BMG’s CEO – Hartwig Masuch says it’s artist take more than 75% of all online streaming revenue and that major labels need to address the situation that other artist’s are still receiving nothing from online streaming.

In the last few years, major music labels have posted higher financials then ever before, this is due to the massive spike in the use of online streaming services such as Spotify and Napster. So if the labels are getting so much money from this new era of music then why are artist still getting paid very little or nothing from this massive market.

Spotify currently contains over 20 million songs from all over the world and is one of the largest streaming services. So with all this new music being listened to in the new digital world surely the artist should benefit as times move forward.

Artist’s are now starting to wonder why this is, and for a simple reason, the argument of production cost cannot be used because compared to CD’s, uploading music to streaming services is considerably lower than the cost of warehouse’s and production line’s. Masuch stated “Scale is not working.  You have to massively bring down the cost base.  Digital is portrayed as very complex… but if you take that cost out, how do you justify such a low rate?  Why in the hell would an artist decide to take less than 75 per cent?  That becomes a very hard discussion.”

He also says “Next-generation artists know what they want and they know how to get it.” Masuch thinks that all artist should be getting over 50% revenue on streaming services and doesn’t know why this isn’t already happening. By releasing stats saying that BMG are paying their artist’s over 75% of streaming revenue, this should set the bar on where other major label’s should be working towards.

A good example of this is the lead singer ‘Chris Difford’ from Squeeze who co-wrote ‘Up the Junction’ and ‘Tempted’ but only receives £1.50 for every 6000 streams. Head of Kobalt ‘Paul Hitchman’ however argues that traditional record deals offer something very different to streaming platforms and that streaming platforms are a good way for up and coming artist’s to make their own way and a decent wage. He did then say that labels should not underestimate the power of online streaming services and that major labels should expect more artist’s to be turning down contracts due to this low revenue via streaming.

So if artist’s push for the higher revenue via digital streaming will they succeed and will labels move with the times and realise that changes might be necessary to keep them alive.