By Christian Collington
Streaming music is here to stay, and it will still be the future of music. It’s too convenient for fans and too profitable for record labels to ever think of it going away.
Before the emergence of streaming services, physical distribution was the dominant way for music listeners to receive music. However, it costs too much for independent musicians to manage the manufacturing cost.
“Independent artists weren’t punching out a million copies,” Thomas McKercher, program coordinator of Humber College’s Music Business program, said. “You know, making a million copies of something was very cheap per copy. It’s when you’re a smaller artist and you have to do a small press run of 500 or so. That’s when you get into this $2 each type of cost.”
McKercher has been in the music business for more than 30 years. He formerly held the role of Director of Classics and Jazz for Universal Music Canada. Along with teaching at Humber, he currently runs his own music consulting business.
According to research published on SAGE Journals in 2020, David Hesmondhalgh, a professor of media, music, and culture at the University of Leeds in the U.K., wrote that streaming was in decline for 14 continuous years, then from 2001 to 2014, the recorded music industry began to grow again. From US$14 billion in 2014 to US$20 billion in 2019, the growth was driven entirely by streaming services such as Spotify and Apple Music.
McKercher notes that the rise in streaming services has been a double-edged sword for musicians.
“It’s the best thing that’s ever happened in the music industry, and it’s the worst thing that’s ever happened,” McKercher said. “The music is the best thing because anybody can do it. The worst thing is because anybody can do it.”
Spotify’s payout rate for recordings is at about $4,000 per million streams, or less than half a cent per stream. Because money may travel via a record label before reaching an artist, hundreds of millions of streams may be required for a musician to make a significant profit.
Part of the disagreement revolves around the fundamental economics of streaming. Spotify, Apple Music and the majority of other big services employ a pro-rata royalty sharing structure. In the model, all the money received from subscribers or advertisements in a given month goes into a single pot, which is then divided by the total number of streams.
“I think the streaming companies take too much criticism and people need to peel back this onion and dive in a little bit more,” McKercher said. “Part of the reason the streams are so low goes back to the original contracts the artists would have signed with the record label.”
Streaming now accounts for more than half of recorded music revenue. In the first quarter of 2020, Spotify had 30 per cent of subscribers worldwide paying for music streaming. Playlists overtook albums as the preferred way of listening to sequences of songs five years ago.
This has caused musicians to promote and brand their music differently in hopes of collecting more streams and in turn more money. The reality today is that it’s easier to make music under a label rather than doing everything alone because an artist can only do so much.
“I would say, it’s pretty much impossible for a musician to do everything on their own. Just not enough hours in the day.” Thomas McKercher, program coordinator of Humber College’s Music Business program, said.
“With a label you’d have someone for promotions, someone for social media, someone for everything.”
Spotify receives 60,000 new songs uploaded every day to its platform. The obstacle for musicians is finding a way to get their music to stand out from the rest. For independent musicians who don’t have a ton of money, they’re left with generating noise through their social media platforms.
However, McKercher notes that there are resources that musicians can use to get off the ground.
“Canada’s very fortunate in the respect that there’s a lot of public funding available for artists,” he said. “There’s an organization called FACTOR. I jokingly call them the largest record company in Canada because they probably contribute to more recordings being made than any major, probably all majors combined, being done in Canada.”
Through FACTOR (The Foundation Assisting Canadian Talent on Recordings), musicians can get funding that can go towards making their music or go towards marketing and promoting their music.
The music industry itself has become a data-driven business in that the bigger the number, the more the artist is noticed, and the more recognition received, the bigger the payout.
“There’s tons of good music being created and recorded,” he said. “But not all good music is commercial music. Meaning that it’s not going to appeal to millions of people to listen to. Artists will never get the attention from a major label, so you have to keep working with those 2000 fans you have and try to build those into 5000.”
According to McKercher, musicians shouldn’t rely on streaming services to be a major player in their income. It should be used to keep people interested in their music and get them to a performance.
“I think if most musicians think they’re going to make a lot of money from streaming, they’re delusional,” he said. “There’s only so many radio stations and most of them are format driven. Most of them play, for sake of argument, 200 songs. If there’s 60,000 a day, you need to find where your audience is.”
McKercher also stresses on his students that the music business isn’t the place to do everything yourself and that musicians should focus on the music. Being signed to a label allows musicians to just be the composer and the artist without looking for gigs.
“As lovely as the ‘do it yourself’ attitude is, and I love it myself, you can’t do it in this business” he said. “There’s too many things to cover these days to be able to do it yourself. And that’s the beauty of recording for a label because they have people in-house that are specialists in press releases, they specialize in marketing. That’s what you get from signing with a label.”
Jocelyn Gould, head of the Guitars Department at Humber College and musician, released her Juno award-winning debut album Elegant Traveler last year with Posi-tone records, an American jazz record label. When it came to the distribution of the album for streaming services, Gould didn’t have to worry about that.
“That work was not entirely on my shoulders,” she said. “So, for me, the experience was really smooth as far as the physical preparation of the album. Also, as far as online, distribution was simple for me.”
Gould found the process of distribution with a label easier than doing it independently.
“Some of the big perks of working with record labels is that they have a ton of experience with distribution and kind of have their own network,” she said. So, you’re really able to tap into that. You can focus on your music and the rest of it kind of gets taken care of by the label.”
However, Gould is currently working on her next album which she is putting out by herself. Although, she already has a plan to handle everything.
“I’ll be working with a publicist to get out to radio and various publicity to deal with the publicity of the album,” Gould said.
