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ERA boss on the #FixStreaming debate: “You don’t mend a #BrokenRecord by smashing the record player”

By | Published on Thursday 21 May 2020

Entertainment Retailers Association

The boss of the UK’s Entertainment Retailers Association, Kim Bayley, has entered the increasingly noisy debate over how artists and songwriters are benefiting – or not – from the streaming boom. She says that the debate should be welcomed but adds that – as the discussion has bounced around the social networks and mainstream media – “numbers are being bandied about which are just plain misleading”. And those numbers generally present the streaming platforms among her organisation’s membership in a bad light.

The so called digital pie debate – over how streaming monies get shared out each month between the platforms, the labels, the publishers, the artists and the songwriters – has been going on for years, of course. But that debate has grown in intensity in recent weeks as a result of the COVID-19 shutdown.

For many artists and songwriters, that shutdown has caused key revenue streams – which might include touring, studio work and/or teaching – to pretty much stop over night. Meanwhile, the temporary closure of venues and the high street in general will also impact on the income that comes in via the collective licensing system for much of the year ahead.

All of which has made those artists and songwriters look at the segment of the music industry least affected by COVID-19 – ie streaming – and wonder why they aren’t seeing more of that cash. That, in turn, has resulted in various campaigns from within the creator community seeking a re-slicing of the digital pie to the benefit of artists and songwriters.

In addition to some online movements, the Musicians’ Union and Ivors Academy have launched a campaign called Keep Music Alive, which is calling on the UK government to intervene and to force all the stakeholders to the table for a formal digital pie conversation.

Such a conversation, though, is complex, because the streaming business is built on a complicated revenue-share-based-on-consumption-share business model. And that, in turn, is based on a plethora of individual deals done between the services and the labels, the distributors, the publishers and the collecting societies, not to mention the mountain of deals done between artists and labels, and songwriters and publishers.

And while heritage artists, new artists, session musicians and songwriters might all have the same primary grievance – that the current system is unfair and when all that streaming revenue is shared out they should get a bigger slice of the pie – the way each of those respective groups of music-makers could achieve a bigger slice is probably different.

Most of the artists and songwriters at the heart of the latest round of digital pie debating know all of this and often discuss the complexities when talking about the challenges in public. However, on social media – and in the mainstream press – all those complexities are often stripped out so that all that is left is the classic line: “Spotify doesn’t pay artists”. Or its more colourful cousin: “This artist had a million streams and only got paid 50 quid”.

Hence why ERA feels the need to join the debate. The streaming revolution led by her digital members, Bayley insists in the new blog post, “saved the record business” and turned pirates into consumers. To now criticise those members for taking about 30% of streaming monies each month – or because per-play payments are tiny, especially when compared to what the sale of a CD generates – just isn’t fair, she then argues.

“A key complaint is that streaming services pay ‘only’ around 70% of subscription fees for the music”, Bayley writes. “The reality is that this is almost identical to the percentage of revenue paid for downloads and that, in turn, is little different to the margin on physical sales. If it is ‘fair’ to reduce the money Amazon or Deezer or Spotify, for instance, retain to run their businesses, it must be equally fair to do the same to iTunes, HMV and even Rough Trade, and no one is seriously suggesting that”.

“The point is that even if services paid 100% of the money they receive from music fans, it would not necessarily answer current complaints”, she goes on. “Manchester-based singer-songwriter LoneLady writes on Twitter that she has earned just £40.22 for all her streams over the past six months. There’s no knowing what the deals were which led to this sum, but it is clear that grossing up £40.22 to the £57.46 it would be if digital services worked for free would not make her fortune”.

As for comparing the tiny per-play royalties paid by the streaming services to CD sales, Bayley states: “That comparison is, of course, completely bogus, as it reflects completely different business models. With a CD the artist is paid in advance for as many (or as few) times you ever play it; with streaming, of course, they are paid as you play”. These are “different models”, she says, and therefore are “simply not comparable”.

But, all that said, the ERA boss is keen to add that her organisation believes that the concerns being discussed by the artist and songwriter communities online in recent weeks are nevertheless very real. However, she reckons, somewhat unsurprisingly, dealing with those concerns is a matter for the music industry itself, and the deals done between artists and labels, and how that 70% handed over by her members each month is shared out.

“In some cases old contracts and old assumptions first made in the age of the vinyl LP have been transplanted one to one to the new world of streaming in a way some artists may feel is unfair”, she notes. “But these are not contracts with streaming services themselves and [those services] can’t be held responsible for them”.

“The music-making community needs to resolve once and for all how best it wants to divide up the 70p in the pound it receives from every premium subscription”, she goes on. “How the pie is divided is no business of ours, but if this debate is not resolved, it threatens to undermine public trust in streaming”.

“One of the industry’s key arguments against piracy was a moral one, that artists deserve to be paid. If the suspicion grows that the £120 a year many are paying for streaming services is not properly or fairly allocated to artists and songwriters, that argument is undermined”.

Along the way, Bayley also raises another important point that is much less talked about in the whole digital pie conversation. The rise of digital has removed the barriers to entry for artists and labels looking to get their music to the wider world, while also reconnecting music fans with millions and millions of tracks in the record industry’s vast archives of recordings. As a result there is simply way more music being consumed.

That means there are more people sharing the digital dollar. The overall artist and songwriter shares are probably too low. But even if they were increased, there is also the issue that the artist slice is simply being shared out between a greater number of artists. And the songwriter slice between a greater number of songwriters.

The superstars are still doing very well thank you very much, but the impact of that trend is felt in the middle level of the artist hierarchy. Here, rather than having some artists who are just about making a living from their music, you have many more artists not making a living from their music. What can you do you about that? Is there anything you can do about that?

Increasing the overall artist and songwriter share would obviously help to an extent. But it wouldn’t solve that challenge entirely. And that particular challenge is only going to increase in the years ahead, as more people make and distribute songs and recordings, and new technologies make it easier to compose, produce and record great music.

On this point, Bayley writes: “The biggest record store in the world until it closed in April was the Amoeba Records branch in Hollywood, Los Angeles. It reportedly stocked 100,000 album titles. At a (very generous) average of fifteen tracks per album, that means Amoeba offered 1.5 million tracks. In contrast, Apple Music and Spotify each offer 60 million tracks, the equivalent of four million albums at fifteen tracks an album”

“The fact is that the larger the number of tracks, the larger the number of low earners as well as high earners”, she goes on. “The fact that a streaming service has a large number of low earners is not necessarily an indictment of that service. No physical store on the planet could accommodate four million physical albums. The fact is that without streaming services millions of tracks would simply never be heard at all”.

“An easy way to increase the average earnings of musicians on streaming services would be to dramatically cut back the number of tracks on those services” she says. “But no one is suggesting that either”. So, another complexity, another challenge.

Referencing the two hashtags that have become part of the online digital pie debate in recent weeks, Bayley’s blog post concludes: “Everyone involved in the debate should recognise that you don’t mend a #BrokenRecord by smashing the record player. The streaming revolution saved the record business. It would be short-sighted and self-defeating if in attempting to #FixStreaming, we ended up undermining it”.

You can read Bayley’s full piece here.

The last two editions of CMU’s Setlist podcast talk through all the various elements of the digital pie debate. You can listen to both episodes here.

And for a simple ten step guide to how the streaming business model currently works, download this free CMU Trends guide here.