Musicians ‘missing out’
When Mariah Carey’s
broke records on December 24 for the most Spotify streams ever in a single day, at 10.8 million streams, it raised questions of who really makes money out of music streaming.
The answer seems to be: Not the musicians.
The much-loved Christmas hit would have purportedly made Carey’s label around just US$66,000, to be split with various stakeholders, including Carey.
Spotify paid on average US$0.0038 per stream to unsigned artists in 2015, according to data visualisation experts Information Is Beautiful.
Revised data from March 2018 shows that the streaming behemoth is likely to be paying $0.00437 per play. This was one of the lowest amounts paid by companies in the space. YouTube was the worst at just $0.00069, while also enjoying the largest market share, with around a billion users.
In its report
Recorded Music New Zealand said that while 83 per cent of New Zealand record company’s income came from downloads and streaming, platforms like YouTube that don’t negotiate licences with rights holders have created a value gap.
Not great for the labels, but it’s musicians who are getting the raw deal, according to David Harrow, a Los Angeles-based musician and dub producer, who has worked with New Zealand acts Salmonella Dub and Headless Chickens.
‘‘Streaming is a total scam in my opinion. There’s a huge amount of money being made from it. Huge. Just none of that goes anywhere near the artist,’’ he said.
So where is all that money going?
Bar Youtube, Spotify is the biggest music streaming service globally, with 191 million active users and 87 million subscribers, but it has yet to turn a profit.
Although it appears to be extremely close. After listing on the New York Stock Exchange in early
2018, the company posted revenues of
€1.35 billion (NZ$2.3b) and an operating loss of just €6 million for Q3 of
2018. These are the best figures it has ever had.
Yet chief executive officer Daniel Ek doesn’t receive a salary. At the end of fiscal 2017, Ek was awarded a bonus of US$1m (NZ$1.49m) subject to ‘‘the fulfillment of certain milestones and/ or discretionary approval by our board of directors’’, Spotify’s F-1 filing with the United States Securities and Exchange Commission on February
28 revealed. Not quite Bill Gates territory.
A substantial portion of Spotify’s operating costs are going on music licensing fees. According to the filing, it paid more than €8b in royalties to artists and music labels by the end of 2017.
Now that Spotify is listed, investors and rights holders both vie for margin. But according to shareholder research by Information Is Beautiful, up to 16 per cent of Spotify’s shares could already be owned by the big four record companies. If correct, big labels would be netting hundred of millions from streaming revenues. It remains unclear how much goes to the artist.
I asked Harrow what advice he would give to young musicians today who aspire to do music for a living.
He said: ‘‘In some ways, it’s easier for them, as they don’t seem to expect to sell anything – the whole concept of buying music seems alien to this generation, they hope to give away enough to get a profile enough to get a gig. I wish them all luck, but urge them all to learn some technical skills that might mean they can branch out into live engineering, theatre production sound et cetera.’’
Perhaps they’d be better off buying shares in Spotify.
‘‘None of [the money] goes anywhere near the artist.’’ David Harrow, musician and producer