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GESAC streaming report puts spotlight on price point, algorithms and the digital pie

By | Published on Thursday 29 September 2022


GESAC – the pan-European grouping of song right collecting societies – yesterday published a new report on the streaming market, which provides an overview of the ongoing debates around the economics of streaming, identifying three key areas of concern: price point, algorithms and the good old slicing of the digital pie.

Produced by journalist and media consultant Emmanuel Legrand, the report – or ‘Study On The Place And Role Of Authors And Composers In The European Music Streaming Market’ – is based on a series of interviews with songwriters, music publishers, collecting societies, streaming services, and other digital music and data experts, as well as a review of other relevant research and media coverage.

Based on all that research, Legrand reports that there are “three main concerns authors and composers have regarding the way streaming services operate and the impact thereof on their livelihoods”.

The first of those concerns is the “asymmetry between the goals of streaming services and the aspirations of authors and composers”. This basically relates to price point, and the fact that the streaming services have used discounting and free tiers to achieve their key objective, ie growing userbases and maximising reach.

But this, of course, results in less revenue per user, and streaming is ultimately a revenue share business, with the music community getting a cut of the money generated by the services.

The report says: “The main streaming services’ end-goal is to grow their userbase, and this is usually done through very extended ad-supported free tiers or through various pricing points and promotional plans to the detriment of other parameters such as ARPU – ie average money paid by each user”.

Noting that in most markets the standard monthly subscription price for services like Spotify hasn’t increased since those services launched in the late 2000s, it adds, “the services that provide very extended ad-supported free access are used more widely than paid services without a viable strategy to turn those users into premium subscribers”.

“The end result”, it then concludes, “is an overall lowering of the value of music, despite the growing userbase, making it difficult to grow the revenue pie, which is one of the primary requests of authors and composers”.

The second area of concern relates to the dominance of hits and big name artists in the streaming market, and the role the streaming service algorithms play in all that when they push and recommend music to users. Or, in the words of the report itself, “structural issues about fairness in the streaming ecosystem”.

“The current hit-driven market of music streaming has resulted in a pyramid system, whereby a small number of songs capture a large portion of the listenership”, the report states. “For instance, 57,000 artists accounted for 90% of monthly Spotify streams in March 2021. The use of algorithms, as well as a bottleneck represented by the most popular playlists, exacerbates this”.

“This report suggests solutions to bring greater transparency in the use of algorithms”, it goes on, “and invites stakeholders to undertake a review of the economic models of streaming services and evaluate how they currently affect cultural diversity which should be promoted in its various forms – music genres, languages, origin of performers and songwriters – in particular through policy actions”.

And the final concern is the one usually raised by the songwriting community, which is how streaming income is shared out across the music industry. Under the current model, 50-55% of income goes to the recording rights, 30-35% to the streaming service, and 10-15% to the song rights.

“The development of music streaming services has boosted the music industry but has mostly benefited the recorded music side rather than the authors and composers of songs”, the report notes.

“According to recent studies the split of revenues from streaming is currently skewed towards the owners of sound recording rights”, it goes on. “There are some structural and economic reasons to that situation. The report advocates for a better sharing of the value generated by the streaming economy between all stakeholders”.

Beyond those three main concerns, the report also raises some of the data issues that impact on songwriters being credited within the streaming platforms, and which also add complexities in how song royalties are processed and paid.

Many record labels and music distributors are now providing basic songwriter credits alongside the recordings they deliver to streaming services, and many services are starting to display that information, but the GESAC report reckons much more could be done in both the provision and use of that data.

“If the streaming economy is a song economy, then it must ensure that the contributions of those who are at its heart are given proper recognition”, the report says. “It means more visibility of, and more information on, authors and composers in the offer of the music streaming services”.

“This can take multiple shapes and forms”, it reckons, “from specific playlists highlighting songwriters to activation of algorithms offering a wider choice to listeners based on their (probably unknown) favourite songwriters, or requirements for prominence and discoverability of works of European authors”.

Launching the new report yesterday, the President of GESAC Gernot Graninger – who is also CEO of the Austrian song rights societies AKM and AustroMechana – said: “We can no longer accept an economic model that, despite an exponential increase of users and the offer, is incapable of properly remunerating creators. We need to grow the overall revenue pie and address the systemic imbalances and dysfunctions in the operation of online platforms, so that authors and composers can benefit more favourably from the resulting success of this growing market”.

Meanwhile, GESAC GM Véronique Desbrosses added: “It is time to consider a more balanced and sustainable market that does not leave behind the creators who fuel this thriving economy. Thanks to authors and their societies, streaming services are offering access to a massive catalogue of music in a streamlined and user-friendly manner but falling short of answering the expectations of creators in terms of remuneration and recognition”.

“The study”, she went on, “provides European policy makers with a useful insight into the market as well as a constructive approach towards a more author-friendly and culturally diverse music streaming ecosystem”.

You can download the new report here.