back catalogue. It’s very, very difficult. I think one thing that really needs to be done is a conversation between us musicians. It’s this classic thing of one on one against this system we’re useless, but once we start to stack up and gather together then we can create a problem.
Orphy Robinson, jazz musician
Streaming is having a very real effect on the music I love: jazz. People are saying because of the nature of what we do, and the art that we create, we’re going to have to change it to fit into Spotify playlists, which value songs that are shorter and don’t have long intros. Some jazz musicians I know are saying: ‘Should we make something that is two-and-a-half minutes long?’ It could trigger a huge change in how some music sounds.
When it comes to possible reform, the composer, the artist and the song have to be paramount. Streaming can’t just be about making profit for some guys at the top. I think there has to be an even four-way split – between the labels, the artists, the publisher and the streaming company. In the last year we’ve heard about how the majors have made these amazing profits but some of the songwriters – the people who provide the product – are starving. We hear horror stories about people with hundreds of thousands of streams, but when the revenue from that is all broken down between a band and their management they make nothing. Music has been so important for people during lockdown, now musicians need a fair share.
Ed O’Brien, Radiohead and founder of the Featured Artists Coalition
What we’ve got is this incredibly efficient streaming model where you’ve got the ability to access all the data, which is then bolted on to this older system that was not about transparency. That old model wasn’t equitable, it wasn’t fair and it was based on – and still is based on – ownership of copyright. They’re no quick fixes, but there are some reforms such as equitable remuneration. But they don’t solve the problem entirely. Up-and-coming artists wouldn’t necessarily benefit from that and they are the ones who fall by the wayside with streaming, especially now because they can’t sustain their income with live gigging.
The major labels are trying to maximise their revenues, which I totally understand, but it’s unsustainable. During the inquiry this has come out, and one of the standout moments for me was during the first panel when MPs simply tried to get their heads around traditional recording contracts and the biases that are built into them. I don’t think until you’ve got some kind of benevolent owner who buys a major record company and goes: ‘You know what, I’m gonna stop these copyrights for life and I’m gonna give something back to the artists.’ Until you get that it’s never gonna get sorted out.
Helienne Lindvall, songwriter
The people who really have an issue and can’t survive in the current streaming economy are the people who have a smaller core audience. It works for big record labels, or even medium-sized record labels that have a catalogue because for them the money from streams keeps feeding through. But if you are an artist or a songwriter where you can have one song coming out maybe once a month, if you’re lucky, then it’s just not going to work. Spotify says: ‘Well, you can’t compare CD sales with streaming because with streaming you’ll get paid for the next 10 years.’ Sadly, that’s not how my rent or my mortgage works.
When I look at the way streaming works, I feel like I’ve opened the bonnet of a car and there’s no engine in there. There are all of these cables hanging out, and the key missing part would be a system for the streaming platforms to accumulate and to get simple information such as who wrote what song, because at the moment there’s no requirement for the label. They can put up a song without knowing who should get paid for it. There needs to be a minimum data requirement for submitting a song to Spotify. Or simply, Spotify should not publish or feature any song that doesn’t have all the information needed. I always say Tesco can’t sell an egg sandwich without knowing what’s in it – the same rule should apply to streaming.
Bradley Zero Phillip, DJ and label owner
I think the debate around DSP revenues is a little misrepresented. While the royalty system is in urgent need of a re-evaluation, I think we also have to take a step back and remember the musical landscape just a decade ago: record stores were closing, CD sales had slumped and digital music was ascribed almost no value. While it may not be a perfect solution, the big streaming services pretty much achieved their aim of redirecting people away from piracy towards a paying model.
What’s not so good for the industry is the fact that the majority of revenue from recorded music: independent or otherwise – flows through two companies. Transparency is key and fair division of income should be paramount. It would be great to see a cap on the percentage that these monoliths are able to retain in profit, but I can’t imagine that happening on a global scale. More competition would also be good to see – but ironically, I think more competition just means lower prices for the consumer – not better deals for the artist being streamed. It’s hard to be entirely pessimistic nor completely hopeful.
Gilles Peterson, DJ, label owner and BBC 6 Music presenter
I know that streaming doesn’t look great on the surface for artists as you get such little return for each play. But here at Brownswood we have found that it is an interesting way for more underground artists to continue to generate income for years. Unlike downloads or vinyl purchases, which are one-offs, you get paid a little for every stream. It is the long-tail theory. Probably less attractive for big acts, but for smaller ones it can work. It has drastically increased our royalty payments to artists for releases years ago. And artists can self-release without the costs of manufacture and distribution. I like it.
Merck Mercuriadis, CEO and founder of Hipgnosis Songs Fund
Streaming has saved the music business by making it more convenient for people to once again consume music legally rather than through illegal file sharing. In doing this it has taken music from being a luxury purchase and turned it into a utility, and that has completely changed the economics of music: now the contractual relationships between the major record companies and artists/songwriters need to be reviewed. Artists and songwriters are the lifeblood of the music industry but the revenue taken by a master holder/record label is 58.5p out of every pound, whereas the writer/publisher gets only 11.5p.
The problem is that three major record companies own the three largest publishers, and it is in the record labels’ interest to push for the income received on the master/sale side to be greater than on the writers/publishing side, where margins are higher at the cost of the songwriter. The major publishers are therefore being prevented from advocating for their songwriters’ interests.
