Streaming Payment Structure is Nearly Impossible to Keep Straight: Part 6, the conclusion of the Music Streaming Debate

August 10, 2016

Part 1

Part 2

Part 3

Part 4

Part 5

 

Many of the complaints about payment for music streaming come from artists who signed contracts with record labels. While their public complaints are readily available online and in the media, their recording contracts are not. Did they take a six or seven figure advance that still hasn’t recouped? Did they sign away their rights for digital revenue with their label? Is their label making legal claims on digital revenue that is not included in their contract with the artist? We will never know. 

 

Independent artists that may have made some money in the music industry in the pre-streaming era might be finding that the revenue streams they became used to, no longer exist. It’s easy to start pointing fingers at streaming services for devaluing music. But what would have happened without streaming services? Do we know if any given independent artist would be making more or less money without streaming services in the current year? 

 

As mentioned in Part 5—Who is Getting Rich from Streaming?—how do the major label deals around advances and equity impact “per stream” rates of artists? 

 

 

These are just the tip of the iceberg on streaming payment structure. Whether a service is interactive (like Spotify) or non-interactive (like Pandora) changes the payment amounts. On non-interactive services, whether an artist is claiming both the artist side and label side with SoundExchange, changes the payment amounts. On interactive services, the streaming service negotiates with each label and publisher in each territory. However, artists recording for those labels, have a separate agreement with the record label, so what label you sign with or what contract you sign with them will change the payment amounts. Whether a track is streamed via an ad-supported or a subscriber account, changes the payment amounts. Furthermore, user generated content (such as on YouTube) has a totally different payment structure. Though music rights holders can claim their music on YouTube, they can only choose to issue a take-down notice (which can become a game of whack-a-mole), monitor data on the plays of your song, or partake in YouTube’s ad revenue sharing program, which pays substantially less than Spotify, Pandora, Apple Music, Tidal, or Google Play. 

 

The intent here is not to elucidate how much artists or labels get paid per stream or per thousand streams.

 

When someone criticizes the amount getting paid out by music streaming, the details make a difference. Which type of streaming service, which type of account (ad supported or subscriber), what deals did the artist sign along the way, and what advances might they have taken… these issues all influence the legitimacy of the complaint. As well as the fact that the artist may just not have gotten very many streams at all. 

 

And remember, if streaming is the new radio, performing artists still don’t get paid for terrestrial radio. 

 

This concludes the six part series "The Music Streaming Debate".

 

Dmitri Vietze is the founder and CEO of rock paper scissors, a music and tech public relations firm.

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The Music Tectonics podcast goes beneath the surface of the music industry to explore how technology is changing the way business gets done. The podcast includes news roundups, interviews, and more. Our host is Dmitri Vietze, CEO of PR firm rock paper scissors.

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