15th September 2021The future of streaming – is it hitting the right note for artists?

The global recorded music market grew by 7.4% in 2020, the sixth consecutive year of growth according to IFPI, the organisation that represents the recorded music industry worldwide. Figures released recently in IFPI’s Global Music Report show total revenues for 2020 were US$21.6 billion.

Streaming is a dominant force in that growth. Paid subscription streaming revenues saw a 18.5% increase by the end of 2020. YouTube’s paid music subscribers recently hit 50m subscribers – up markedly from the 30m subscribers in October last year.

Music can be big business but despite the “streaming boom” this doesn’t always translate to a proportionate benefit for stakeholders. In fact, many successful artists see poor returns from streaming, while some performers are frozen out of payments in their entirety.

This is a debate that predates the pandemic, but it has rightly become higher on the agenda in the last 18 months. In March 2020, Covid put an end to live touring, almost overnight. Many artists’ main source of income was from live touring, with streaming (and sales) simply being a great marketing tool that helped promote their music and shows. And following the publication of the Digital Culture Media and Sport (DCMS) Committee’s report in July, MPs called for a “complete reset” of music streaming to fairly reward performers and creators.

From the report’s findings, it is clear that the current music streaming industry is unsustainable and is likely to lead to the decline of new music in the long term unless supported by a comprehensive new legal framework. The Government is now due to respond to the recommendations by 15 September 2021.

While we await the Government’s response, Rob Fowler, our head of music royalty audits, shares his thoughts:

The balance has to change – the industry can do better

A share of the value of streaming does not compare to a share of the value of a physical CD sale, for both the songwriter or the artist. When streaming first arrived on the scene, clients were often aghast as to the small amounts of money they were receiving for their streams.

Achieving the right balance between streaming and division of income is a difficult one to strike. Whilst labels clearly have significant investment costs it is clear that it’s time for the label vs artist balance to shift. The right to equitable remuneration is essential.

But, it’s not only the label vs artist balance, the label vs Publisher balance needs to be addressed as well.  As the DCMS report highlights, it is a very complex issue that will require much change and there is no simple quick fix solution. It’s a challenge and there will be many obstacles to overcome!

However, as an industry, it’s time to fight this battle.

Streaming income must be shared according to actual streams

Equitable remuneration will help a rebalance of the artist share, but it is also important for streaming income to be calculated according to actual streams.

Less popular genres are often short changed. Their tracks are not generating the same volumes of streams as more popular tracks, currently resulting in their respective share of income being diluted within the actual income apportionment.

Accounting streaming income according to actual streams is the fair thing to do and it will help to ensure these different genres of music are able to earn more.

The streaming ecosystem has to work for everyone

The pace of change is no doubt going to continue. Spotify’s ‘Car Thing’ is on the horizon, the expansion into new territories will continue, and different types of content (for example, podcasts) will continue to emerge. This is why it is extremely important to make changes now and ensure the streaming ecosystem works for all.

We will be closely monitoring the Government’s response to the DCMS report. If you would like to discuss your specific circumstances, please get in touch.

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Robert Fowler
Director - Forensic

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