The Success Of Streaming Has Been Great For Some, But Is There A Better Way?
By Paula Mejia
Grady Coppell/Getty Images
It’s tough to recall a time when listening to music — and making it — wasn’t completely synonymous with streaming. The idea of filling an iPod up with carefully selected digital files almost feels like a distant memory, though it wasn’t that long ago that these kinds of players, and the digital library of songs you built through them, embodied the future of music. (For what it’s worth, Apple still sells one.) These days, streaming services offer music fans a tantalizing premise: Instant, limitless access to music from all over the world and across history, for a small monthly fee. Or for free, as long as you’re cool with advertisements cutting into the experience.
These days, part of being an artist — from Top 40 superstars to independent bedroom songwriters, the Bad Bunnys and Nobunnys alike — entails throwing oneself professionally and promotionally into these services. “Professionally, streaming has become crucial for the artists I work with, and it’s become such a big part of what we do in terms of marketing our campaign and making sure that people know that it’s on these streaming platforms,” says Katie Garcia, who owns Bayonet Records and does A&R for Secretly Group. “It’s crucial nowadays; it’s a necessity.”
The tantalizing premise of streaming has been a success story in many ways. Industry strategy firm MIDiA Research notes that recorded music revenues ballooned to $18.8 billion last year, a $2.2 billion uptick from 2017 — within that, streaming was up 30% year on year, and climbed to $9.6 billion, in what they describe as “the engine room of growth” for the industry. In a 2018 year-end report, the Recording Industry Association of America (RIAA) touted the fact that “for the third year in a row, double-digit growth was driven primarily by increased revenues from paid subscription services including Spotify, Apple Music, Tidal, Amazon and others.” The International Federation of the Phonographic Industry’s (IFPI) most recent Global Music Report revealed that in the United States, streaming revenues steadily rose by 33.5% last year. (In 2017, that number was even higher: 50%.)
But, while streaming continues to evolve at a breakneck pace, the system through which artists are paid for the music being listened to hasn’t evolved in tandem — meaning that, as dissenters note, many artists are still paid little, after services and labels take their respective cuts. Streaming payouts to artists vary wildly however, depending on whether they are signed to a major or independent label, and whether or not they’re songwriters of an individual tune, as well as the performers. And within these situations, the terms of these contracts can make one artist’s pay stub unrecognizable to another’s.
But beyond these contractual idiosyncrasies, the bedrock structure for streaming services’ royalty payouts tilts the entire system towards those who, in some ways, need it least. Spotify and Apple Music’s model for determining who gets what from their services is known as “pro rata,” which means that rights-holders are paid according to market share; how their streams stack up against the most popular songs in a given time period. The people who hold the rights to the most listened-to tracks, then, stand to make the most. “The ‘pro rata’ model is perceived as being inherently objective and fair, however, it doesn’t take into account different user behaviors,” says Will Page, Spotify’s Chief Economist. “Arguably, it does produce an efficient outcome in that every stream is worth the same and it is relatively cost-efficient to manage.”
That cost efficiency is outlined well in a 2017 study from Digital Media Finland, which found that pro rata streaming models tend to benefit the services themselves, who keep about 30% of a subscriber’s fee. The rights holders of the recordings, which include record labels, producers, and performers, split about 55 to 60% of the fee. Meanwhile, the rights holders of the song itself (the composition) — which at once includes composers, arrangers, music publishing companies and lyricists — see about 10 to 15% of that pie. As David Turner, a critic who writes the weekly streaming newsletter Penny Fractions and now consults for SoundCloud, said in an interview with Slate last year: “So if you’re signed to a major label, for every stream you get you’re probably getting maybe 12 or 15% from that if you’re an artist.” It varies, of course, but Turner notes that while independent artists may not have to pay out to labels, they also don’t have access to the same kinds of resources — managing the nuts and bolts of an artistic career — as an artist who signed to one.
Critics say the pro rata model disproportionately privileges top artists and labels, and leaves little chance for even midsize artists, such as a band like Khruangbin — whose most-listened-to songs have tens of millions of listens on Spotify — to get a fair shake. Also and importantly, fans have no say in the direction of where their subscription dollars head. In parallel to the promise of “music for everyone” (as Spotify’s tagline goes), a harsh truth has emerged: Countless working artists in the United States can’t feasibly make a decent living in this new world.
