A recent article from TechDirt provides an interesting data point in the discussion of how streaming services like spotify compensate artists. According to the article, a recent study by a French record-industry trade group finds that a large percentage of the revenue generated by these services is paid to record labels, rather than artists. To be precise the study finds that about 45% of the revenue goes to labels, and 6.8% goes to recording artists and 10% goes to songwriters and publishers. About 20% of revenue goes to the services themselves. (Click through to the tech dirt article for charts, and more discussion of the results).
I've been wondering about what Spotify's reportedly meager pay-out for artists means for the future of digital music for awhile. Does the low revenue from streaming services mean that the “music as service” model is, in an of itself, not a sustainable way to pay artists? Or does it mean that artists need to re-negotiate their relationships with labels to capture more of the revenue from streams?
This study seems to provide evidence in favor of the second conclusion, but I'm not sure it's the whole story. For one thing, the article mentions that the streaming services are not yet “anywhere close to profitable.” One wonders then, what the path to profitability for these platforms look like. Do they need to charge more for subscriptions? Will they want to pay less for content? I'm sure they are telling their investors that they will be able to spin user data in gold, but I'm increasingly dubious about the value of consumer data in an economy where consumer purchasing power is, at best, barely growing.
I'm also not sure we can dismiss all label income as rent-extraction. Yes, production expenses aren't what they once were, and distribution expenses must be lower than they were when fleets of trucks brought plastic discs to physical stores, but the “publication is a button now” rhetoric doesn't tell the whole story about the work and expense that might be involved in digital publication. I need to dig into record company financial data to try to round out the story here.
