I made a post today on social media regarding Neil Young pulling his music from Spotify based on Joe Rogan’s “misinformation” spreading. My post was pivoting from Young/Rogan beef to the reality and the elephant in the room of artist/earning reality that exists based on this new and dominant form of music distribution that has become the new normal.
After I hit Post, more thoughts and discussion started to swarm in my head, so figured now was the time to release it here.
I don’t think Spotify and other DSPs are evil. They are 2022. I don’t think DSP's are music haters or intentionally pay poorly to content providers (using the word “content” to describe music is so cringy), they just can. They are the new model. The old model died a very public death, ironically due to the greed and the power struggle of the former monopoly holders. This time around those who suffered from the technology shift, thought wisely, and embraced it vs fighting it. The victim in both technology advancements (file sharing and streaming)? Artists.
When Apple first introduced the iPod, the guinea pig was music. Was it a music device? No, it was a hardware device. The success of music was an experiment to move onto visual media, then to a phone. When iTunes tried to create a digital form of music delivery and set the price at .99 cents per download, the labels said nobody would pay for music they couldn’t hold. The digital distributors, tried to create a DRM (digital rights management) protocol to keep downloads from being shared. One proved to be true (people would pay for digital music), and one was abandoned (DRM was eliminated when it proved to be too difficult to impose on consumers. Who are the losers in this one? Artists.
When Films, Documentaries and TV shows are made, budgets are allocated for every single cost to make the film. Costs for cameras, crew, editing, travel, catering, per diems, you name it. When it comes to the end of the film, the soundtrack is needed to add ambiance and audio accompaniment to it to help create the mood. Many times (not all) the budget is spent, and music is hunted for use at a low fee or even gratis use under the pitch that it’s “good for exposure”. The cost of airline flights cost more than the entire music budget, so once again, the artist is victim to a low fee for the use of their music in a film. Here’s the sad part. Many times, these low fees are more money than the artist has made from a full year of streaming. Also, if the license comes from an artist that is signed to a label, the money earned just goes toward the unrecouped balance of the money spent being signed to the label. This is not a knock-on film/TV use. This is just to point out how it seems to work for better or for worse.
MTV has always been notorious with the “exposure” line. Worldwide rights, in perpetuity for “exposure”. Again, for an unknown artist, this is a good deal, because if their song is used in a reality show and shown in every country, that means they have a shot at being heard. I’m very pro film/tv placement, especially in 2022 where those forms of exposure are the most likely to get noticed because you can’t fast-forward or skip a song if it’s in a show or film you are watching. I personally think editors are the best music discovery sources and most helpful to up-and-coming artists than any other individual person. They cut a scene to a song to create a feeling, an emotion and if they get it right, that moment can change an artist’s life. I always think of the use of “Breathe Me” by Sia in the finale of Six Feet Under. I personally believe that placement changed her career forever.
So back to streaming. The argument of whether a music fan in 2010 and beyond needed to physically own the music they listened whether it was digital file, or a physical product was a very short one. No. Nobody cared. Spotify and other DSPs were quick to address the issue on ownership. Quick to realize they needed to strike a deal and work with the majors. Majors, coming off a horrible past decade because of the refusal to accept and work with technology, came to the table, not as bullies, but as negotiators. They had something Spotify needed, and Spotify did something they needed. Deals were struck. Ownership was granted and here we are.
Now, based on the pay rates per stream, if any businessperson looked at it, there would be no way a major would take this deal. But, when you look at this deal and are part owner of the company, it’s a lot easier to accept these numbers. Especially if you get a share of the subscription fees, the advertisement dollars and are still collecting your share of the streams and paying out the artists on the agreed upon percentage they made when signing their contract.
Also, being a partner and having ownership, as a major label, you have advantages built in. In a distribution system that has 60,000 uploads of new music a day, you still have your influence to take priority to pass go and collect $200. So, it’s a win, win, win. If you are on a major label and are a priority, you are elite. Again. I can’t hate on any of this. First you get the power, then you get the money.
A major label has always been a benefit to any artist. Being on one is the gold standard. It’s your shot. But just like anything, just because you are in the race doesn’t mean you are going to win, place or show. Sometimes you never even make it out of the stable. It’s a gamble. But who would turn that down? The power, the influence could change your life. It’s been this way since the beginning of labels. You are on a label; you had the staff in place with the relationships. Relationships with radio, video, retail, writers, periodicals, agents, etc. You had influence. If you had an A list artist coming out with a new song, you could leverage a new artist to get exposure. You could put developing acts on headliner packages. Get an exclusive with an artist if they wrote about someone that needed a review or profile. Today, being part owners of this new platform, it carries on. You can’t be mad at them. Don’t hate the player. Hate the game.
