Apple / Deezer / Spotify / WIRED
When lockdown came into force in March, many musicians in the UK saw a huge chunk of their income disappear virtually overnight. The summer’s stacked lineup of festivals fell one by one. The outlook was bleak.
On top of this, the closure of bars, offices, shops, spas, and the many other places left the majority of musicians – who normally earn royalties when their songs are played in public – relying solely on recorded music as their only source of income. Apple Music, Spotify and YouTube already dominated the music industry. Lockdown skewed things even further.It was around this time that Tom Gray started tweeting with the hashtag #BrokenRecord. A lot. As a working musician (and 1998 Mercury Prize winner with his band, Gomez) and a director at music royalties collection society PRS, he found himself uniquely placed to advocate for change.
The subject of Gray’s ire was the apparent discrepancy between major labels banking upwards of $1 million every hour from streaming, and middle-tier or smaller artists who receive tiny amounts in comparison for their millions of streams. Concert violinist Tasmin Little was paid £12.34 for millions of streams over six months, for example, and anonymous tipsters report similarly meagre payouts. Now, Gray is part of a growing number in the industry advocating for a change to the way payouts from streaming platforms are handled.
The current payout system used by all the major streaming services is known as the ‘pro rata’ model. Under this arrangement, all revenues are collected into a single pot and then divided and distributed according to the share of total streams for the given payment period.
To illustrate, imagine payouts are calculated monthly and in June 2020 Apple Music is paying out £100 to rights holders. If ten per cent of the total streams on the platform for that month were Ariana Grande songs, then Grande – or the rights holder for those recordings, which in this case is Universal subsidiary Republic Records – would receive ten per cent of the total payout pot, or £10. The same method applies to songwriters, although these rights are typically owned separately (and, again, often by a major label entity). This way of dividing payments means the most popular artists (those with the most streams) receive a chunk of revenue from users of the platform who haven’t played any of their songs.
Under this system, the Ariana Grande stan who pays £10 a month for Apple Music and plays ‘thank u, next’ on repeat all week also has a far greater influence on who gets paid what than, for instance, their dad who also pays £10 a month but only uses Apple Music to stream his favourite Paul Weller album to wind down at the weekend. Effectively, the Paul Weller fan is supplementing Ariana’s income when the Apple Music cheque lands.
This is a simplified explanation of the process, since streaming platforms also give a different weighting to streams from paying, premium subscribers versus free users who listen to the service with ads, for instance – that adds another level of complexity to the breakdown, but broadly the system works as described.It means that most of your ten pound subscription actually goes to Ed Sheeran or Drake or Lady Gaga rather than the other musicians whose music you may have been listening to.
The biggest beneficiaries of the pro rata model are the major labels, who own the vast majority of recorded music in existence via deals favourable to them. Currently, if you sign with a major label, taking home 30 per cent of the streaming royalties earned by your music is considered about as good as it gets. And streaming, by narrowing how music is consumed, essentially exaggerates and exacerbates the age-old imbalance between the majors and the rest of the industry. For these reasons, Gray’s campaign is ultimately aimed at root-and-branch reform of how the music industry serves musicians – streaming is simply the most visible way into the issue.
Supported by the Musicians’ Union and The Ivors Academy (which represents songwriters and composers in the UK), the #BrokenRecord campaign is calling on the Government to “urgently undertake a review of streaming.” In reality, Gray says, this would mean bringing together all the major streaming services operating in the UK and all the major rights holders to discuss reforms of the way that payments are divided up.
Perhaps the biggest, existential issue with the pro rata model is a Malthusian one: as subscriber numbers inevitably begin to plateau and the amount of music added to the platform continues to grow exponentially (Spotify’s founding CEO Daniel Ek boasted last year that the service was adding up to 40,000 tracks every day), the value of each individual piece of music will continue to fall. Data published by artists’ rights organisation The Trichordist showing that Spotify’s per-stream rate has fallen every year bar onesince it launched appears to bear this theory out. Despite the petitions, it’s not possible for Spotify to simply increase its per-stream rates – the revenue pot is finite.
One obvious way to mitigate this would be to up the price of subscriptions. Since launching in 2008, the monthly cost of a premium Spotify account has stayed at £9.99. Accounting for inflation, this means that the cost of a monthly Spotify subscription has effectively fallen by 25 per cent since the service first launched. Daniel Ek says Spotify has considered raising the subscription price in its mature markets (such as the Nordics), but won’t be making any changes in the near future.
Accepting that subscription costs are unlikely to rise of their own accord any time soon, Gray advocates for something else: a method known as a user-centric payment system – or UCPS. Under this model, subscriber revenues are distributed according to what the individual user has spent their time listening to. So the Ariana Grande fan’s subscription would still mostly go to Grande’s rights holders but, crucially, her dad’s £10 wouldn’t: that would go to Paul Weller’s rights holders. Supporters of the model argue that this is a fairer way to remunerate artists, as well as having other expected benefits such as supporting niche and local music scenes, offsetting the impact of ‘power users’ (like the Ariana stan in the pro rata example), and similarly tackling streaming platforms’ well-publicised problem with bots by limiting the influence a single account has on payouts.