While streaming is the music industry’s most visible economic driver these days, its problems are historical in proportion. “Capitalism has a role in this problem,” says Henderson Cole, an entertainment attorney based in New York. “But I think also how our legal system is built is that instead of usually rewriting something, they’ll just build on it. And we’ve been putting Band-Aids on this for I don’t know, 100 years? So none of [the royalty system] makes sense… if a song is played on the radio, 100% of the royalties go to the songwriter. But if the same song is played on a streaming service, only about 20% of the royalties go to the songwriter. Where does that come from?”
Artists confirm that these numbers can be murky. “You cannot get at actual data, especially financial data [from Spotify],” says the musician Damon Krukowski, who plays in the projects Galaxie 500 and Damon & Naomi. “No matter what they tell us about our quantities of plays — which seem to be approximations, not down to the single ones — they do not tell you exactly what you’re making. You can look back through your royalty statements, but it’s hard to do.”
It gets particularly nebulous, too, considering the digital blind spots. Crossed wires and bad metadata have contributed to a “royalty black box” of unpaid money, thought to be somewhere at least in the millions. Some speculate that even those reported streaming numbers themselves might not even be entirely correct, either. Earlier this year, news broke that a criminal investigation is underway against Jay Z’s high-fidelity streaming service, Tidal, following accusations from the Norwegian newspaper Dagens Naeringsliv that the platform had exaggerated listener streaming numbers for Kanye West’s The Life of Pablo and Beyoncé’s Lemonade “to the tune of several hundred million false plays… which has generated massive royalty payouts at the expense of other artists,” as they wrote in their report. Under the pro rata system, those allegedly false plays would affect the kinds of royalties other artists are making.
As streaming has become a dominant part of being an artist and a listener alike, musicians, activists and critics have also increasingly and vocally criticized the dominant streaming economy, and the purported inequalities that arise therein.
A purposeful playlist from Spotify. “Keep calm and focus with atmospheric music.”
Money (for artists) aside, naysayers also point to the shift towards mood and purpose-driven playlisting instead of full-length albums or EPs as both an advertising tool and not working for every single artist. Nor does it benefit every kind of listener. “Their product is more valuable if people just listen more,” says Liz Pelly, a contributing editor for The Baffler and journalist who covers streaming. “If people just don’t stop streaming. So in some ways, it seems to me that a result has been this situation where music that is being surfaced by the platform is music people won’t turn off: This background experience, where music isn’t really as intentional of a thing, and it’s more music that people could just stream for hours and really not think about.”
As a consequence, streaming isn’t just changing consumption habits, but how people write music altogether — with songs becoming shorter and shorter, for instance. The independent distributor CD Baby’s DIY Musician blog suggests that if musicians want to optimize their music for the streaming age, they might want to explore changing the structure of their song to have the chorus hit listener’s ears first, in the vein of Post Malone’s “Better Now.“
“I really do feel like the flattening and watering down of the experience of musical community and fandom is one of the biggest issues [of streaming],” says Pelly. “We’re in this moment where artists on every level are expected to think this way that, in the past, would have been a way of thinking about artists that are gonna be on the Top 40 radio. And now all artists are expected to be beholden to the mechanisms of pop music in a sense… the idea that one platform could ever serve all artists is something to really be scrutinized.”
“That’s another thing about streaming I find so frustrating,” Krukowski adds. “We’re not developing as a community — as digital producers and listeners — through these companies.”
Alternatives have emerged that can, perhaps, offer a more equitable path to those whose livelihoods depend on it. “As listeners, we have agency, and I think platforms like Spotify and other streaming services are really banking on people’s requirement of everything being super convenient,” Pelly says. “But being fans of independent music has not, historically, been a super convenient thing, and if we can forgo a little bit of convenience to support economies that are a little bit more equitable for independent artists and artists in general, that’s something that we should keep in mind.” In recent years, other modes, including user-centric and stream-to-own models, have become a bigger part of the conversation.
“One-size-fits-all is a very crude, barbaric approach to music,” says Mat Dryhurst, an artist and a teacher at NYU’s Clive Davis Institute of Recorded Music in Berlin. “And actually, the internet and music might be a whole bunch more exciting if artists were given the tools to make the experience of consuming their work as unique as, arguably, the work is in itself.”
