The UK Parliament’s Department for Digital, Culture, Media and Sport (DCMS) issued what can best be described as a howl for artists to get a bigger piece of the streaming pie. According to a DCMS Chairman Damian Greene, “As the committee heard, there is still frustration about the returns for the vast majority of musicians and songwriters. Too many of them receive pitiful returns despite making successful music. The main players need to get together to remedy this in a sustainable way.”
That’s very altruistic of Mr. Greene and I’m sure that many agree with his assessment. And record labels and music publishers would probably agree. But the question is, as Mr. Greene suggests, which of the main players would be willing to give the artists a bigger share? They’re all for it, I’m sure. As long as it doesn’t come out of their pockets.
That leaves the streaming companies holding the bag. But they have deals in place and have paid out billions of dollars/pounds/euros to rights owners. In fact, the music industry is now dependent on streaming income and those revenues have increased to the point that have had some of its biggest years ever. In the meantime, the streaming services are not making any profits at all. Spotify is the biggest and best example of this. Although they have grossed billions, they consistently lose money year-on-year.
This means that the only stakeholders actually making money are the labels and publishers. As we already know, they cut their own deals with artists while profiting the most as middle men. Granted, labels have much bigger overheads than most artists, but if you’re not a superstar you’ll make next to nothing. That’s always been the case, certainly before streaming came into existence.
So, what’s the solution? Simple. In order to pay artists more, labels will want to charge the streaming services more, who will then turn around and pass the increased costs to the subscribers. Expect this to happen sooner than later. Cable tv and Netflix bills are constantly going up because studios keep insisting on getting paid bigger dividends and those costs are passed through to YOU. And that really sucks.
The good news is that Amazon, Apple and Google (YouTube Music) services don’t really care. They’re essentially loss-leaders. But the Spotifys, Tidals, and Deezers of the world don’t have that luxury. In fact, Spotify’s share price has dropped at least 50% from its initial price. They’ll never make money in spite of the fact that they have more users than all of the other major services combined, over 400 million! That’s like a gazillion dollars a month and they still operate in the red.
So, if costs start going up, how will consumers react? They still want their music. And where ill they get it for a better price? The Pirate Bay, or some new iteration of it.