The majority of people who champion streaming are not your average artist, they are not even the top 10 per cent of artists. The advocators of the commentary we hear day to day are music industry press, mainstream press, the streaming networks themselves, aggregators and Digital Service Providers (DSPs) and of course users, who get an amazing experience of all the music in the world for 9.99.
[Editor Charlie sez: Cherie Hu presents a good argument for why artists and fans should demand the “user centric” royalty, or what Chris Castle calls the “Ethical Pool” approach that he’s working on.]
Fraud is applicable because there’s a tangible price tag involved in the consumption of a song: Labels and other rights owners are paid on a pro-rata basis, according to proportional volumes of on-demand streams. The average per-stream payout may not look like much — $0.004 for Spotify, slightly more for services like Apple Music and Tidal ($0.008 and $0.012, respectively), although exact rates depend on the type of artist or song….
But they can add up. A top hit like Ed Sheeran’s 2017 monster “Shape of You” would distribute millions of dollars in performance royalties to its songwriters and even more to the master-rights owner. Using Goldman Sachs’ projection that the streaming sector will hit $34 billion by 2030, millions of dollars in fraudulently acquired funds could be making their way through the royalty chain. Though unlike Twitter, which wiped out 6% of its users, the number of fake music streamers has not been determined. Says one major label head: “It’s not something we’re currently concerned about, but that’s not to say we won’t be in the future.”
“Music streaming payouts are a zero-sum game,” says another industry insider. “It is imperative that services are vigilant and sophisticated in their controls to ensure that streaming fraud doesn’t dilute payments to the artists who have rightfully earned those payments”….
Here’s how “playola” works at playlist-promotion companies like Spotlister: A customer pays the company to secure prominent placement of a song on key playlists, such as those on Spotify. When a track is uploaded, it is analyzed and its metadata is used to send it to the most appropriate playlists.
[Chris Castle says: Remember that high profile criminal payola cases were prosecuted under state law commercial bribery statutes and not only the federal anti-payola or plugola laws. Alan Freed pleaded to commercial bribery for actions which are literally nothing compared to what Spotify does every day. While the federal payola laws apply to FCC licensed radio stations, commercial bribery prohibitions are not restricted to radio–so Internet companies need to take this a lot more seriously. “Because Internet” is less of a defense every day.]
Zoë Keating does a great interview with the BBC World Service’s World Business Report on how what we call the “streaming meltdown”: How the economics of streaming services doesn’t work for independent artists.
[Sara Hickman is one of Austin’s most beloved songwriters. She has allowed us to republish her viral Facebook post on how streaming is hollowing out the “middle class musician”. (If you want data on this phenomenon, see the Austin Music Census, the most comprehensive work of its kind that actually connects with working musicians as opposed to the usual hoorah Chamber of Commerce bunk.) Trust me–it’s not just Austin. As Maria Schneider has written, low streaming royalty rates and increased consumption are essentially destroying the music infrastructure from the ground up. And the recurring theme from the World Trade Center offices of Spotify is that royalties are too high. We’re honored to republish Sara’s important post. And a 44% increase in streaming rates is still $0.00144.]
There were many reasons why I retired from music last year. I’ve never explained them or felt the need to, so I’m not going to start today.
But I do want to point out something that made a chilling difference in my decision. And that is streaming and downloading music versus selling physical cds/vinyl/cassettes, what have you. You’ve all heard how it affects us: the songwriters, the musicians, the bands. I want to share a living example of what streaming does. Because streaming is killing the opportunities of musicians to make a living off of their creations.
My song “I Couldn’t Help Myself” was my biggest success, in consideration of what the industry expects, it wasn’t much. But when it came out in 1990, there was a lovely video, lots of airplay, touring, promotion teams and I was flown to radio stations all over the country to perform live and chat with the DJs. All this to say hard work helped move the song to #3. I was blessed to appear on “The Tonight Show” while it was the single.
All this to lead up to the fact that it is 2018 (28 years later)
and I just received my quarterly royalty statement from Warner Music Group for all the songs from “Shortstop”. Believe it or not, my songs still get airplay around the globe, which blows my mind and, of course, makes my heart smile.
I hope you’ve read this far.
Because the pay off is you’re not going to believe what I’m about to tell you.
I recognize the numbers I’m about to share don’t amount to beans when compared with musicians who have made it to the big, BIG time. But I’ve always considered myself a working middle class musician; I worked my ass off to make a decent living and I was cool with that. I had a niche. I learned how to diversify my talents, read contracts, distribute, create and publish content (music) to support my dream. I enjoyed understanding what I was making and releasing into the world, knowing there would be end results of, hopefully, satisfied listeners and a financial reward parallel to the work, time, effort and costs associated on my end.
Having said that, I’ve watched how income numbers on royalties have dropped since streaming/downloads started.
This new earnings notice (Oct-Dec 2017) shows “I Couldn’t Help Myself” played 14,789 times (U.S., Italy, Canada, Japan, United Kingdom, United Arab Em., Belgium, etc) and here’s what that provided:
FIFTEEN DOLLARS AND NINETY EIGHT CENTS for 14,789 captured results of people listening to my song.