So, since I have clarified I don’t hate labels for having the power and the influence, I do want to speak on their business itself. Historically, prior to streaming, labels always put out a lot of money in costs to work with an artist. There were (and still are) a lot of moving parts. There were advances, production, art, videos, manufacturing, tour support, distribution, publicity, advertisements, etc.… many of these things still exist. One missing piece that was very expensive is manufacturing and distribution. An artist when signing to a label would agree for several releases with options to continue (labels option) if things were going well and would usually negotiate a percentage (points) awarded to them for their music and being part of the label. This percentage was usually around 12%-16%. This calculation was based on how much the label was putting into the project from their side and it was a fair (agreed upon) split with the artist for the label doing the heavy lifting and financial investment. This 85% (Average) would cover the recoupable costs they were putting into the creation, marketing, promotion, manufacturing of the release. So, for any aspiring and excited artist, this was understandable, and this was their shot. But, the math wasn’t as clear. Many artists I know today who have sold 1 million copies of albums are still unrecouped. How you ask? Well, when you cut the deal up, you are earning (say) .16 cents per dollar spent. That is also the number you are recouping on. So, by that, if $1 is earned and you owe $1, you only paid back .16 cents towards that dollar owed by the dollar earned. It would take you $6.25 earned to pay back $1 according to your deal. So, if you earned 1 million dollars, but owed 1 million dollars, only $160,000 was recouped leaving you still $840,000 unrecouped. There is an upside though. If you are in this number area, that wood hopefully mean that you are making money another way, like merchandise, touring, as an influencer or branching out into other areas and you got there thanks to the efforts of the work that you and your label did for you to gain this exposure. But these deals are archaic. The costs of making, distributing, and promoting a release is nowhere near the numbers it was before streaming. Majors need to do 50/50 deals. Give these people a chance to make a living off their music.
To be fair, Sony has begun trying to work with legacy artists to renegotiate with them for better royalty shares and even wiping clean the accumulated debt that is still unpaid, giving the artists a chance to actually earn a good percentage from their streams moving forward.
I won’t even start on what publishing earns because that alone is its own rant. Being a partner in the DSPs, earning off each stream (double dipping) and earning off master uses and exploitations, I think you are making enough to give up half of the streaming revenue to these artists. Making 1 million per hour on streaming. I think you can share.
That was the old model. When it cost a lot of money to release and promote a song. When the gates were sealed, and you couldn’t get through unless you had a connection or a way in. Retail, radio, periodicals. Very exclusive and impenetrable for the most part. Manufacturing was expensive and moving units and getting them in stores was hard. Labels owned end caps and point of positions to highlight their releases and priorities. You weren’t getting placement on the Tower Records counter as an impulse buy, unless a clerk was a fan and said, “fuck it”, but traditionally those spots were bought and paid for.
Today, with DSP’s being the main distribution model, anyone can get their music on the platforms with independent distributors from TuneCore, Distrokid, CDBaby and more exclusive ones like Fuga, Symphonic, Empire. Hence, the 60k per day uploads of new songs. Gone are the record stores, the politics, the golden key to compete against the others. But now we have a marketplace that is beyond oversaturated and still controlled by the majors because of their ownership.
Showing the numbers of what an artist earns on each stream is alarming and sad. But you are now on the field. I have news for you too. Regardless of these numbers, if you own your own music, you make all the money. You can make a living. I described the deals that artists have with labels, but I also described how much they lose from those situations. When you own all your stuff, you aren’t receiving .14 of a dollar earned. You are earning $1 of $1 earned. It’s not all doom and gloom and fuck the DSP’s for not paying. It is what it is because that’s what it is, and you can either work with the system or be a tree falling in a forest with nobody there to hear you. I’m not condoning it, but if you are an artist, there is no other option today. Try and get more people to convert to the better paying platforms, but at this point it’s like asking someone to change from their iPhone to an Android. They like what they like.
Spotify, has us all by the balls. They are the most used platform. They offer the option to pitch your music to their editorial playlists and if you get on one, life can change. It sucks. Whenever I have a release coming out and it’s pitched to Spotify for editorial play listing upon release, I reminds me of buying a lottery scratcher. You could win or you could lose. You wait and anticipate every moment waiting for it to win and when you get 2 of 3 numbers, with what you scratched off being generated by a computer with zero explanation as to why you didn’t win. It’s just the way it goes.
As an artist or an independent label, we need these platforms. It the only way to get music to the masses. They pay for shit, but like I said, if you own your own music, you make all the horrible payouts. If you are an independent label, make fair deals. Give the artist 50/50 deals. Let them want to work with you to succeed. It’s better to have a partner in life than to do it yourself. We can’t look at this Neil Young situation and withdraw from the platform due to the inclusion of Joe Rogan being on the same platform. We can try and get people to support us on better paying platforms but jumping off one (the biggest one) is literally shooting yourself in the foot. Most people don’t have the catalogue of songs to live off to afford to say “it’s told us or them."
I love Neil Young. I love Joni Mitchell. I have their albums on vinyl and CD and listen on AppleMusic, but they are legends. They have catalog and they were around and coming up when there was a way to become an artist by working with labels and artist and career development. We live in a very different time, where many of those options no longer exist. Time waits for no one and over-saturation cancels out time. When they released albums and music, distractions were lesser. People read more, writers wrote more, radio played music more and we had time to digest what we heard. Gone are the days of doing a paper route to earn money to buy one or two albums to listen to for hours, staring at the art and reading the liner notes and committing because every dollar earned was thought out to spend on something. We owned music, we didn't rent it.
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