The transition took place in 2017: for the first time, the music industry’s revenues thanks to streaming platforms such as Spotify or Apple Music exceeded those of traditional “physical” sales channels. And it has tripled since then, giving new impetus to a sector that was in crisis with the advent of digital. This market, which did not exist until the beginning of the new millennium, today generates a turnover of 17 billion dollars, that is, 65% of global income. However, only a small portion of the earnings reaches the artists. It’s a problem that the European Parliament wants to solve by increasing compensation for writers, bands and singers.
streaming music
A study commissioned by Eurocamera itself underlines the transparency surrounding the music streaming market, starting from the algorithms that regulate the functioning of the platforms and, above all, guide the user experience by recommending, for example, “close” songs, authors and genres based on consumers’ favorite ratings. These machine-driven mechanisms have become so centralized that competition has shifted from content to creating increasingly engaging interfaces and experiences.
Artists’ income
But as with everything, there is a downside to the explosion of online streaming, which offers the user potentially unlimited offerings at low cost. The majority of creators, artists, writers and performers of the material we find so cheap actually make a very limited profit from the content they upload to the platforms; This profit comes mainly from royalties, i.e. royalties.
Each platform now uses different criteria to determine how much on average they will compensate writers. So, for example, Spotify keeps 30 percent for itself and gives 70 percent back to the artists; This rate drops to 52 percent on Apple Music. Obviously, not all of this money goes into the writers’ pockets: The percentage that writers actually collect depends on the deals they make with record labels and production companies; These deals, like the “analogue” market, are more advantageous. for rights holders (i.e. record labels) rather than writers, composers and musicians. On average, about 55% of revenues go to record labels, with artists receiving less than 10%.
As for the platforms’ revenues (derived from advertising revenues and subscriptions, effectively constituting the artists’ “fee”), these are usually calculated in prorated rates based on streams, i.e. the reproduction of a given audiovisual content: in the case of musical tracks, for a stream to be valid it must be at least It should take 30 seconds.
These rates also vary between various platforms: Tidal averages 0.012 euros for each valid stream (so it takes 83 streams to get one euro), Apple Music 0.009 euros (112 streams for one euro), Amazon Music 0.0036 (it takes 278 streams to make one euro) and Spotify 0.003 (so one euro after 334 streams), but these figures vary depending on various factors such as the total number of streams on the platform, the strength of the labels and the popularity of the artists.
Alternative models
In line with the demands of music creators’ associations, the European Parliament adopted a resolution on Wednesday (January 17) asking the EU to reduce the huge imbalance that persists in the world of music streaming. Essentially, the demand is to introduce a legal framework at European level that revises the parameters within which copyrights are defined and guarantees fairer compensation to all authors, given that the current model largely favors more mainstream artists.
An alternative model could be a user-centered payment system (UCPS for its English acronym); Here, the revenues generated from the user’s listening will not be thrown into a huge global pot and then shared, but will only go to the artists listened to. between various artists depending on streams (with the mechanism used today, users even pay for music they don’t actually listen to). According to parliament’s estimates, the move to the UCPS model would lead to a reallocation of at least 170 million euros per year to Spotify alone.
However, it is worth noting that market trends show an increase in the number of independent artists turning to self-production (i.e. without various labels and intermediaries) and seeking a balance between fairer and higher compensation by signing deals directly with platforms. lower visibility.
The decision also points to so-called “payola” systems: this term (derived from the combination of the English verb “pay” and the musical instrument pianola) denotes agreements between authors and publishers in which the former submit to “payola.” the second are rights to certain audiovisual materials purchased in bulk in a one-time transaction (thus excluding artists from regular profits from the continued reproduction of their works). In general, stricter rules should be introduced to more precisely define rights holders and better specify metadata for the various contents available.
Artificial intelligence
Another important issue is the problem of artificial intelligence (AI). The parliament wants to impose an obligation on platforms to make more transparent the algorithms that govern listening recommendations to users, among other things. The aim would be to prevent unfair practices, such as manipulation of artists’ streaming volume figures, which platforms allegedly use to pay artists less.
However, this is a slippery slope because these mechanisms are an integral part of the commercial products sold by these companies and are therefore protected by intellectual property law.
What’s more, MEPs want to see the introduction of some sort of label to be applied to AI-generated songs, such as on the covers of records, cassettes and CDs with “parental advice” flagging sexually explicit content. In fact, the music streaming phenomenon is also gaining ground on music streaming platforms deepfakeArtificially generated content by computers that uses authors’ identities, voices, and appearances without their permission.
musical diversity
Finally, there is the issue of musical diversity, which, according to MPs, is being degraded by current listening methods. As mentioned, these favor artists who have more resources and are already popular; less frequently, it suggests styles, languages, and authors that fall outside the main lists.
To overcome this problem (which has, in fact, always characterized the musical world, even in the pre-digital age), it has been proposed to define “specific indicators of diversity” in order to map the enormous range of genres and languages available. in line with the European music strategy to promote diversity and support smaller independent artists.
Regulatory intervention from the EU will also be necessary to guarantee the visibility and accessibility of unspecified “European musical works”; for example, by introducing quotas to encourage listening to these productions on broadcast platforms.
Source: Today IT
Roy Brown is a renowned economist and author at The Nation View. He has a deep understanding of the global economy and its intricacies. He writes about a wide range of economic topics, including monetary policy, fiscal policy, international trade, and labor markets.
