Musicians aren't losing out from streaming music, UK regulator says

Posted:
in iPod + iTunes + AppleTV edited November 2022
The massive profits of record labels and streaming services like Apple Music are not at the expense of musicians and artists, a UK regulator has declared.

Apple Music
Apple Music


Early in 2022, the UK's Competition and Markets Authority commenced an investigation into the streaming music market, to determine if companies at the top of the food chain have too much power, and if artists and subscribers were being treated fairly. In November, the CMA has made its decision: Everything's fine.

Published on Tuesday, the CMA's final report claims that consumers have benefited from the move to streaming and increased competition. In real terms, prices for consumers have fallen more than 20% between 2009 and 2021, it found.

On concerns from music creators, including songwriters and musicians claiming they earned very little from streaming, the CMA reckons that the concerns are pretty much unfounded.

With more artists competing for attention, revenue from streaming is shared "more widely." This includes an increase from 200,000 artists in 2014 to 400,000 in 2020, a doubling of competition.

The watchdog found that, as meritocracies usually go, the top producers got the lion's share of revenue. Over 60% of streams listened to were recorded by the top 0.4% of artists, it determined.

While an artist could expect to earn around 12,000 pounds ($14,410) from 12 million streams in the UK in 2021, less than 1% of artists actually achieved that level.

Labels aren't holding out on profits

As for how much record labels and streaming services actually pay, the CMA's analysis found "neither record labels nor streaming services are likely to be making significant excess profits that could be shared with creators."

Average royalty rates in major deals with artists have actually gone up over time, from 19.7% in 2012 to 23.3% in 2021. Songwriters have also benefited, seeing an 8% share of revenue in 2008 turn into an average of 15% by 2021.

Therefore, concerns by creators wouldn't be addressed by the introduction of measures to improve competition, CMA continued. However, other policy measures would be needed to address the complaints.

"The study does however highlight that the issues raised by creators could be further considered by government and policymakers as part of their ongoing work following the DCMS Select Committee's inquiry into the economics of music streaming," CMA concludes.

"Streaming has transformed how music fans access vast catalogues of music, providing a valuable platform for artists to reach new listeners quickly, and at a price for consumers that has declined in real terms over the years," said CMA interim CEO Sarah Cardell.

"However, we heard from many artists and songwriters across the UK about how they struggle to make a decent living from these services," Cardell continued. "These are understandable concerns, but our findings show that these are not the result of ineffective competition - and intervention by the CMA would not release more money into the system that would help artists or songwriters."

The UK Department for Digital, Culture, Media, and Sport started an inquiry in October 2020 into the topic of streaming music royalties.

An ongoing complaint

Complaints from musicians and songwriters about low earnings from streaming have existed for quite some time, with Apple among the targets due to the popularity of Apple Music.

In 2021, Apple sent a letter to musicians explaining that it pays a penny per stream to record labels, and that 52% of its subscription revenue goes to record labels, who in turn pay artists.

Apple commands just a fifth of the UK streaming market, a UK government report found in July 2022. Spotify was in the lead with around 60% of the market, while Amazon made up 30%.

Read on AppleInsider

Comments

  • Reply 1 of 14
    Touring is only way for musicians to make real scratch now.

    (I’m so punk rock, the most I’ve made from a show was 40 bucks, and I felt like a sellout poser.)
    baconstangwatto_cobra
  • Reply 2 of 14
    The irony here is that the CMA is acknowledging that "competition" doesn't just come from alternate services but also from other artists. That acknowledgment is typically totally missing from all of the controversy over app stores. You don't see the EU admitting that the number of app developers growing over time = greater competition. 
    lolliverseanjbaconstangwatto_cobra
  • Reply 3 of 14
    DAalsethDAalseth Posts: 2,588member
    The irony here is that the CMA is acknowledging that "competition" doesn't just come from alternate services but also from other artists. That acknowledgment is typically totally missing from all of the controversy over app stores. You don't see the EU admitting that the number of app developers growing over time = greater competition. 
    Very true. Nowadays with a computer and a bit of equipment anyone can be a musician, or a painter, or a writer. They may not be great, but they can get their stuff out there. It’s harder for all artists in this connected world. 
    baconstangwatto_cobra
  • Reply 4 of 14
    My take is this:

    Apple competes with others and has the least market share of any of them. Therefore Apple is NOT a monopoly.

