CMU Trends Dan Le Sac Writes Digital Labels & Publishers The Great Escape 2014

Trends: Dan Le Sac on “What Artists Really Think About Streaming Royalties”

By | Published on Friday 16 May 2014

Dan Le Sac

For this year’s Great Escape Convention, CMU asked me to help develop and present the results of a survey looking at what artists really think about the rise of the streaming music services.

We chose to focus on streaming because recently that debate in particular has garnered national attention. When Thom Yorke and Nigel Godrich took to Twitter to criticise the royalties being paid by Spotify – and subsequently removed some of their tracks from the service – the debate even ended up stealing column space in the tabloids.

Yorke and Godrich’s opinions about streaming services and the payments they make to artists have been well publicised, and the attention they generated on this issue is important. But the voices of two extremely well established artists does not give us a true representation of artists at large.

Now, it’s my belief that with all the issues that come up in the music industry, understanding the opinions of the artist community is of paramount importance.

To climb on my soapbox for a second, the music industry does not exist without the artists (which includes me, yay, I’m vaguely important!). No one gets paid if we don’t make records or play shows. Labels, managers, publishers, merch companies, music journos, sound engineers, distros, mastering peeps, ticketing companies, pluggers, PR types, radio stations, the list is endless.

To get a better understanding of what the wider artist community thinks about the streaming debate, CMU invited a panel of artists to share their opinions. We tried to make sure our panel covered all bases – with established artists, new and veteran talent, those signed to majors and indies, and those releasing their own records.

Though the one thing all the artists surveyed probably have in common is that they are particularly aware of industry issues. We enlisted the help of the Featured Artists Coalition to recruit the majority of our panel, and many of those who responded are active members of the FAC. So we should remember that fact when reviewing the results of the survey.

Let’s go through each of the topics we covered in turn…

Do you know how much Spotify, Deezer, Rdio, YouTube or Vevo is paying your label or distributor per play?
50% of the respondents knew how much they were being paid by Spotify, yet not one knew the same for Deezer, Rdio, YouTube or Vevo. Which means that even with our clued up respondents, that crucial information isn’t getting into artists’ hands. But I don’t believe the streaming companies are entirely to blame for that.

Spotify is clearly working very hard to get the information out into the artist community (see the blog for example), but being the market leader, and therefore first target for all pot shots, I suppose they have to. So why aren’t we getting all the fun facts from YouTube, Rdio and the likes? The basic answer is that we probably are, but some way down the line.

The streaming services are handing over complex data to the bigger labels and the distributors, who then don’t have either the manpower or the inclination to break this down into clear, concise numbers for the smaller labels and artists they represent. Ultimately it is easier to just add up a column and hand over some cash. But, especially if the cash payment is pretty low, many artists would like a little more information about how the sums were done.

This complexity isn’t helped by the rates being in a seemingly constant state of flux. There are no fixed values just fixed percentages, so Spotify may give 70% of their revenue back to rights holders, but that revenue is constantly changing.

How do you feel about the level of the royalties being paid by the streaming services?
Ask anyone whether or not they want to get paid more and the answer is going to be a majority yes, so the 50% of respondents who felt the rates being paid (whether per-play rates where they knew them, or overall sums where they did not) were too low, might have been predictable.

However, 25% felt that, yes rates should increase, but in the future, and for now they were OK. This to me shows that the artist community are willing to work with Spotify et al to make their models work. Ultimately artists want to get paid for what they do BUT getting the music in the hands of the people who will love it is more important.

Do you know how much you are being paid by your label per play for all or any of the streaming services? And if yes, are you being paid a fair cut of the money?
Now the responses to these two queries raise a wider question about the relationship between artists and labels. Only 33% knew what their label was earning overall from streaming and only a third of that 33% felt that artists were getting a fair cut.

I fell in love with music at a time when the NME taught us that major labels were “scum” and the indies were king, but over time we even started to mistrust the independents, especially as certain indies became brand names owned by the majors. So when I finally found myself in the music industry, my natural standpoint was “what’s the catch?”

Now, I’m not the only artist that entered the industry with this view; which means that labels have to try extra hard to foster trust with their artists, especially long-term.

