From Taylor Swift to Thom Yorke, a lot of artists have expressed their grievances toward Spotify and other music streaming services. I’ve long suspected that their anger was misguided, and Techdirt has confirmed my theory: they should probably be angry with their record labels instead.
While I personally think Pandora is proverbially the spawn of Satan, I have had nothing but positive experiences with Spotify as an artist/master owner. The royalties aren’t life-changing, but they’re better than I expected.
Nevertheless, when Pharrell only earns $2700 from 43 MILLION streams on Spotify, you know something is wrong.
We noted that the target of these musicians’ anger appeared to be misplaced, as the CEO of Merlin (which represents a ton of indie labels) admitted that the real problem was that Spotify paid lots of money to labels and it was the labels not giving that money to the artists. Yet, rather than blaming their own labels (or their own contracts), these artists lashed out at Spotify and other streaming services. Just a few months ago, we covered this issue again, with even Bono admitting that the real problem was the lack of transparency from the labels.
And, it appears, there’s a decent reason why those labels haven’t been eager to be transparent: because they’re keeping most of the money.
The graphs below further prove the point: labels are getting 46% of the streaming revenue. With the post-tax payout, labels are pocketing nearly 75% of the royalties.
In all fairness, labels are businesses. They have several departments that not only keep themselves running, but also further the careers of the artists they sign. The majority of these artists lose the label money. The big sellers cover the shortfall.
Just because it costs pennies to upload the music digitally doesn’t mean that it didn’t cost upwards of hundreds of thousands of dollars to create and promote said music. It comes with the territory of signing with a major label. Artists would realize this if they actually read their recording contracts.
Nevertheless, the songwriters should not have to suffer the consequences. The music industry would not exist without the music, and the music starts with a song. It’s infuriating that those who make up the very foundation that this industry stands on are usually the last to be considered.
I won’t even go into how some artists and producers secure publishing shares on songs they didn’t write in the exchange of getting the song placed.
It happens more than you’d realize.
With all the movement that’s going on with Copyright Law, some things are definitely going to change. I’m just interested to see in whose favor the pendulum will swing.
