Music Industry

There’s a new study on where the money goes (and doesn’t go) when it comes to streaming payments (SPOILER: The system is broke.)

Most people have no idea how the financial end of the streaming ecosystem works. Spotify is often singled out because the company is accused of minuscule payouts to artists. And the payments are minuscule–but not because Spotify is mean to artists. Its payouts are determined by long negotiations with rightsholders (labels, publishing companies, copyright boards). Spotify pays out what it does because the company is told to pay those amounts by the people who really control the music. In the chain of command, though, the artist is paid last.

The title for of the study is “Streaming in the Dark: Where music listeners’ money goes–and doesn’t.” It’s a fascinating read that concludes the current streaming marketplace is broken. I quote:

Consumers are pouring more than $12 billion dollars a year into music streaming services. From there it enters a dark, labyrinthine economy shaped by centuries-old laws and unchecked market power. When that money emerges out the other side and reaches artists, it has been reduced to fractions of pennies.

Our ability to scrutinize that black box has been methodically and strategically hampered by the use of non-disclosure agreements (NDAs). On its face, we don’t know much about what happens to that money. But what we do know is disconcerting, and what we can reverse engineer is outright alarming. The streaming and music industries are both breeding grounds for anti-competitive behavior. Astronomical licensing costs have squeezed the streaming market and created a world where music streaming is treated as a loss leader for the world’s wealthiest tech companies. Licensing deals are riddled with payola and other kickbacks, which maximize wealth for major labels while minimizing how much they have to pay out to artists.

Whoa, huh? Keep reading here.

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 38427 posts and counting. See all posts by Alan Cross

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