Record labels keep half of profits from music streaming
Image Credit: Yannis Papanastasopoulos
More surprises at the second session of the UK government’s inquiry into the economics of music streaming, featuring Nile Rodgers.
The appearance of Nile Rodgers on the inquiry panel of the DCMS was announced like a Glastonbury headliner. After all, why would a global star care about the dry subject of the economics of streaming for UK musicians? When asked that very question, Rodgers replied: “I feel that the UK is one of the most important musical engines in the world” – and the point of the inquiry is to get fairer payments to the musicians who keep that engine running.
Whilst the previous session on the 24th November had focussed on the issue of payments from streaming services, this one took aim at the monetary split between record labels, artists and publishers.
The Chic guitarist was giving evidence alongside songwriter Fiona Bevan and Soweto Kinch, MC and jazz saxophonist. The overall message of the debate was that whilst the streaming issue is presented as being something complex, fixing the problem might not be complicated at all.
Probably you’re wondering why you should watch the sessions – if you’re a musician then the inquiry is essentially about making sure you’re paid fairly when someone listens to your tracks; if you’re a consumer of music on any streaming platform then you have a right to know who is benefiting from the playlists you click on, especially if you’re keen to support your favourite artists.
Whilst Nile Rodgers stressed that “I don’t look at my record label partners as enemies, I look at them as my friends,” the streaming inquiry is investigating the fact that as it stands, the money from about 50% of the streams of a Spotify user goes to record labels, 30% stays at the platform and less than 10% goes to the performers.
There are alternatives for independents, of course – by distributing with Routenote artists can go their own way and, rather than having to split streaming and download profits with a record label, can keep either 85% or 100% of all the revenues they make. But generally many artists feel there is no room at the table for musicians to make their voices heard, and Rodgers effectively called for CEOs and music artists to sit down as adults and be honest.
Rodgers has sold an estimated 500 million records worldwide, so the fact he showed up at all proved he’s eager to use his influence to address an issue that affects him far less than other artists. Despite being on US time he cared enough to “get up at 5 am, which if you know anything about musicians, was only about an hour after I went to sleep.”
It’s simple, he cheerfully told the MPs, transparency is all that’s needed: “If you can help us to make this happen, things would change and I guarantee you that, two years down the road, everybody is going to be fine and happy because we are going to experience explosive growth.”
Just as in the first hearing, Rodgers suggested that equitable remuneration would help – treating streams like radio broadcasts, with royalties split 50/50 between artists and labels. He also made time for casual name-dropping, remembering chats with Michael Jackson and admitting to having “nothing but flops until I met David Bowie.”
Meanwhile, Fiona Bevan presented a case for hit songwriters, saying the inquiry into the economics of streaming is “a huge, wonderful opportunity for the UK to become world leaders in how you fix this.” Bevan, who this year has written for Kylie Minogue and Steps, admitted that she had “a track on an album that was recently No.1 in the album charts in the UK… the fastest-selling solo artist album of the year. That track has earned me about £100.”
Multiple credits on a song split royalties still further, and “the vast majority of music in the charts is written through collaborations and teams. Pop songwriters, the most successful songwriters in the world, cannot pay their rent.” She said she had great hope for the future but called for a levelling out so that ‘the song itself is valued: the lyrics, the melody, the beautiful chords.’
Despite the harrowing statistics, just like in the previous session all the speakers had only positive things to say about streaming as a resource. Streaming has educated the general public that music shouldn’t be free to download. Rodgers said that despite the murkiness around payments from streams on the platforms, “it is fantastic that they can distribute our product in such an effective, wonderful way.”
With pressure to get on playlists and the fact that streams pay out the same regardless of the length of the track, there is less of an incentive to make “complicated” records. Soweto Kinch spoke about the effect today’s streaming model has on more specialist music genres, and also the effect on creativity.
The way Kinch as an independent jazz musician makes an album is “quite a hefty investment, and you’re only going to get a sliver of that back on your royalties.” If musicians can’t make a living from streaming it would have “lasting effects on the type of content that this country produces.”
He approves of a user-centric model of streaming – only paying for what you stream – as he knows that “jazz musicians and fans can be particularly loyal and attached to a particular aesthetic, and I think that deserves its own model of remuneration.”
Surely streaming services should have a legal obligation to make it clear to artists and composers exactly how much they are owed? Again, Nile Rodgers hammered home the need for transparency: “I want to know what the hell a stream is worth. Just show me the number, so I could sit down with my accountants.”
The problem, the panel claimed, is that Non-disclosure Agreements make it almost impossible to know the true streaming rates. Even someone as massive as Nile Rogers is subject to NDAs, with no chance to negotiate deals – he has a bit more leverage, but “with all of these relationships between the labels under NDA, we don’t even know what a stream is worth. Does anyone?”
It’s a pretty eye-opening debate. Much of the sitting trod familiar ground from the November session, but as the MPs are building a case for parliament, it was important to gather as much good evidence as possible. There were some great lines that will definitely make it into the final report. As Rodgers urged: ‘Now is the perfect time to fix this stuff. There has never been a better time.’