The End Of Record Labels

Artists are starting to realize that the real enemy isn’t streaming companies,
it’s record labels.

By Mike Montgomery, Executive Director CALinnovates

When Taylor Swift won her brief battle against Apple Music in June, she was hailed as the savior of music. Thanks to Swift, artists will now be paid royalties during Apple’s three-month trial period of its new streaming music service.

But that will hardly save music. Artists are increasingly up in arms about the paltry paydays they are collecting from streaming music. Back in the day, a band could earn $2 for every CD sold. Today, artists are lucky to get a fraction of a cent for each stream.
Most of the music world’s anger has so far been directed at streaming companies. From the outside, it’s easy to see why. It looks like tech companies are bringing in millions and handing very little of it over to the people who create the music that makes these companies possible in the first place.

But a closer look shows that’s not exactly the case. Streaming companies hand out (on average) 70% of all revenue to rights holders. Spotify has distributed more than $2 billion in royalties. According to Spotify, as of June 2013 it was paying out $425,000 per month for an average global hit album and $145,000 per month for a Spotify Top 10 album. And while Apple, which won’t have a free option after the trial period, will pay $7 of every $10 monthly subscription fee to the music industry, it’s an open question as to how much of that revenue the artists will actually see.

It’s starting to become clear that the money isn’t getting log jammed at the streaming sites; it’s getting log jammed at the record companies. The recent massive Sony hack revealed that the record labels are receiving tens, if not hundreds, of millions from Spotify. A leaked version of Sony’s contract shows that Spotify paid Sony $42.5 million in advances for the rights to Sony’s music catalogue, and a ‘most favored nation’ clause gives Sony the opportunity to earn millions more. Spotify also gave Sony an additional $9 million in ad inventory that it could use or sell at a profit. But how much of those millions make it to the artists?

Read the full article here.