When music fans listen to their favorite album, they get a certain satisfaction in knowing that they have paid for the music they love – they are giving back to the artists who did.
This is not the case on music streaming platforms, where artists do not receive a fixed fee when you stream their songs or albums. Instead, your subscription fee goes into a big pot which is then split among each artist on the platform based on their share of the overall feeds. You can think of the payout pot as a pie chart: The size of an artist’s income bracket is determined by the number of streams he receives relative to his fellow artists.
It 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, known as the pro-rata payment model, starts to seem unfair when the effects of curated playlists are taken into account.
Popular playlists are streamed repeatedly by millions of people, making up about a third of all streams on platforms like Spotify – a third of the pro rata pie. Because one-third of the streaming pie represented by playlists mainly comprises the world’s most prominent musicians, the effect of playlists is to enlarge the slices enjoyed by bigger artists at the expense of smaller artists, who see their songs. tiny slices shrink further.
This uneven playing field was the subject of our recent Spotify Playlist Survey, conducted with royalty pricing expert Daniel Antal. We have found that playlists do not only benefit the best artists, but that the curators of those playlists may unfairly favor those artists, influenced by the bargaining power of the major music labels that manage them.
In recent years, music streaming has become the dominant form of music distribution around the world. Today, streaming accounts for more than half of the global revenue from the sale of recorded music.
Globally, nearly four in five listeners use Spotify, Apple Music, Amazon, Tencent, or YouTube. Some of the music that listeners on these platforms come across is the result of a targeted search for a specific artist or album, but many people simply choose to rely on some playlist to prepare. 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 a top playlist is like hitting the jackpot – your feeds will skyrocket and your slice of the pie will increase.
There are over 4 billion playlists on Spotify, but those in the top 100 attract a quarter of all playlist followers. Our study found that 81% of the songs on these Top 100 Spotify Playlists are recordings from major labels. A 2018 study found that inclusion in a top playlist with 18.5 million followers increases an artist’s feeds by nearly 20 million and results in a payout of at least $ 116,000. US (£ 84,500).
Naturally, artists, record companies, and their distribution partners are all interested in maximizing the streams their songs receive and, therefore, the revenue they can earn. Getting into the best playlists is a smart way to do it, but with around 60,000 new songs uploaded every day from Spotify alone, it’s no trivial task.
The majors, with their huge catalog of current and past music, are in a good position to negotiate preferential access to playlists. Their bargaining power is further strengthened by the minimum payment guarantees that they include in their contracts with streaming platforms and the stakes they hold in some of them. The big labels also have their own big playlists, such as Filtr and Topsify, which further improves access to playlists for their artists.
As a result, our analysis of Spotify data suggests that artists from indie record labels are getting 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 depleted more, especially by heavy users, such as pubs and cafes, who are constantly playing popular playlists all over the place. throughout the day.
Earlier this year, musicians staged a series of global protests outside the offices of Spotify. One of their requests was for Spotify to move towards a “user-centric” payment model.
Toronto requires #JusticeAtSpotifyhttps://t.co/E10iCcSwI3
– Union of Musicians and Allied Workers (@UMAW_) March 16, 2021
This is a system that we urgently recommend, as it would see the royalties generated by your subscription simply distributed among the artists you choose to listen to. The 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 away from more international and traditional stars.
In the UK, the Department for Digital, Culture, Media and Sports has formed a committee to determine whether the economy of music streaming 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 pandemic-stricken world, where live music is almost completely (although only temporarily) eradicated, music streaming is an important source of income for musicians. But if labels and independent artists find themselves without a sufficient slice of the pie, it threatens the wonderful diversity of music that 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.