    The creators compete with other creators and some creators do way better than others. This is seen in all sorts of areas, notably YouTube.

    The real culprits are the record labels who are proven to scam musicians as seen in the breakdown of what a band makes that has been a round for a couple of decades. While the numbers might not be the same today, the basic rundown hasn’t changed.

    All in all, Apple isn’t at fault, record labels are and need to be reeled in.
    Hedwarebaconstangwatto_cobra
  • Reply 5 of 14
    What will be interesting is when they apply the same standards to app makers. I’m willing to bet it’s the exact same dynamic, and that the most vociferous of complainers are used to operating in a market with highly consolidated competition.
    mwhitelolliverwatto_cobra
  • Reply 6 of 14
    zoetmbzoetmb Posts: 2,639member
    Except that artists did make money in the physical model and in the download model, even though labels found ways to rip off artists back then as well.  

    The streaming model doesn’t work for all but the A-list charting artists.    

    I have a family member who is a singer-songwriter.   One of her tracks has been streamed more than a million times.  She hasn’t seen a penny yet. 

    Typically, the streaming companies pay $0.0033 per steam.  So a million streams would pay $3300 to the label.  At even a 20% royalty, that’s $660 to the artist.  But if the label spent money on marketing, that’s considered a royalty advance that has to earn out.  So most artists will never see any money from recording.  

    Let’s say that the million streams represents 250,000 people each listening 4x.  In the 1950’s - 1980’s, that would have generated about $300K and on a 12% royalty, the artist would have gotten $36,000, which is about $284.000 (using 1970 as the base year) in todays dollars.  

    The Beatles stopped touring in ‘66 and became a studio band until they broke up in 1970.  That wouldn’t be possible today.  

    The streaming model is great for consumers, but it sucks for the artists and it’s not even good for the labels.  In the U.S., the entire industry, including the gross of the streaming companies, is 60% of its former peak, adjusted for inflation.  
    OferdewmeJapheybaconstang
  • Reply 7 of 14
    sphericspheric Posts: 2,290member
    The biggest issue right now is the distribution of subscription fees. 

    Currently, everyone's fees are thrown in a pot and distributed according to the total number of streams. 

    This is somewhere between problematic and catastrophic. 

    1.) it opens the floodgates for manipulation. Bot farms streaming hundreds of thousands of instances generate real money, and take it away from all the rest of us. 

    2.) it ensures that only the major players get any sort of meaningful revenue. 

    What we need is a model where each user's subscription fee is allocated to the artists THAT USER listens to. 

    A kid who pays a $12 subscription fee, but only listens to his three favourite underground bands, sees all his money goes to Drake and Taylor Swift. 

    That is not okay, and it makes work impossible for a whole range of indie artists who used to sell just enough records to their loyal fanbase to break even. 
    chadbagmuthuk_vanalingamdewmeJapheylolliverbaconstangwatto_cobra
  • Reply 8 of 14
    chadbagchadbag Posts: 1,821member
    spheric said:
    The biggest issue right now is the distribution of subscription fees. 

    Currently, everyone's fees are thrown in a pot and distributed according to the total number of streams. 

    This is somewhere between problematic and catastrophic. 

    1.) it opens the floodgates for manipulation. Bot farms streaming hundreds of thousands of instances generate real money, and take it away from all the rest of us. 

    2.) it ensures that only the major players get any sort of meaningful revenue. 

    What we need is a model where each user's subscription fee is allocated to the artists THAT USER listens to. 

    A kid who pays a $12 subscription fee, but only listens to his three favourite underground bands, sees all his money goes to Drake and Taylor Swift. 

    That is not okay, and it makes work impossible for a whole range of indie artists who used to sell just enough records to their loyal fanbase to break even. 
    Thank you for this post.  I’m not a recording or live playing musician, except in my dreams (nightmares?).  But the topic interests me as music is very important to me in life and I agree that the money should be distributed by what the individual paying person listens to and not some overall percentage of the grand pot.  It requires more book keeping but is more equitable. 