Regarding distribution, Gould plans to use Distrokid. Distrokid is an independent digital music distribution service. When music is uploaded to the service, they send it to all the streaming and online services such as Spotify, Apple Music, TikTok, Instagram and more. Artists keep 100 per cent of their earnings and get paid monthly.
When it comes to streaming services, Gould notes that one of the reasons payouts from Spotify are low is because of outdated legislation in comparison to streaming’s advancement.
“Streaming as a way of listening to music has evolved faster than the corresponding legislation,” she said. “And there’s not currently legislation. Legislation hasn’t kept up with the advancements of technology and the advancement of streaming. So, right now, the laws surrounding streaming and how artists need to be paid are extremely outdated and it allows organizations, corporations like Spotify to exploit musicians and exploit artists.”
With musicians being forced into exploitative situations where they’re not being paid properly, Gould believes that legislation needs to rectify the situation because the general public uses platforms such as Spotify, and musicians rely on the general public to consume their music.
“I think what needs to happen is that legislation needs to catch up,” Gould said. “I don’t think these corporations should be allowed to profit the way they’re profiting off of artists’ work while paying artists so little.”
Reid Blakley, a Vancouver-based musician in the band The Plodes and The This as well as a member of the Union of Musicians and Allied Workers (UMAW), notes that there are problems across all facets of the music industry with streaming payouts being one of the largest.
“Unfortunately, there’s a lot of exploitation in the music industry,” he said. “That kind of goes for labels and for streaming services alike. One of the main issues right now with streaming is that for a lot of artists that signed record deals before streaming was a big thing, we had no say in our streaming royalties and we had no say in what those cuts would look like with our labels.” came across a petition UMAW’s streaming committee put on their website. Once he joined a new member meeting that UMAW hosted, he liked what UMAW was trying to do.
Blakley joined UMAW in March of this year when he came across a petition UMAW’s streaming committee put on their website. Once he joined a new member meeting that UMAW hosted, he liked what UMAW was trying to do.
UMAW is an anti-capitalist, anti-colonialist organization that fights for a better music industry as well as uses its strength as music workers to join fellow workers across the globe.
Katie Stelmanis, a Toronto-based musician with the band Austra as well as a member of the Union of Musicians and Allied Workers, notes that everybody in the music industry holds the blame for how musicians are being treated and paid by streaming services such as Spotify.
“Spotify is kind of the biggest Goliath of many Goliaths,” she said. “And so that’s kind of the rallying point, like it’s the most popular streaming service, and the biggest one, they are kind of seen as the most indicative of the problem.”
Stelmanis recently started working with UMAW, but over the summer she had an accidental viral tweet where she revealed that she made no money off of her last album that was released on Domino Records.
“I just sort of did like a breakdown of how much money goes directly to artists and how it’s divided between streaming services and labels,” she said. “I just sort of revealed that the artist sometimes gets nothing.”
After the tweet gained a lot of traction, she was contacted by Julia Holter, a member of UMAW’s streaming committee, and started going to meetings and doing what she can.
Stelmanis also notes that the issue stems from record labels and that it’s not new. It’s something that has happened before and keeps happening.
“Record labels have been kind of taking the lion’s share of all the revenue and kind of string over artists ever since record labels have existed,” Stelmanis said. “And it’s a common thing like whenever some kind of new technology pops up. Downloading music was one. Remember Napster? There is kind of a panic at first on the part of both musicians and labels. But then the dust settles, and then the labels are usually the ones that figure out a way to take the lion’s share. And it’s just more of the same.”
For musicians, both Blakley and Stelmanis recommend joining UMAW to gain resources and strengthen their position as an artist.
“Anybody can join UMAW, any musician from anywhere in the world could join,” Blakley said. “On the UMAW website, there’s a whole section on labels and sort of the key terms in a recording contract. And I know that there’s an aspiration to kind of spread this knowledge within other facets of the music industry, with live touring and with venues and how much you should be paid as an opening band or as a headlining band.”
Blakley also notes that currently streaming is exploitative to musicians and the deals can be unfair, but it can change if a new model was introduced.
Currently, the model that Spotify uses is a pro rata model. Most streaming services use it to distribute royalties. Users of Spotify pay a monthly fee and that gets pooled into a singular big pool. Then, it’s distributed based on how much a song plays. That means most users are paying royalties to the most popular artist, or to whoever has the most popular song during the month, even if they’ve never listened to them.
“One thing you might be demanding of the streaming services is a user centric model,” he said. “Which is, for example, if in the month of November, half the songs I play on Spotify are by Katie, then Spotify, under a user-centric model, would take my membership fee, take off their own overhead because Spotify costs money to run, but then give half of the remainder, to Katie.”
According to Spotify Wrapped, which is a yearly round up of the most popular artist, album, song and podcast of the given year on Spotify, the most streamed artist globally for this year was Bad Bunny. Canadian artists Drake and Justin Bieber landed fourth and fifth respectively. Olivia Rodrigo’s song “drivers license” was the most streamed song garnering over 1.1 billion streams. Justin Bieber’s album Justice ranked third among the most streamed albums globally. In the United States, Drake was the most popular artist.
Right now, the most popular artists on streaming services make roughly 10 per cent of the monthly revenue and under a user-centric model, they would make just under six per cent. It’s still a lot, however, there would be way more leftover for less famous artists.
There’s no immediate fix to have musicians be paid fairly by streaming services. However, the fight for change on that front won’t end until a change is inevitably made. In the meantime, musicians should engage with their social media platforms to gain more listeners, but also get involved with organizations such as UMAW to continue pushing for what musicians deserve.