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. icon
    That One Guy (profile), 8 Feb 2015 @ 9:44pm

    Re: Re:

    Personally, I feel that if a service like Spotify can't make money, they're probably just doing it wrong.

    If the reason a service/company can't make money is because almost every cent they make is scooped up by other companies, then that doesn't mean you're doing it wrong, that means the other companies grabbing all your profits are too greedy for their own good. 'Killing the golden goose' comes to mind here.

    That being said, I do think artists need to see more money from streaming services, because it pays next to nothing as compared iTunes

    Now here's the million dollar question: Is iTunes a streaming service, or a purchasing service?

    If the payments are different, maybe, just maybe, it's because the services themselves are drastically different. One involves a single, larger payment, the other involves repeated, though smaller, payments. Anyone, whether band, label, or what have you, who expects a repeated payment to be anywhere close to a single payment needs to have their common sense and/or rampant greed checked.

    ...and I think it takes a significant number of customers away from downloading sites.

    And? In either case, whether you're talking about streaming or downloading, the artists(well, more the label than the artists, as this article shows) is getting paid for their music, and the one doing the paying is getting their music from a legal source, as opposed to the alternatives.

    If the labels don't think that they are getting 'enough', then by all means, pull their music from the service, enjoy the nothing they get from it after that point. While they're at it, best pull their music from radio as well, that might cannibalize CD/download purchases as well, and one can't be too careful.

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