    How can we, the common citizens, help push these concepts?  Are there pieces of legislation (in whatever country) that we can voice support for?
    dewmewatto_cobraspheric
  • Reply 9 of 14
    thttht Posts: 4,730member
    I don't think the share of money for musicians between the streaming world, MP3 world and physical media world isn't really that different. Their share of the revenue pie is always going to be low. So, no news?

    Streaming does allow for people to discover more music and for more niche musicians to find bigger audiences. It may not translate to a lot a money in terms of money for streamed music, but it gives these niche musicians more economic opportunity through concerts, contacts, and other stuff which they never had a real chance at before.
    watto_cobra
  • Reply 10 of 14
    danoxdanox Posts: 1,558member
    The subscription, streaming you own nothing market is running out of idea’s for profitability, long term it is loser market unless you are the last man standing, the same applies to the gaming market, there are only so many monthly payments a person can make it’s unsustainable.

    It’s not to late you can still own something if you want access to it on your terms. CD, DVD, Vinyl, still work and are cheaper to own long term.
    baconstangwatto_cobrachadbag
  • Reply 11 of 14
    AppleZuluAppleZulu Posts: 1,511member
    zoetmb said:
    Except that artists did make money in the physical model and in the download model, even though labels found ways to rip off artists back then as well.  

    The streaming model doesn’t work for all but the A-list charting artists.    

    I have a family member who is a singer-songwriter.   One of her tracks has been streamed more than a million times.  She hasn’t seen a penny yet. 

    Typically, the streaming companies pay $0.0033 per steam.  So a million streams would pay $3300 to the label.  At even a 20% royalty, that’s $660 to the artist.  But if the label spent money on marketing, that’s considered a royalty advance that has to earn out.  So most artists will never see any money from recording.  

    Let’s say that the million streams represents 250,000 people each listening 4x.  In the 1950’s - 1980’s, that would have generated about $300K and on a 12% royalty, the artist would have gotten $36,000, which is about $284.000 (using 1970 as the base year) in todays dollars.  

    The Beatles stopped touring in ‘66 and became a studio band until they broke up in 1970.  That wouldn’t be possible today.  

    The streaming model is great for consumers, but it sucks for the artists and it’s not even good for the labels.  In the U.S., the entire industry, including the gross of the streaming companies, is 60% of its former peak, adjusted for inflation.  
    Record labels have been doing the royalty advance thing for generations. New artists, certain they’re the next big thing, blow their advance on living large, only to realize later that’s all the money they’ll ever see. Throw in deals with Live Nation/Ticketmaster, and they’re soon wishing they were still just playing for the door of local bars. Streaming hasn’t really changed that mess. 

    Streaming has made it a lot easier for independent artists to get their music out there, without having to invest in production and distribution of physical media. Anywhere you perform, fans have access to the recorded stuff, with the added benefit that your music is never ‘out of print.’ With physical media, after you’ve sold your 5,000 CDs or LPs, you’re done until you drop more capital into printing more. For small artists, that second run is dicey, because you could end up losing everything you made on the first batch and have a bunch of boxes of unsold discs to store in your mother’s garage. You also have to compete with the used market, where you get zilch for each subsequent sale of your album. Each new fan listening to your streaming catalog is at least dropping pennies in your tip jar. 

    As for it not being possible for the Beatles to cease touring in the current paradigm as they did in the 60s, don’t be ridiculous. They were and still are the biggest band in the world. They are profitable from sales of recorded music, no matter the means of distribution. The Beatles still aren’t touring 50 years later, and I guarantee they’re making bank on streaming content as we speak. 
    lolliverwatto_cobra
  • Reply 12 of 14
    AppleZuluAppleZulu Posts: 1,511member
    spheric said:
    The biggest issue right now is the distribution of subscription fees. 

    Currently, everyone's fees are thrown in a pot and distributed according to the total number of streams. 

    This is somewhere between problematic and catastrophic. 

