Original title: Musicians, record companies, music platforms, who is making money?
Image source @ Visual China
Article | Music Pioneer, Author | Peng Peng, Editor | Fan Zhihui
Recently, the UK Market Competition and Authority (CMA) released a research report on the music streaming economy. The results show that streaming media platforms and record companies have not "earned huge excess profits that can be shared with creators".
For a long time, musicians have been facing a Paradox: The streaming media platform has gathered unprecedented fans, but their income has not significantly improved. As a result, streaming media platforms and record companies have become targets of criticism to some extent. Finally, CMA intervened in the investigation.
Unfortunately, it did not bring hope to the musicians struggling on the food and clothing line. The musicians have been complaining for so long, but in fact, the streaming media platform and the record company have no money to share. CMA also clearly stated in the investigation report that "CMA is unlikely to release additional funds to the system to pay for the creators."
So, who benefits from streaming media services? Why can't musicians and streaming media platforms make money? Where should we go in the future?
The Long Struggle of Musicians
What does streaming media bring to the music industry?
The 2021 Global Music Report from IFPI illustrates this problem well. Since 2001, the revenue of the global recording music industry has basically not increased, and before 2014, the overall revenue of the global recording music industry has declined all the way. Since the rapid rise of streaming media in 2015, the global recorded music revenue has grown steadily again. This growth is based on the steady growth of streaming media revenue and the sharp decline of entity sales revenue. In 2017, the income of streaming media overtook that of physical records for the first time, and the dominant position of streaming media increased year by year. By 2020, the income of streaming media will be more than three times that of physical records.
However, the musicians did not get the matching return.
According to the survey of PayPerFormers in 2020, 90% of independent musicians did not receive remuneration from streaming media services or less than 1000 euros per year. Among them, there are even very successful independent musicians whose works have been played for 100000 or even a million times.
For example, in May 2020, the works of the violinist Tamsin Little won 5 million to 6 million broadcasts through Spotify within six months, but only earned 12.34 pounds, while the electronic musician Jon Hopkins earned only 8 pounds for 90000 broadcasts on Spotify.
Obviously, in the opinion of the Digital, Culture, Media and Sports Committee (DCMS) of the British Parliament, music streaming media needs to be completely restarted. In 2020, DCMS will investigate the business models of Spotify, Apple Music, Amazon Music, YouTube and other streaming media platforms, and form a research report. The report pointed out that music streaming media in the UK brought more than 1 billion pounds in revenue through 114 billion streaming media broadcasts in 2019, but the revenue earned by musicians only accounted for 13% of the total revenue.
In view of this, DCMS believes that music streaming media must be completely restarted with "fair remuneration" as the main idea.
As for "fair remuneration", it is a kind of music income distribution mechanism in the era of radio. In the UK, when DJs of radio stations broadcast musicians' works, they will advance a payment to the Consumer Association (PPL), which will then distribute the money, 50% to songwriters/musicians and 50% to record companies.
Under this mechanism, no matter how much voice the record company has, it can ensure that money will flow into the pockets of musicians. So DCMS suggested that the algorithm rules of Spotify and other streaming media platforms should be treated in the same way as the "fair pay" of BBC, so that a part of the revenue of streaming media can actually flow to musicians.
There is no doubt that this proposal has once again led to tit for tat between musicians and record companies.
However, Paul Pacifico, CEO of the Independent Music Association (AIM), which represents the position of independent record companies, resolutely opposed this proposal. He believes that allowing government licensing agencies to set royalty rates for streaming services, as they have done for BBC, will be a setback for the music industry.
"Music stations pay through fair remuneration. Although they pay a huge amount of remuneration, they are based on the aggregation of a large number of listeners. On the basis of each listener, these payments are significantly lower than the current streaming media rate." Paul Pacifico said in an interview.
However, musicians believe that this will increase their income in the era of streaming media.
On April 20, 2021, an open letter calling on the government to implement "fair remuneration" for the streaming media platform was sent to Boris Johnson, the then British Prime Minister. Among them, 150 famous musicians, including Paul McCartney, the lead singer of Coldplay, Chris Martin, Sting, and Jimmy Page, Robert Plant, and John Paul Jones, members of Led Zeppelin, have signed for support.
In the report of DCMS, another suggestion is to submit the "domination" of the streaming media economy of the three major record companies to CMA for review. In the report, DCMS said that the licensing negotiations between the three major records and streaming media platforms lacked transparency, especially whether the three major records "conspired" with streaming media services to win "playlist benefits" for their musicians. For this reason, invalid competition has been created in the market, leading to the loss of the interests of other musicians.
In July 2021, after a series of actions between DCMS and well-known musicians, CMA responded and officially opened the investigation.
