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January 25, 2019

The money musicians don’t make — part 1

The money musicians don’t make — part 1

Delia Albu-Comănescu
MONEY

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The distribution of revenue in music has been an important topic in the music business and even more so in the Low-Fi universe. The vast discrepancy between what the music industry makes in total and how much of that goes to artists is one of the implicit reasons for the Low-Fi community to even form in the first place. To illustrate, in the US music market the total generated revenue for 2017 was 43 billion dollars. Of that sum, artists received 12%.
Backstage is going to be looking into this further, but for starters let’s have a brief overview of what is it we talk about when we talk about making money as a musician.

When I started looking into how musicians (can) make money, I was convinced I would be swimming in murky waters and — truthfully — also a little annoyed at all the legal jargon I suspected would soon follow. Sometimes research helps clear the air, but unfortunately this wasn’t one of those cases. Things get even murkier post-research and many of the initial practical questions like "How do all the types of royalties differ, how much do they pay and how can they be tracked?" and "Might YouTube's $0.00069 per stream payout be a typo?" end up taking a more philosophical turn. In my experience, emotions always run high when discussing matters of finances in music, so I recommend you strap yourself in for this one.


The internet listicle breakdown

First things first, let's see what advice the internet has about how to make money in music. As expected, any cursory search involving the keywords "making", "money" and "music" will provide lengthy lists of 12, 20 or even 101 ways in which musicians could make money. Some, of course, more valid than others. To name a few: getting crowdfunded, creating and selling merchandise, entering sweepstakes for musicians, uploading music to YouTube, playing more gigs, teaching music lessons, streaming, digital royalties, publishing royalties. While alternative activities like, for instance, creating and selling merchandise, or running successful crowdfunding campaigns are fair suggestions, they are also jobs in their own right. They require large amounts of time, preparation and know-how and ultimately, they might end up being more of an expense in terms of time and effort than they are a source of income.

Historically speaking, there is a long line of artists who worked day jobs before getting their big break: sources suggest this was the case of janitor Kurt Cobain, truck driver Elvis Presley or gravedigger Rod Stewart. There's even a certain level of mystique that has been built around the topic and, arguably, it might be this exact mystique that stops us from raising our brows at the discrepancy between our declared love of music and our apparent societal nonchalance in suggesting taking on other jobs as a way of correction a systemic failure in payment distribution.

 

Getting a (loose) grip on royalties and the ongoing European copyright debate

As a music fan, it all sounds pretty straightforward: it boils down to ownership of a specific musical creation. But for musicians and the music industry itself, the concept holds many more facets. In short, legally, each person who was involved at any stage in the creation or recording process of a song or album, has a right to specific amounts of money derived from the sale, usage, distribution, embedding or any other form of monetisation of the music content. TuneCore, a music distribution platform, provides one of the many guides to royalties that aim to shed some light on at least "13 ways to make money" as a songwriter. But be forewarned, royalties for songwriters can vary from $0.00069 per stream in the case of YouTube, to up to 15% of the retail price for analog print rights, with a number of them being subject to individual negotiations. For musicians, the level of obscurity and inconsistency that characterises copyright and payment distribution turns the process of tracking and measuring their revenue streams into a daunting process, wrapped in endless amounts of legalese. The conundrum of understanding the revenue streams generated by even a single song are beautifully showcased in Imogen Heap’s project "Life of a song". Additionally, the artist is also one of the proponents of using emerging technologies like blockchain to support and democratize the collection of data and virtually automatize the payment process.

You might have heard a collective sigh of hope and relief last year, coming from musicians all over Europe. For a short while — improbable as it may have seemed — musicians were able to cling to the hope that the EU directive on Copyright in the Digital Single Market would provide music some legal protection. The draft proposal met immense pressure from giants like Google or the Wikimedia Foundation, mainly on two of its articles — 11 and 13 — popularly known as the "link tax" and the "meme ban".

While Article 11 doesn’t seem to be a cause for much concern in the music industry, Article 13 has triggered a digital mutiny on YouTube, seemingly under the kind patronage of Google. Effectively the article aimed to safeguard the intellectual property rights of content creators by prohibiting the unrestricted use of anyone else’s copyrighted work, be it a song or a photo, if the remixed content is intended to be published online. Moreover, in this scenario, platforms that rely heavily on user-generated content — like YouTube, SoundCloud, Facebook, Twitter, et al., — would become legally liable for the copyrighted material that they host.

At the beginning of this year, though, the light at the end of the copyright tunnel seems to be back to looking pretty dim. On January 21st, European negotiations on the copyright directive hit an indefinite impasse.

 

The unbearable lightness of streaming

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Back in 2005, David Kusek, the then-Vice President of Berklee College of Music, proposed a new way of approaching music. In "Music like water" Kusek suggested the creation of a "music utility" plan, where users would pay a $3 or $5 bill each month in return for unlimited access to music. Three short years later, a Swedish start-up called Spotify introduced the concept of an extensive library of music — not dissimilar to peer-to-peer sharing — that users could get access to through a lightweight application. While the application and service have changed immensely in the last decade and the platform has amassed over 200 million users, it still struggles with profitability, an increase in streaming fraud and finding a steady, healthy diet for its royalties payment plan. The discussion on the financial success and the equitability of streaming platforms cannot be limited, however, to Spotify. Even though the Swedish company owns the largest part of the market in its field (with 36%), most platforms are not doing a much fairer job of paying musicians. Informationisbeautiful.net attempted to showcase the distribution of royalties in streaming services in 2010, 2015 and in 2018. What the data essentially shows is that in order for a musician to earn the equivalent of a US minimum wage ($1,472 /  9.600 DKK) their work needs to be streamed between 80.000 times on Napster and 2.2 million times on YouTube. Take a moment to let that sink in.

Moving forward — or to the side

According to a study done by Nielsen Music across 7 markets (U.S., U.K., Sweden, Spain, Italy, France and Germany) songwriters are not the only ones who stand to lose financially because of the questionable state of copyright laws. The music industry loses 2.65 billion dollars per year to coffee shops. In light of this, it is becoming increasingly necessary for streaming platforms to address the different types of needs that their users may have, as well as potentially address a special set of royalties payouts reserved for businesses.

Things are not all bad on the music streaming front, however. Revenue is projected to grow by a steady 4.2% between 2019 and 2023; in the US, on-demand audio is up 42% compared to 2017, the total number of streams jumped over the 800 billion mark and subscription streams grew by 50% in the fourth quarter of 2018 alone. Broadly seen, the larger issue doesn't necessarily seem to be the potential for growth of streaming platforms, but the way in which the revenue generated through them will find its rightful owner and at what percentages. Worries about the decrease in pay per stream rates continue to surface in light of the expansion of the Spotify freemium market. But the discussion about per stream royalties paid by streaming services is far from over and, consequently, so is the one about making money as a musician. 

The one thing music fans could actually do about this issue is to choose where to put their money. Sign up to Low-Fi to support the musicians you like. Low-Fi's fee is 15% and the rest of the proceeds go directly to the artists. Help us grow, so that we can make a bigger differece. Join the movement. 

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