    1.) it opens the floodgates for manipulation. Bot farms streaming hundreds of thousands of instances generate real money, and take it away from all the rest of us. 

    2.) it ensures that only the major players get any sort of meaningful revenue. 

    What we need is a model where each user's subscription fee is allocated to the artists THAT USER listens to. 

    A kid who pays a $12 subscription fee, but only listens to his three favourite underground bands, sees all his money goes to Drake and Taylor Swift. 

    That is not okay, and it makes work impossible for a whole range of indie artists who used to sell just enough records to their loyal fanbase to break even. 
    Hadn't thought of bot farms streaming music just to generate plays. If each bot account is a paid streaming subscription, I'm not sure the math really works for that. Big picture, the streaming service is getting a cut out of each subscription, before they start paying royalties. I suppose a bot streaming the same song 24/7 could be like the fat guy at a buffet, using more than its share, but that sort of abuse shouldn't be hard to spot on the server side, and the account shut down for violating terms of service. On the other hand, record labels used to pay DJs to play their records in order to generate record sales, so manipulations do happen. They're just not a new thing.

    As for the other idea, a music subscription is indeed like buying lunch at a buffet. If you pay your eight bucks but only take a small plate of asparagus, that may be eight dollars' worth of asparagus to you, but the restaurant isn't going to take its cut of your bill and give the rest to the asparagus farmer. It's just going to pay the asparagus farmer the going rate for the amount of asparagus they bought. The restaurant is going to look at the usage rate (including asparagus guy and the fat guy who eats three whole chickens) and set their buffet price to make sure they're netting whatever it is they expect to make from the enterprise. Next they'll look at how much pizza, chicken and asparagus gets eaten and buy commensurate amounts of each to stock the steam table. Whether you like it or not, the chicken farmer is going to sell more than is the asparagus farmer. 

    I think there's a misnomer in thinking that in the days of physical media, artists were somehow making a lot more money from sales. Some probably were, but many more most assuredly were losing money. Physical media requires up-front capital to have CDs or records to sell. It also costs money to haul those boxes around and distribute them to stores or through merch tables at shows. People have to be paid to stock the shelves and to facilitate the transactions. It's a costly, inefficient way to distribute recorded music. For signed artists, record labels carried those costs, and employed accountants to charge all that against an artist's advance. Only the biggest artists at labels make real money. For independent artists, they're carrying all those up-front costs, and whether or not they can do the math, they're charging all that against whatever they can take in, and most were not breaking even. That's why a few years later, very few were still full-time professional musicians. The same is true now with streaming services. The difference is that when the records are all sold and the musician stops touring, that's the end of it. For the artist on the streaming services, even after they go get a job, they could still see a little money trickle in for years if some of their old fans keep listening occasionally.
    edited November 2022 lolliverwatto_cobra
  • Reply 13 of 14
    sphericspheric Posts: 2,290member
    tht said:
    I don't think the share of money for musicians between the streaming world, MP3 world and physical media world isn't really that different. Their share of the revenue pie is always going to be low. So, no news?
    Completely different situation. When people still bought records, you could convince a small fanbase to buy a couple hundred, and you could hope to more or less break even. 

    Streams do not translate into album sales, at all, and the payout is zero. Literally: zero. (See above)
    tht said:
    Streaming does allow for people to discover more music and for more niche musicians to find bigger audiences. It may not translate to a lot a money in terms of money for streamed music, but it gives these niche musicians more economic opportunity through concerts, contacts, and other stuff which they never had a real chance at before.


    Do you know how many songs are uploaded to Spotify every day? 60,000. "Exposure" is there if you can afford the money for promotion, getting yourself put on important playlists, etc. 

    But even then: 
    The return for this investment, if you're really successful, is still zero. If you can get people to come to your gigs, you can figure that income against the production and promotion costs. If you make music that really doesn't translate to a concert situation for whatever reason, there is literally NO WAY to recoup your investment through current streaming models unless you're a major international star. 

    IF the model were changed to pay out each listener's subscription money according to what THAT PERSON listened to, there'd be a chance even for small regional bands or underground productions. 

