Yes, Major Record Labels Are Keeping Nearly All The Money They Get From Spotify, Rather Than Giving It To Artists

from the who-are-you-blaming-now? dept

A small group of very vocal musicians has decided that the new target of their anger, after attacking cyberlockers, search engines and torrent sites, should be legal, authorized streaming services. They've decided that the payouts from these services are simply too low, even though almost none of these services are anywhere close to profitable, and most are handing out the vast majority of their revenue to copyright holders. The complaints are often nonsensical. Way back in 2012, 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 Music Business Worldwide site has the details on a new report put together by Ernst & Young with the French record label trade group SNEP, concerning where the money from streaming services Deezer and Spotify ends up. Spoiler alert: it's not with the artists. Here's the overall share of the 9.99 Euros that people pay for a premium account on these services:
As you can see, the labels get the lion's share, with songwriters/publishers splitting 10% and the performers getting less than 7%. And, if you look at the specifics of the actual post-tax payout, you can see the contrast more starkly:
The labels end up with nearly 75% of the total payout, with actual artists and songwriters left with the scraps.

Of course, since this project was paid for by SNEP, which represents the major labels, it then tries to spin this as being not only perfectly fair, but a good thing for the artists themselves. What, you say? How can that be? The report claims that 95% of that money that goes to the labels goes to cover all of the "expenses" those poor poor labels have to endure to record and... um... upload(?) the actual music. Sure, in the past, it may have been reasonable for the labels to take on large fees for distribution -- but that's when it meant manufacturing tons of plastic and vinyl and then shipping it to thousands of record stores around the globe. In this case, there's no manufacturing, and distribution is an "upload" button. Sure, there are some marketing costs, but the numbers ring pretty hollow (especially for many of the artists for whom the labels do little to no marketing).

So, again, rather than blaming these streaming services, it appears that perhaps they should be discussing things with the labels.

Filed Under: artists, contracts, copyright, distribution, music, record labels, revenue, streaming
Companies: deezer, snep, spotify

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  1. identicon
    Anonymous Coward, 6 Feb 2015 @ 1:08am

    From Madam Wong's to Starwood
    To the Whiskey on the strip
    You can hear the crashing, blasting strum
    Of bands that come to be real hip
    And get a record contract
    From a talent scout someday
    They'll sell their ass, their cocks and balls
    They'll take the check 'n' walk away
    If they're lucky they'll get famous
    For a week or two perhaps
    They'll buy some ugly clothes to wear
    And hope the business don't collapse
    Before some stupid magazine
    Decides they're really good
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    From downtown Hollywood
    Tinsel Town Rebellion,
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    It's a little bitty Tinsel Town Rebellion
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    They used to play all kinds of stuff
    And some of it was nice
    Some of it was musical
    But then they took some guy's advice
    To get a record deal, he said
    They would have to be more punk
    Forget their chops and play real dumb
    Or else they would be sunk
    So off they go to S.I.R. to learn some stupid riffs
    And practice all their poses
    In between their powder sniffs
    Chop up a line now, snort it up now
    And when they think they've got it
    They launch a new career
    Who gives a fuck if what they play
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    Tinsel Town Rebellion,
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    A Tinsel Town Rebellion
    A Tinsel Town Rebellion Band
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    Think substance is a bore
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    They'll hurry on back for more
    Of leather groups and plastic groups
    And groups that look real queer
    The Tinsel Town aficionados
    Come to see and not to hear
    But then again this system works
    As perfect as a dream
    It works for all those record company pricks
    Who come to skim the cream
    From the cesspools of excitement
    Where Jim Morrison once stood
    It's the Tinsel Town Rebellion
    From downtown Hollywood

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