Music Industry

Should there be tiered payments for artists on streaming music services? This is going to get interesting.

Here’s how an artist gets paid on any streaming music service.

  1. Someone listens to an audio file (could be a song, could be any other kind of audio) for at least 30 seconds. A play is registered and a fraction of a cent is set aside.
  2. At the end of the month, the streamer looks at (a) how many streams were played and then (b) looks to see which songs/artists were streamed the most.
  3. If a particular artist has, say 1% of the month’s streams, that artist gets 1% of the money from that month.

This means a couple of things. First, if you’re a subscriber and you listen to nothing but Norwegian black metal from the 90s, none of the money you pay will necessarily go to those Norwegian black metal bands. It goes into a pool of cash that’s divvied up amongst all artists.

Second, this system also weighs each stream the same, assigning exactly the same value to every single song. Your favourite Norwegian black metal song pays out 0.08-ish cents per stream, just like “Thinking Out Loud” by Ed Sheeran.

There are some obvious issues. If I listen to Norwegian black metal, I’d like my money to support my favourite bands. That’s not happening. Some streamers are trying to move to something called “artist centric payments,” which means your sub money will go only to the acts you listen to, but adoption of this method of payment is slow.

And we have to ask this question: In terms of market value, demand, and popularity, should Ed Sheeran be paid more per stream for “Thinking Out Loud” than, say, “Transilvanian Hunger” by Darkthrone?

This topic is coming up more often with the latest being comments from Warner Music CEO Robert Kynel, who agrees with his Universal counterpart Lucian Grange. I quote Kynel from this week: “It can’t be that [an] Ed Sheeran stream is worth exactly the same thing as a stream of rain falling on the roof.”

Here’s an example. Connor McDavid is worth every penny to the Edmonton Oilers. Because of his contributions on the ice and his stature with the fans, he’s paid more than a fourth-line left-winger. Both are hockey players in the same league playing the same game for the same team. Yet…

However, doesn’t this just tip the scales towards the rich getting richer and anyone trying to break through getting buried even further?

Restructuring artists payments is going to take time. Meanwhile, it’ll be interesting to see the reaction of artists and fans.

Alan Cross

is an internationally known broadcaster, interviewer, writer, consultant, blogger and speaker. In his 40+ years in the music business, Alan has interviewed the biggest names in rock, from David Bowie and U2 to Pearl Jam and the Foo Fighters. He’s also known as a musicologist and documentarian through programs like The Ongoing History of New Music.

Alan Cross has 38161 posts and counting. See all posts by Alan Cross

2 thoughts on “Should there be tiered payments for artists on streaming music services? This is going to get interesting.

  • How does this compare to radio? Do radio stations pay hit artists more when their songs are played? Do radio stations with higher listener numbers have to pay more to play any song?

    Reply
    • Radio pays a series of fees to performance rights organizations. As far as I know, PROs pay out at the same rate to all clients.

      Reply

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