The dilemma of having no money to share
On November 29, 2022, after nearly one year and five months of market research, CMA released the final report of music streaming media and announced the termination of the relevant investigation.
From the current results, CMA stands on the opposite side of musicians.
Contrary to the assumption of musicians, CMA's survey results show that streaming media platforms have not earned excessive profits. Correspondingly, users benefit from streaming media platform services, and the actual paid music consumption price is falling. CMA said that due to inflation, the price paid by British consumers for Spotify's subscription service fell by more than 20% between 2009 and 2021.
At the same time, CMA also analyzed the profits of the three major records, and also did not "find evidence that major record companies hold large and sustained excess profits." According to the data provided by the three major records to CMA, after the three major records were listed in Spotify, Warner Music sold all of its shares in Spotify, and Sony Music sold 49%, And use the proceeds to pay royalties to musicians. Although Globegroup still holds the equity of Spotify, the three major records all said that they did not interfere in the operation of the streaming media platform, nor did they obtain preference terms from the streaming media platform.
However, CMA further pointed out in the report that, It is the "industry change caused by streaming media" that makes the living environment of musicians and creators more difficult.
According to CMA, the music industry has entered the era of streaming media, and musicians have "lowered the threshold of access and had more choices in how to distribute music", which has led to the emergence of "more musicians than ever before", meaning that "creators must compete with more musicians and songs to generate streaming media revenue".
There is no doubt that 100000 new songs enter the streaming media platform every day, which greatly increases the uncertainty of the music industry. It is also difficult for record companies to determine which of the growing creators is likely to succeed. CMA added in the report that this inherent uncertainty coupled with consumers tend to "relatively few artists". In the UK, 0.4% of musicians have created 60% of streaming media, "which means that creators face greater challenges".
Finally, CMA gave its own conclusion that the current dilemma of musicians is not caused or exacerbated by how companies in the market compete. In other words, Today's plight of musicians cannot be attributed to the exclusive excess profits of record companies and streaming media platforms, but the diluted content pool creates the diluted distribution.
In this regard, Sarah Cardell, interim CEO of CMA, concluded: "Streaming media has changed the way music fans consume music, providing a valuable platform for musicians to quickly reach new audiences, while consumer prices have been falling for many years... We have heard from many artists and songwriters around the UK how they try to live a decent life through streaming media services. These are understandable dissatisfaction, but our research results show that these are not the result of ineffective competition - CMA's intervention cannot bring more funds to the streaming media economy to fund these musicians and creators. "
Obviously, CMA believes that the streaming media platform and record companies have not "conspired" on the issue of "exploiting musicians", nor are they willing to take over the privilege of "sharing the cake".
Make money before sharing it
As early as January 2021, nine officials of DCMS held an online meeting with David Joseph, CEO of Universal Music UK, Jason Iley, CEO of Sony Music UK, and Tony Harlow, CEO of Warner Music UK, to discuss the rights and interests of musicians openly.
Even though the officials of DCMS strongly criticized the principals of the three major music records, MBW, the American industry media, even though it had a record at that time, believed that the record companies and streaming media platforms did not monopolize the benefits that music people deserved.
According to the prospectus of Spotify before its listing on the New York Stock Exchange in 2018, there are "more than 3 million creators and musicians" on its platform. While Spotify's total annual income in 2019 is 5.91 billion dollars. Without considering the cost of the platform, the income is equally distributed to each of the three million creators, so the annual income of each artist is only 1970 dollars, only half of the average monthly rent in New York.
The reality is that 90% of Spotify's listening volume is created by 43000 musicians, while the remaining 10% is shared by 2.957 million musicians. Based on this, MBW redistributed Spotify's income. The results showed that the annual income of the top 43000 artists exceeded $100000, reaching $123697; The remaining 90% of the musicians received only $199.86 per person per year.
MBW only envisages a very extreme situation, that is, it does not consider the operating costs of the platform, excludes the revenue of record companies, and ignores the remuneration of word writers and song producers. But this data also shows a problem, Even without considering other remuneration, it is a small probability that musicians only rely on streaming media services to settle down.
Now, CMA's survey results also show that the streaming media platform is far from the stage of "dividing the cake", but is in the stage of "making the cake bigger", and you still need to make money before dividing the money. Therefore, transferring the revenue distribution of music streaming media services to CMA, a third party, cannot solve any problem.
Seeking roots and sources to truly improve the survival of musicians is not a real problem that can be changed overnight, but needs to improve the revenue of the entire platform of music streaming media in an all-round way. Perhaps radical musicians and rights organizations should be more patient and give streaming media more time. Go back to Sohu to see more
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