LONDON — Low payouts from music streaming services are placing artists’ livelihoods and future careers at risk, four British artists testified at the opening of a U.K. Parliament probe into the streaming business.
On Tuesday, rock band Elbow frontman Guy Garvey warned that “the system, as it is, is threatening the future of music,” as more artists are struggling to make a living with the current rates streaming platforms are paying.
With streaming accounting for more than half of the global music industry’s revenue, the Digital, Culture, Media and Sport (DCMS) Committee is looking into the economic impact that streaming services like Spotify, Apple Music and Amazon are having on artists and record labels, as well as the sustainability of the wider music industry.
Garvey and Radiohead guitarist Ed O’Brien were among a group of four artists and two industry analysts that provided evidence on the first day of the inquiry, which is anticipated to stretch for several months and will call upon executives at major labels and streaming platforms to answer questions.
The Parliament probe — which so far is being done with witnesses testifying virtually, as the U.K. is in lockdown — is also addressing a lack of transparency in record contracts and opaque accounting practices, safe harbor provisions and the European Copyright Directive, which will hold online user-generated services like YouTube liable for unlicensed content.
The inquiry comes at a time when the coronavirus pandemic has decimated income from touring, focusing artists’ attention on how much — or in many cases how little — cash they actually make from music streaming.
Spotify paid labels and rights holders a blended per-stream rate of $0.00366 in 2019, while Apple Music’s rate is about $0.0070 per stream and YouTube doles out $0.0033 for ad-supported official videos.
The COVID-19 crisis “has provided an opportunity for us to really see what we’re making from recorded music [and] it’s pretty horrific,” Tom Gray, from British rock band Gomez, told the committee. He cited a “very successful” unnamed songwriter friend who recently received payment of £70 from YouTube in return for 1 million plays of his music.
“There have always been imbalances in the system, and they need to be addressed,” O’Brien told the Parliament members, “but it’s more acute now.”
All of the musicians taking part in Tuesday’s session said they were fans of music streaming but stressed that something needed to be done to address the imbalance between revenues record labels and rights holders receive from streaming services and the often-miniscule payments artists were getting for their work.
“It would be disingenuous of me to pretend that there aren’t some artists who are doing well from streaming,” Gray said. “But the problem is that they conform to one type of artist broadly speaking. They tend to be solo artists. They tend to be fully independent … and they tend to be working in a genre that is highly playlisted.”
Garvey and Gray both advocated a move towards streaming platforms and labels implementing a user-centric payment model that will see artists paid every time their music is directly streamed, rather than the current arrangement where royalties are distributed on a pro-rata model based around market share.
Gray also criticized outdated record label contracts that see rights holders withholding the lion’s share of streaming income, noting that the imbalance in artist payouts was occurring while “foreign-based multi-national” corporations reported record revenues.
Last month, Universal Music Group, the world’s biggest record label, posted €1.86 billion ($2.14 billion) in third quarter revenue, up 3.1% on the same period the previous year. Spotify’s third quarter 2020 operating income fell to a loss of €40 million from a gain of €50 million during the same time last year, while revenues climbed 14% to €1.97 billion ($2.29 billion), with the streaming giant growing its customer base to 144 million paid subscribers and 320 million total monthly active users.
Gray drew attention to physical breakage clauses — automatically deducting 10% of an artist’s royalties to cover the cost of damaged vinyl and CDs — that are still present in many record deals.
While acknowledging he was one of the lucky artists who had made a good living from playing music, O’Brien said he was taking part in the inquiry to support new acts struggling to survive in the digital music economy.
One of those is British singer-songwriter Nadine Shah, whose 2017 album Holiday Destination was nominated for the Mercury Prize. She released her fourth studio set, Kitchen Sink, on BMG this year.
Shah told MPs that, despite her success as an acclaimed artist with a substantial fanbase, she and many fellow musicians were struggling to pay their rent. “The reality is that we could lose lots of musicians,” she said.
Garvey said that if musicians could not afford to live, “then we haven’t got tomorrow’s music in place.”
Whether the Parliament hearings will have any genuine impact on the streaming industry remains to be seen. Although the DCMS committee is made up of 11 elected members of U.K. Parliament, it exists independently from the British government and does not have any regulatory power. Instead, the committee makes recommendations based on its inquiry findings that government officials can then choose whether to pass into law.
Its real power lies in shining a light on previous hidden business practices and inequalities. A two-year probe into the U.K. live music market which ended last year helped bring about major changes to the British secondary ticketing sector, culminating in Ticketmaster shutting down its two major U.K. secondary sites, Get Me In and Seatwave.
Viagogo, which made headlines when it twice snubbed a request to appear before the committee, also made changes to comply with British law following the DCMS inquiry and a number of concurrent investigations by regulatory bodies.
Additional reporting by Ed Christman.