You sense with these questions that the frustration over a lack of information was higher than any resentment about how much money the labels are keeping. Which is something for the labels to consider, I think. As the industry changes labels want to work with artists in new ways, and that requires more trust between artists and their record companies, yet being in the dark about streaming money means there is less.

Many record companies are paying artists a ‘record sale’ royalty on streaming income (usually around 15%). What split do you think would be fair?
The answer to this is that we think our work is worth more than 15% – half of our panel proposed a 50/50 split while nearly a third thought a 30-50% split for the artist would be fair – though what is actually fair is extremely hard to define.

The 15% record sale royalty comes from a time when releasing a record was an extremely expensive business; billboards, TV ads, print advertising and bungs to radio producers (maybe!) all emptied a label’s coffers quickly.

But we are talking pre-social media here. In the post Myspace landscape getting the word out is a very different affair, we can directly market a record to 500,000 targeted people for less that £1000, or in my case, build an entire career off a £200 video.

What I suppose I’m saying is the greater the risk, the greater the pay off, so is it right that labels still take the greater pay off from streaming when they arguably have a lower risk?

Do you think streaming services will became the primary way people consume music and therefore the primary revenue stream for the record industry in the next ten years?
100% of respondents said yes. Phew, basically artists aren’t all blinkered fools, getting smashed and trying to rub their bits against other people’s bits in portaloos and dressing rooms. I am in total agreement with this. Though I wonder which of the streaming services will be “the primary way”.

Look at Netflix, Crunchroll and the crappy titled Amazon Prime Instant Video (formerly LoveFilm Instant), to see just how willing we punters are to stream our entertainment, but whilst looking in the direction of the video streamers you’ll notice that the content is different on each. Yes there are huge overlaps BUT each tries to find its killer show to drag their subscribers in.

Netflix advertising was cloyingly horrid in comparison to LoveFilm’s, but we all still jumped on board when they exclusively licensed ‘Breaking Bad’. At the moment Spotify, Deezer et al are keeping quiet on exclusive licenses, but in the long term when this inevitably happens, it’ll be guys with the killer catalogue that survive.

If that prediction DID come true, how would you feel about that?
From the responses we immediately see that the biggest worry for current artists is how the rise of streaming effects new artists; after all we are a community who for the most part try to help each other out.

If artists are the anchor point of the entire industry, new artists are its future, and it’s good to see that the artist community is aware of that.

And when millionaire rock stars complain about streaming royalties – or the way labels do or do not share that money – it’s worth remembering they are mainly speaking for the majority of artists who aren’t so wealthy.

Spotify-style services are currently licensed directly by the labels. Do you think it would be better if these services were licensed through the collective licensing system like traditional radio is?
80% of respondents said yes to this. It is interesting that 80% of us would rather an organisation like PPL – the UK record industry’s collecting society – take a cut of the money, just so we had the peace of mind that we were being correctly paid.

Bringing in a bipartisan body to collect and distribute the money and pay it on to labels and artists has worked for years in terms of radio play but sadly, with the shear weight of information to be processed in the streaming space, and myriad international territories to deal with, there is yet to be a collecting body that could do this effectively.

If you could tell the streaming services thing one thing, what would it be?
“Don’t agree to NDAs that prevent artists from finding out what we need to know in order to check that we aren’t being ripped off by our labels”.

“Give users more detail about the tracks they’re listening to. Who wrote it? Who produced it? When was it originally recorded? On which label? Then allow users to list songs by each of these separate criteria”.

“Make the searching/similar artists tools better so people can find more unsigned/unheard music, I still struggle to find new music based on online recommendations from Spotify, etc”.

If you could tell your label one thing about streaming services and/or royalties, what would it be?
“Play fair. Allow artists to re-negotiate legacy deals to represent the economics of the new business models”.

“Stop ripping your artists off under the cover of NDAs. Pay a decent royalty to ALL artists and share the so called ‘catalogue access fees’ and advances your receive fairly with the artists”.

Ultimately, the biggest thing that the artists who responded to this survey want – and hopefully this is reflected in the rest of the community – isn’t simply more money, it is clarity, to see where the streaming pennies are going and how this is all working, or could work in the future.

So if there is a message for the record industry to take from this survey it would be this: tell us how things are working behind the scenes, involve us in the discussion of how to rise to the challenge of making the streaming music business work, and openly discuss with us why you feel your slice of the pie is justified.