    As it stands, there is not.
  • Reply 14 of 14
    AppleZuluAppleZulu Posts: 1,511member
    spheric said:
    tht said:
    I don't think the share of money for musicians between the streaming world, MP3 world and physical media world isn't really that different. Their share of the revenue pie is always going to be low. So, no news?
    Completely different situation. When people still bought records, you could convince a small fanbase to buy a couple hundred, and you could hope to more or less break even. 

    Streams do not translate into album sales, at all, and the payout is zero. Literally: zero. (See above)
    tht said:
    Streaming does allow for people to discover more music and for more niche musicians to find bigger audiences. It may not translate to a lot a money in terms of money for streamed music, but it gives these niche musicians more economic opportunity through concerts, contacts, and other stuff which they never had a real chance at before.


    Do you know how many songs are uploaded to Spotify every day? 60,000. "Exposure" is there if you can afford the money for promotion, getting yourself put on important playlists, etc. 

    But even then: 
    The return for this investment, if you're really successful, is still zero. If you can get people to come to your gigs, you can figure that income against the production and promotion costs. If you make music that really doesn't translate to a concert situation for whatever reason, there is literally NO WAY to recoup your investment through current streaming models unless you're a major international star. 

    IF the model were changed to pay out each listener's subscription money according to what THAT PERSON listened to, there'd be a chance even for small regional bands or underground productions. 

    As it stands, there is not.
    It has never been the case that musicians without the money for promotion, getting put on playlists (or radio... remember radio?) are profitable just because they're so good. It's always required a clever DIY effort with hustles on the side (or Dad's credit card) to pay for it, or a starry-eyed launch into the Big Time after signing an exploitative record contract.

    Also, streaming music services do pay out based exactly on what each subscriber listens to. You drop your money in the bucket, and the artist gets paid money out of that bucket for every time you listen to them. It's literally a music buffet. If you pay $10 per month admission, but only listen to 7¢ worth of your favorite indy band's music, that's on you. They don't get the whole $10 just because your 7¢ worth is all you listened to that month. If you're a big fan, you'll listen to them more than that. And don't forget, in the olden days when you bought your favorite indy band's CD, they got paid only once, even if you spun that CD 24/7 for six months straight. Even more, after listening so much made you sick of them and you traded their CD in at the used record store, the next new fan who bought your used disc paid nothing to the band to listen to that CD. With streaming services, they get paid every time you listen, and they'll get paid when that next new fan listens, too.

    Mind you, I am a strong proponent of paying artists for their creative work, and those per-stream rates should probably be more. What makes me respond to these things is the fact that the laments about the current structure always seem to make comparisons that don't take into account the whole ledger. While the actual rates paid are indeed open for debate, there is nothing inherently wrong with the streaming subscription service model of music distribution. In fact it's probably the best one yet developed. For the subscriber, the whole world is open to sample, learn and enjoy. For a reasonable price, a listener anywhere has access to a selection of music better than even what you could find in the old record stores and libraries of the largest cities in the world. With broadband, lossless and spatial audio formats provide a higher quality listening experience to the average consumer than has ever been available before.

    For those who are actually interested in listening to new music, or new-to-you music, considering a suggestion about a new artist no longer is about deciding if you want to spend your limited budget on that album or someone else's, nor do you have to search around to find that one record store that even has it. If someone recommends it, you can just search it up and listen. If you don't like it, you don't have to try to recoup some of your money by trading a CD in for something else. If you do like it, you can listen again, and then go find everything else that artist has done, and then go check out others in that artists' scene. 

    For the musician, it's possible to record at home at a quality that easily surpasses small professional studios of the past. You can even buy plug-ins that work in Garage Band (free recording software on every Mac) that model classic gear from the famed Abbey Road studios in London. For the DIY musician, it's possible to get your music out there without a huge up-front capital investment. Yes, there's more competition amongst the unknowns, but that is specifically because it's possible for anyone to record and release their music. The entry level is easier and more democratic. Getting noticed and actually making a living is as hard as it's ever been. There is no Golden Age when it was easy to make a living as a professional musician. 
    edited November 2022
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