Streaming’s problems will not be fixed by royalties alone

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by Mark Mulligan

15 Sep 2023

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UMG and Deezer’s artist-centric royalty proposal got the amount of attention both parties probably wanted , if not necessarily the type of attention they were after.

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Bob Bellin
The real issue is your #2. Labels won't cut better deals with artists because they have no incentive to, except possibly with big stars. Taylor Swift proved that if you're big enough, you can just rerecord everything and render your catalogue almost worthless. The issue is the DMCA, which was cut and pasted into law from an email from the RIAA in 1998. No law dealing with anything digital written in 1998 should exist in that form. Again, the problem is math - to much money to the labels, not nearly enough to artists or streamers. Changing the structure without changing the metrics won't change anything.
Max
If labels really want to push through a two-tier royalty system for (short-term) profit growth, they are going to make the same mistake as in the past. Perfect is the enemy of good. The consumer needs will prevail. And the consumer clearly wants: 1. Diversity and ultra-personalization (ever expanding genres) 2. Perceived fairness in compensation, rooting for their favorite artists (voted by attention/streams) Neither can be achieved with a label-centric system. Spotify and other DSPs should be careful to cater to labels wants too much. Otherwise, they risk disruption.
jim mcguirk
"Better Music"? In whose opinion - and who will be the gatekeepers of this system? Back to the old days when moneygrubbers controlled what music was fed to the masses and talented people who refused to bend over were refused access to the world of music. "Amplified streams?" This means the people who can afford to buy lots of streams gain an even bigger advantage - the megarich continue to use their money to manipulate what we are allowed to listen to.
Mark Mulligan
As I have written previously, I share the opinion that as soon as we get into discussions about what is 'better' we tread into a cultural minefield. For example, if a retired marine biologist uploaded an album of whale noises, that represented her life time's work, would that be 'better' or 'worse' that Taylor Swift rerecording one of her old albums? Under current prevailing thought, it would be 'worse'. That is why we proposed a system that does not get dragged into that un-winnable debate, but instead use the data listeners generate to determine what is standing out. Looking at metrics that measure engagement (eg average listens per person, add to collections, shares, likes, follows etc), metrics that show how much the music is connecting, rather than the reductive volume of streams. Engagement is much harder to mimic and game than consumption is.
Bob Bellin
I think this is dead wrong. The major labels are very happy with the current system, as they're getting more money than ever before and no longer have to deal with supply chain/distribution/vendor issues. Spotify has zillions in subscribers and revenue, but gives most of their money to the major labels, so they lose money almost every quarter. So Spotify doesn't need an overhaul or a two tiered royalty system - it needs to 1) Keep more of its revenue so it can turn a reliable profit and 2) pay a bigger share of $ to the artists. Both should come out of the music industry's hide, not Spotify's. The problem is the old joke about losing $5 on every sale but making it up in volume. That doesn't work - the problem is math, not structure.
Mark Mulligan
The fact it is the world's biggest major label that is leading the charge for royalty reform suggests that they are not happy with the system. Otherwise, why try to change it? Do bigger labels with bigger marketing budgets benefit better in today's system? Yes. But that does not mean they do not want more from it. Should a greater share of royalties be shared with the artists? Yes. But there are really only two ways to fix this: 1) labels change their deals with artists, 2) equitable remuneration (which requires legislation)