Geoff Taylor, chief executive of the British Phonographic Industry and the Brit awards
More artists than ever are able to forge a career in music thanks to the global reach of streaming. There are a broad range of deals to choose from and rising label investment is helping to realise their creative and commercial potential, increasing the opportunity to “break through” in a hypercompetitive global market. The rise of streaming means thousands of artists are seeing their songs played in the 10s and 100s of millions in the UK alone – in the last year 1,800 artists achieved more than 10m streams – 72% more than the 1,048 who achieved the equivalent number of sales in the CD era. Typically, UK artists will then see four times the number of streams globally to build significant artist revenues from streaming.
Set alongside other earnings from music, label backing and creative marketing is helping many artists succeed in the streaming era. With signs that “live” will return this year, this crucial part of artists’ income will soon be restored. Through continued label investment and public policies supporting music’s growth, the artist community will continue to benefit, fans can enjoy even more music and the UK’s standing as a music nation will go from strength to strength.
Dan Chalmers, director of YouTube Music for Europe, the Middle East and Africa
YouTube gives artists at all stages of their career a platform to reach audiences around the world, while providing the opportunity to earn money in a number of ways. Our open platform and truly global reach has led to an explosion of creative, genre-blurring music coming from all corners of the world, such as grime music, K-pop and Afrobeats, and has led to new artists and songwriters finding their voice, growing their community of fans and building their revenues.
Streaming platforms have played a vital role in recovering music industry revenues lost to piracy and have generated five consecutive years of growth globally. Our twin business models, of subscription and ad-supported remuneration that has brought an incremental revenue stream for the industry, means that YouTube can become the music industry’s No 1 source of revenue by 2025. And we’re further experimenting with new models, such as the ability to subscribe to individual channels, which will drive further new revenue streams to artists and songwriters. We hope that streaming leads to further transparency in the industry such that the flow of artist revenues is visible.
Michael Weissman, chief executive officer of SoundCloud
Streaming and technology has created enormous opportunity for artists. Right now, the number of independent artists releasing music is outpacing the overall growth of the industry. That creates imbalances. Unless the industry experiments and innovates beyond current one-size-fits-all offerings, artists will have a tougher time building their careers. We know artists want to stay independent and grow. We are the only platform to allow artists to engage directly with fans, and fans with artists. This unique position allows us to be a step ahead of the industry. For example, in early March we launched fan-powered royalties – a new payout model that rewards the artist-to-fan connection and tips the balance in favour of emerging independent artists. It is a significant first step for SoundCloud and we continue to look for new ways to elevate, grow and create new opportunities directly with independent artists.
Elena Segal, global senior director of music publishing at Apple Music
We believe very strongly that creators should be paid for their art and we have done that ever since 2003 when we came into this business. Artists should be paid for their work, creators should be paid for their work and it’s what we’re committed to do every single day. We’re very happy to have a discussion about what is and is not fair, because it’s not a straightforward question.
Horacio Gutierrez, Spotify’s head of global affairs and chief legal officer
Since Spotify launched in 2008, we have paid out more than €20bn to rights holders and €5bn alone in 2020 – helping save the industry from piracy. Streaming enables more opportunity for more artists to be discovered and make a living than ever before, and an increasing number of artists globally are succeeding at all stages of their career. Over the last four years the number of recording artists whose catalogues generated more than $1m a year across recording and publishing is up by over 82%, to more than 800 artists. And the number generating more than $100,000 a year is up 79% to more than 7,500 artists.
Of course, Spotify is one of many other music streaming services generating revenue for artists, and streaming makes up a portion of all industry revenues, so these figures only represent part of the picture. But we know the ongoing pandemic has had a huge impact on the careers of artists, who are now relying on streaming income more than ever before. We want to continue to support them and we welcome the opportunity to work together with rights holders and administrators to look at how we can modernise music economics to do this.
Fiona Bevan, songwriter
The entire music industry profits from the brilliant, beautiful songs which we walk up the aisle to, hum in the shower, or use to say farewell at the funeral. Yet these songs that soundtrack our lives are vastly undervalued compared with the recordings of the songs. If a singer releases a cover of a hit song, they’ll earn up to 10 times more from it than the writer will. Record labels get about 55% of streaming platform income because they historically had large overheads for their physical products, while publishers only get about 15%. Now that streaming has almost totally replaced CDs and vinyl, songwriters are trying to survive from a percentage of £0.0003 per stream, compared with a percentage of a £1.99 CD single sale, or even a 99p MP3 download. The labels’ physical overheads are vastly reduced, but songwriters are still trapped in this archaic model, ending up with a tiny percentage of the publishers’ 15% by the time everyone else has taken their cut along the way, which is why I recently told the government inquiry that I know hit songwriters who are driving Ubers.
I think if the archaic split between labels and publishers was updated into equality, to account for the fact that the industry has gone digital, hit songwriters would be able to pay the rent and survive. I also think “user-centric” streaming models could help fix some of the problems; it would mean that if you spend a whole month listening only to your favourite local singer-songwriter, your subscription fee would actually go to that artist, whereas at the moment it goes to the biggest artists in the world, by record label market share, whether you abhor or love them.