That equals .0010 per download or stream. It’s not even
a PENNY per play. And it’s not because it’s me. That’s the level playing field of payment for all of us in music on Spotify, YouTube, Amazon download, Apple iTunes, Google Play, Tidal, Rhapsody, Slacker…even something called Neurotic Media.
Let me hip you to how many of those were downloads (as in paid for content):
Here’s how much streaming this one song of mine received:
As today is the International Day of Women, I thought it was important to remind you of not only how women musicians are treated, but how ALL musicians are compensated and WHY it is IMPORTANT to remember to pay for music.
Video may have killed the radio star, but streaming is ending wages and opportunities for your creators.
[Editor Charlie sez: Just in time for the Spotify IPO…or debt rollover…Billboard is poised to visit agita on streaming boosters when it corrects the absurd equal weighting of free streams and subscription streams in its sales/airplay/streaming chart, which should also change the way some people…ahem…average the revenue value of the ad/paid streams.]
One of the biggest stories of 2017 is playing out right now, as Billboard works on a revamp of its Top 200 album chart that will give greater weight to paid streams, while ad-supported streams will be devalued. Most majors have been lobbying for just such a revenue-based revamp.
Presently, all streams are weighted equally, with 1,500 streams counted as one album. Those in the know believe the formula for paid streams will be adjusted to 1,250:1, while ad-supported streams will be devalued to 5,000:1. In other words, premium streams would have four times the weight of ad-supported. Under the existing metric, 100m streams of any kind would count as 66,667 albums, while under the new proposal, 100m ad-supported streams would count as just 20k albums, and 100m paid streams would count as 80k albums. On the other hand, albums that rely heavily on ad-supported streams for long periods of time could lose thousands of chart units.
YouTube streams will supposedly continue to be excluded from the Top 200, following vehement protests by rights holders over their possible inclusion.
Late last month, Mark Zuckerberg wrote a brief post on Facebook at the conclusion of Yom Kippur, asking his friends for forgiveness not just for his personal failures but also for his professional ones, especially “the ways my work was used to divide people rather than bring us together.” He was heeding the call of the Jewish Day of Atonement to take stock of the year just passed as he pledged that he would “work to do better.”
Such a somber, self-critical statement hasn’t been typical for the usually sunny Mr. Zuckerberg, who once exhorted his employees at Facebook to “move fast and break things.” In the past, why would Mr. Zuckerberg, or any of his peers, have felt the need to atone for what they did at the office? For making incredibly cool sites that seamlessly connect billions of people to their friends as well as to a global storehouse of knowledge?
Lately, however, the sins of Silicon Valley-led disruption have become impossible to ignore.
Facebook has endured a drip, drip of revelations concerning Russian operatives who used its platform to influence the 2016 presidential election by stirring up racist anger. Google had a similar role in carrying targeted, inflammatory messages during the election, and this summer, it appeared to play the heavy when an important liberal think tank, New America, cut ties with a prominent scholar who is critical of the power of digital monopolies. Some within the organization questioned whether he was dismissed to appease Google and its executive chairman, Eric Schmidt, both longstanding donors, though New America’s executive president and a Google representative denied a connection.
Meanwhile, Amazon, with its purchase of the Whole Foods supermarket chain and the construction of brick-and-mortar stores, pursues the breathtakingly lucrative strategy of parlaying a monopoly position online into an offline one, too.
Now that Google, Facebook, Amazon have become world dominators, the question of the hour is, can the public be convinced to see Silicon Valley as the wrecking ball that it is?
These menacing turns of events have been quite bewildering to the public, running counter to everything Silicon Valley had preached about itself.
[Editor Charlie sez: royalty deadbeat Facebook is making friends all over.]
When Facebook Inc. wants to try something new, one of its first calls is to CNN. It was a key partner when Facebook introduced its news-reading app, Paper, in 2014. When the social network shuttered Paper soon after, transmogrifying it into a series of fast-loading News Feed stories called Instant Articles, CNN remained on board. And last year, when Facebook began focusing on hosting live video, CNN was one of the few parties to which it paid a nominal fee to produce clips of, say, election results being projected on the Empire State Building.
But strain is showing in the relationship. Facebook’s latest pitch to publishers such as CNN is for them to provide a regular stream of TV-quality, edited, original videos that will give Mark Zuckerberg’s company a chance to compete with YouTube to siphon some of the $70 billion pouring into TV ads each year. In exchange, the publishers can share some of the revenue for ads that roll in the middle of the videos. Facebook will control all the ad sales.
It’s getting tougher for CNN and others to view these arrangements as mutually beneficial. “Facebook is about Facebook,” says Andrew Morse, general manager of CNN’s digital operations. “For them, these are experiments, but for the media companies looking to partner with significant commitments, it gets to be a bit of whiplash.” Morse says the financial compensation Facebook offers isn’t enough to convince him that working directly with the social network will be worthwhile in the long term.
Jason Kint, chief executive officer of the industry trade group Digital Content Next, was more blunt. “Media companies are like serfs working Facebook’s land,” he says. [Editor Charlie sez, “Aren’t we all?”]