Deezer, France’s most popular streaming service, is the only platform to publicly push for a switch to UCPS. Since the beginning of lockdown, the company says its UCPS landing pagehas seen a 125 per cent traffic increase, including a 70 per cent boost in May (compared with April) when the #BrokenRecord campaign got underway.
Deezer had planned to run a full pilot of the new system in 2019, but the effort was blocked by at least one of the service’s major label partners. However, it has continued to run tests alongside its standard pro rata payouts and says that so far these have largely confirmed expectations – as well as suggesting that artists who lose out initially could reap longer-term benefits from the system, as the loyalty of their listeners comes into play over time (a 2018 study by the company suggested that people’s appetite for new music narrows as they get older).
But because UCPS hasn’t yet been tested on a scale that accounts for the global nature of streaming, it’s hard to be absolutely clear on what the impact of the system would be. Alexander Holland, Deezer’s chief content and product officer, is particularly keen to avoid making what he calls “a Robin Hood argument” in favour of the system, as he says this masks its true complexity and variety of outcomes. The small handful of public studies conducted to date have returned varying results – broadly concluding that UCPS doesn’t shift the dial as much its proponents imply, and may have unintended consequences arising from user behaviour.
Critics note the increased admin costs involved in changing how payments are made, suggesting that this would ultimately be shouldered by rights holders (and thereby artists) further down the line. Other streaming services have hinted at their scepticism of UCPS, but remain tight-lipped about their exploration of any alternatives to the current system.
Such decisions may soon be out of the streaming platforms’ hands. Jo Stevens, the Labour Party’s Shadow Secretary of State for Digital Culture Media and Sport, has given the #BrokenRecord campaign her backing. “The industry really needs to reach a commercial solution that provides transparency and fairness,” she says. “Music is getting many of us through lockdown and streaming is one of the only ways musicians can make money right now – it’s time the system was fairer.”
With Stevens’ former Labour colleague Tom Watson now installed as the new head of UK Music, the music industry’s lobbying body, there’s hope that political pressure will move the discussion around UCPS (and copyright directives more broadly) forward.
UCPS also brings streaming subscribers into the conversation and, Gray says, encourages them to assert their moral rights as consumers – something that politicians in particular tend to be mindful of. Gray, who briefly pursued a career as a political speechwriter before his band took off, believes some form of government regulation of streaming could well be the end result of the #BrokenRecord campaign, as more legislative ears are pricked to the issues it raises.
However, there remains a risk that UCPS is seen as a silver bullet for musicians’ woes – especially once the argument falls into the kind of simplistic analogies with which political arguments tend to be fought and won. Mat Dryhurst, a musician and academic who’s been working on the issue of streaming for the best part of the last decade, worries that UCPS represents a “tourniquet solution” that fails to fully address the exigent issues facing musicians trying to earn a living from their work. Gray is wary of the limitations of UCPS too, and describes it as a key to unlocking opportunities for wider industry reform as opposed to a solution in and of itself.
Dryhurst points to the way various shifts taking place in music at the moment reflect wider labour movements in other industries that have been disrupted by digital technologies. “In some senses, now everybody is being rendered independent,” he says, “and companies like Uber or Deliveroo or whoever use much of the romance associated with that term in fact to do heinous things and basically isolate people.”
Instead of the trap of independence, Dryhurst advocates what he calls ‘interdependence,’ the idea that “it takes groups of people and scenes to make the stuff most of us love.”
Currently, these values are borne out in part by platforms that allow creators to set their own prices, such as Bandcamp (which emphasises fan support and payment for ownership), Patreon (direct fan-to-creator subscriptions), or Mixcloud (a long-form audio platform that lands somewhere between the two with its new Select offering) – as well as previous experiments like Resonate and Saga.
“We ought to have tools whereby artists themselves can determine the value of their works in different contexts,” says Dryhurst, arguing that a set, per-stream valuation makes little sense. “To judge Karlheinz Stockhausen or Miles Davis on play numbers is patently absurd.”
Mixcloud’s co-founder and CEO, Nico Perez, agrees, and says that “[streaming] is ultimately a one-size-fits-all model.” Borrowing from internet industry parlance, he’s pushing for a move towards what he calls “Music 3.0” – in which platforms offer more customisable options, and reposition musicians and other creators at their core.
It’s perhaps not by coincidence that Spotify launched as a remedy to music piracy in the same year as the last major global economic crash, and that a campaign seeking to reform the streaming status quo it ushered in should arise on the cusp of what’s predicted to be the worst recession in 300 years. The circumstances give these conversations a renewed urgency.
For Gray and those backing the campaign, the question is simple: “if you don’t correct this problem in the middle of a global economic crisis, when are you gonna fix it?” The bigger difficulty will be convincing the labels making a million dollars a day for their shareholders that there’s a problem to fix in the first place. But if musicians – a group of people who earn a living from making noise – can’t get more people to sit up and pay attention, then who can?
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