Streaming popular music playlists hurts income for small artists
When music fans listen to their favorite album, there’s a certain satisfaction in knowing that they’ve paid for the music they love – they’re giving back to the artists who made it.
That’s not the case on music streaming platforms, where artists don’t receive a flat fee when you stream their songs or albums. Instead, your subscription fees go into a big pot which is then split between each artist on the platform based on their share of overall streams. You can think of the payout pot as a pie chart: the size of an artist’s revenue bracket is determined by the number of streams they receive relative to their fellow artists.
This may seem like a fair way to distribute music streaming revenue. If Rihanna gets 1% of all streams on Spotify, it’s fair that she gets 1% of subscription revenue. But this system, called the prorated payment model, starts to look unfair when the effects of curated playlists are taken into account.
Popular playlists are streamed repeatedly by millions of people, making up around a third of all streams on platforms like Spotify – a third of the pie pro rata. Since the third of the streaming pie accounted for by playlists consists primarily of the world’s most prominent musicians, the effect of playlists is to enlarge the slices enjoyed by bigger artists at the expense of bigger artists. small, which see their small slices shrink further.
This uneven playing field was the subject of our recent Spotify playlist survey, conducted with royalty expert Daniel Antal. We’ve found that playlists don’t just benefit top artists, but playlist curators can unfairly favor these artists, influenced by the bargaining power of the major music labels that manage them.
Over the past few years, music streaming has become the dominant form of music distribution worldwide. Today, streaming accounts for more than half of the world’s recorded music revenue.
Globally, nearly four out of five listeners use Spotify, Apple Music, Amazon, Tencent or YouTube. Some of the music listeners encounter on these platforms is the result of a targeted search for a specific artist or album, but many people simply choose to rely on a playlist of some sort to put together their musical regime.
The biggest playlists on Spotify are curated by the platform’s publishers, attracting millions of regular listeners. As an artist, being on one of the top playlists is like hitting the jackpot: your streams will skyrocket and your slice of the pie will increase.
There are over 4 billion playlists on Spotify, but those that make up the top 100 attract a quarter of all playlist subscribers. Our research found that 81% of the songs in these Spotify Top 100 Playlists are major label recordings. A 2018 study found that inclusion on a top playlist with 18.5 million subscribers boosts an artist’s streams by nearly 20 million and results in a payout of at least $116,000 US (£84,500).
Naturally, artists, record labels, and their distribution partners are all interested in maximizing the streams their songs receive and, therefore, the revenue they can pocket. Getting into top playlists is a smart way to do this, but with around 60,000 new songs uploaded every day on Spotify alone, it’s no trivial task.
Major record labels, with their huge catalog of current and past music as bargaining chips, are in a strong position to negotiate preferential access to playlists. Their bargaining power is further enhanced by the minimum payment guarantees they include in their contracts with streaming platforms, and the stakes they hold in some of them. Major labels also have their own great playlists, such as Filtr and Topsify, which further improves playlist access for their artists.
As a result, our analysis of Spotify data suggests that artists from independent labels get less than their fair share of access to the most popular playlists. And under the pro-rata system, that means smaller artists see their streaming revenue cut even further, especially by heavy users, such as pubs and cafes, which constantly stream popular playlists throughout. of the day.
Earlier this year, musicians staged a series of global protests outside Spotify’s offices. One of their demands was that Spotify move to a “user-centric” payment model.
Toronto demands #JusticeAtSpotify https://t.co/E10iCcSwI3
— Union of Musicians and Related Workers (@UMAW_) March 16, 2021
This is a system we highly recommend, as it would see the royalties generated from your subscription split simply among the artists you choose to listen to. Available evidence suggests that a move towards user-centric payments would benefit local and national artists who cater to more specialized tastes, redistributing that money from more international and mainstream stars.
In the UK, the Department for Digital, Culture, Media and Sport has formed a committee to assess whether the music streaming economy is fair for all artists. Our study is one of the submissions to help the committee plan the way forward for music streaming in the UK.
In a world affected by the pandemic, where live music is almost completely (although hopefully temporarily) eradicated, streaming music is an important source of income for musicians. But if labels and independent artists are left without a sufficient piece of the pie, it threatens the wonderful diversity of music we currently have access to on demand, wherever we are in the world.
This article by Peter Ormosi, Associate Professor of Competition Economics, University of East Anglia and Amelia Fletcher, Professor of Competition Policy, University of East Anglia, is republished from The Conversation under a Creative Commons license. Read the original article.