I’m on vacation with my kiddos. Thus, today, I notify you, dear readers, about music I released to the world on Valentine's Day. I am encouraging you to listen, add, share. I will grimly explain why those requests are economically quixotic.
Streaming services have done a fiscal disservice to musicians and music. There is now a laughable amount of money to be made as a small scale artist from streaming royalties. The traditional music industry had to work a little harder to pretend “signing” musicians to their label wasn’t highway robbery.
I am not a big time artist. I’m not even a small time artist. I do have a horrible habit when it comes to having purchased too much audio equipment since I was 16. Yes, that is a custom volume knob box on the bottom in that photo below. What do all the knobs do? Change the volume. Custom line amps, custom transformers, and the volume goes up ….and down. The tone? Pristine.
Here is the sum total of money I have reaped from said pristine tone, via streaming royalties:
This is an example of market forces eating a market alive, and there is just nothing left but bones and ash. Artists can still perform live and make money, and maybe sell vinyl, but most recorded music has been devalued to the point that one should bother to do a great job anymore, when it comes to the economics.
Working as a “recording” artist is not financially viable. Which means, for all of us, less great recorded music.
Steve Albini called this predatory dynamic years ago in a classic article published in “The Baffler”:
I… imagine a faceless industry lackey at the other end [of the latrine the artist is swimming across] holding a fountain pen and a contract waiting to be signed.
Nobody can see what’s printed on the contract. It’s too far away, and besides, the shit stench is making everybody’s eyes water. The lackey shouts to everybody that the first one to swim the trench gets to sign the contract. Everybody dives in the trench and they struggle furiously to get to the other end. Two people arrive simultaneously and begin wrestling furiously, clawing each other and dunking each other under the shit. Eventually, one of them capitulates, and there’s only one contestant left. He reaches for the pen, but the Lackey says, “Actually, I think you need a little more development. Swim it again, please. Backstroke.”
…
Record sales: 250,000 @ $12 = $3,000,000 gross retail revenue Royalty (13% of 90% of retail): $351,000
less advance: $250,000
Producer’s points: (3% less $50,000 advance) $40,000
Promotional budget: $25,000
Recoupable buyout from previous label: $50,000
Net royalty: (-$14,000)
THE BALANCE SHEET
This is how much each player got paid at the end of the game.
Record company: $710,000
Producer: $90,000
Manager: $51,000
Studio: $52,500
Previous label: $50,000
Agent: $7,500
Lawyer: $12,000Band member net income each: $4,031.25
The band is now 1/4 of the way through its contract, has made the music industry more than 3 million dollars richer, but is in the hole $14,000 on royalties. The band members have each earned about 1/3 as much as they would working at a 7-11, but they got to ride in a tour bus for a month.
If one were to take that 250,000 albums sold number and we replace it with 1,000 streams per album, so they get up to 250,000,000 streams…at Spotify rates:
Spotify pays artists between $0.003 - $0.005 per stream on average. That works out as an approx revenue split of 70/30 - so that's 70% to the artist/rights holders and 30% to Spotify.
On the high end, that is $1.25m, which is less than half of the $3m revenue between Albini’s example of album sales. Labels still exist to take their cut, also.
When albums could sell for $20, or $12, or even “$1 a song” …we had a financial model that supported the effortful work of creating remarkable recorded music. This no longer exists for new artists. There is no realistic on ramp, when it comes to dollars and cents. I worked in the music industry for years. I have a dear friend (Nicole Zuraitis) who just won a Grammy. I recorded her first album! I am relatively sure I did it for free, or for very little money, because of the above economics. The world was a more musically rich place when recorded music was more expensive. We now rely on the grace of fans, artists, and others to get great music out in the world. This is not optimal.
My music might as well be free to you, and the same is true for me. I have another job. I can make the decision to record it on microphones that will cost orders of magnitude more than I will ever recoup. Other more rational people will not make the same decisions, however.
Napster was stealing music, and that was bad. Streaming has devalued music, and for all of us who love music and that is, debatably, worse. The economic difference for most musicians between being stolen and shared on Napster and being streamed by any streaming service—Spotify is not unique—is negligible.
The “industry” itself has “grown”…though not in inflation adjusted terms.
In inflation adjusted terms, that 1999 amount would be $42 billion today. The whole industry has shrunk, when you take inflation into account.
I don't have to make a living off of my music. You can still listen to it. Please do! However, if there are professional musicians in your world, buy their merch from them to the degree you are able. Spotify has to deal with endless attempts to game the system, so, for example, if a song is one of the tens of millions of songs that has between one and 1000 streams on Spotify, the payout will now be …nothing. Because it would earn about three cents a month, and the bank would charge up to $20 to withdraw that three cents. Those negligible payouts will now be re-allocated to the total pool paid out to musicians directly we have greater than 1000 streams. My total revenue from being on Spotify will now go to zero! This is precisely the point of this adjustment, because I'm not a professional musician, and professional musician should be getting the money generated from streaming, and they probably have more streams than my small time nonsense.
In no way am I trying to vilify Spotify, I think they are a company that is trying to do the right-ish thing, in an environment that makes that extremely difficult from a financial standpoint, for artists. They have a duty to their shareholders, their employees, and their customers also. I am advocating for artists, and great art, which has enriched my life endlessly.
Streaming isn’t enough to support the music you care about. It's not like the music industry has ever been “fair” to mid-market artists. Jobs are hard, but it's the interest of all of us who love music to support musicians who make it, because it enriches all of our lives in the process.