Current Streaming Services Undervalues Music

The situation is worse for smaller labels or independent artists, as major labels are found to get preferential treatment, thanks to existing regulatory structures and negotiating imbalances, says the study, recently endorsed by the Songwriters Association of Canada.

So how bad is it?

“Our study determines that the market rate for use of music by streaming services should be 80% of gross revenue, paid to all rights holders, with a 50/50 split between record labels/performing artists on the one hand and music publishers/songwriters on the other. Currently, services are paying 60-70% of gross revenue to rights holders with an average 94/6 split in favor of record labels.”

This does not bode well for artists, especially as more consumers turn to streaming services over purchasing music, either track-by-track or in a more traditional album format.  There are clear advantages to streaming – being able to access any song (so long as it’s available on that particular service) at any time from anywhere with a WiFi signal –but there are also potentially serious drawbacks.

The study suggests a more equitable compensation rate would be in the 80% of gross revenue range, instead of the current 60-70%.

Another complication is the “lack of transparency” when it comes to advances paid to labels by streaming services. One report cited by the study indicates there is “no evidence that these advances have been shared with artists, songwriters or other rights holders. This lack of transparency, and the opaqueness of many other aspects of the current value chain… leaves artists and songwriters in the dark about much of their current situation.”

Pandora, Spotify and iTunes pay on a per-stream basis, but the number of plays required to make even a full penny is staggering. As Canadian musicians have lamented, especially in light of the Tariff 8 proposal, “If I Had a Million Dollars” would have to be played more than 9,200 times before the Barenaked Ladies could afford a single box of Kraft Dinner. It’s no better in the United States, where those same three streaming platforms pay anywhere from $0.001 to $0.005 per stream of a given song, a few which goes to performers. Even less goes to composers and songwriters, and there’s a good chance they won’t see any of it, thanks to “a number of highly questionable practices during both negotiations of rates and distributed of collected monies,” the study notes.

The study was endorsed in October during the International Council of Music Creators Congress, in Nashville. The organization embraces a Fair Trade initiative, similar to that established for Fair Trade coffee and other products, as a way to create and protect a system in which all individuals engaged and involved in the creation, production and consumption of music act in ethical, responsible and financially sustainable ways.

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