One alternative streaming service that’s emerged in recent years, Resonate, functions on a “stream-to-own” model with transparency in mind. Unimpressed by his experience trying to use other services as an artist, musician Peter Harris started the Berlin-based company in 2015. It works by splitting the cost of a digital download into several streams; after listening to a song nine times, paying a small amount that slightly increases with each listen, the person then owns it. The company is a co-op, so everyone, from listeners to artists, has a say in profits and decision-making; according to their website, Resonate says they “will share any and all profits with consumers (listeners) and workers (musicians, labels, staff and volunteer contributors). Members will be able to trade their profits for more streams and downloads and/or withdraw as cash.”
Resonate notes that they pay $0.006 per stream, falling on the high end of what current streaming services reportedly pay out. (There’s also a sliding scale, where you can see the estimated profit you might make as an artist through it.) The service, which includes the likes of highly regarded electronic artists and DJs such as Fatima Al Qadiri, Burial, and Kyle Hall, relaunched earlier this year.
Advocates also point to Bandcamp as an alternative model that’s beloved by the people who use it. On it, artists and their labels can directly upload their songs, and fans directly support artists they love, follow their work, and post gushing odes about their favorite tracks. Unlike Spotify and Apple Music, the service not only enables listeners to stream songs, but also allows both artists to set the price for their work and listeners to name a price to own the songs. It has an editorial arm, Bandcamp Daily, where music fanatics dish about under-the-radar artists and scenes (on Bandcamp) flourishing around the world, and newsletters that keep you abreast about what your favorite label’s just released, and digital tracks and vinyl records that your friends have been into lately.
Compared to a behemoth like Spotify, Bandcamp is not unlike a city’s independent record store compared to a Best Buy (at least, back when it even stocked music) — a place that attracts a more engaged listener. “I think if you’re a fan, knowing that your money is going directly to the artist and supporting them, there’s something really awesome about that, and that’s probably what inspires people to pay more for something online,” says Garcia. But realistically, Bandcamp doesn’t do the numbers that Spotify does, in both subscribers and revenue. “Bandcamp, you can see each and every single penny where it came from and where it went,” Krukowski says. “So financially there’s absolutely no mystery at all. Of course, the numbers are radically different. Spotify at this point is an important part of our music income, and Bandcamp is not yet.”
And while many independent musicians, artists, and critics have positive things to say about Bandcamp, and how its model allows for more equity than anywhere else right now, they’re hesitant to hinge the future of streaming on it. “My great optimism would be that more people who have engagement with the archive, for example, or more of an emphasis on the kind of deep cultural aspects of music would think like that, rather than trying to pin their hopes on something like Bandcamp. Which I completely like,” says Dryhurst. “But long-term, I don’t see it as being viable, it feels like… retiring into your fantasies or something, to think that will ever compete at the level of a venture monster like Spotify.”
The user-centric model, an alternative to the pro rata model, also focuses on a listener’s money going directly to the artists they listened to, and not to the entire pool of musicians whose songs were streamed in a given month. For example, if Megan Thee Stallion was your most-listened to artist in June, that means that your money would go to Megan — and not to, say, Lil Nas X, whose “Old Town Road” is the most-streamed song of 2019 so far (by far). Spotify’s Will Page argues that the complexity of the user-centric model “would arguably come at an increased cost — and the value of a stream would be more volatile, and less predictable, as well.” Others see it as perhaps a more ethical way to stream music, and the idea has picked up steam as of late: The French streaming service Deezer has been said to be exploring user-centric licensing. It also exists in platforms such as Patreon, where fans give their money to support a specific artist and might periodically receive music, a podcast, or another creative output through their subscription.
The downside of Patreon-esque ventures, as Krukowski points out, is that it only works for specific kinds of artists, particularly those who are hands-on and have preexisting fanbases. Not to mention the fact that sometimes relying on these solutions-oriented tech endeavors doesn’t always end up shaking out: The crowdfunding service PledgeMusic announced its bankruptcy back in May, and it still owes scores of artists and labels, many of them independent, hundreds of thousands of dollars. “There’s no single model, in other words, that’s going to fit for everybody,” he says. “And I think that’s part of the problem also with streaming right now, is that we’re allowing this narrowing of possibilities of how many models we have to choose from.”
Krukowski has one radical idea for a potential future alternative streaming economy: Doing away with the royalty system altogether. “I think it sounds kind of kooky to people, but I seriously wonder: if we just gave up the idea of owning digital streams at all, of trying to attach them to copyright, if we’d be better off as musicians and as listeners,” he says. “Now it would mean, obviously, a loss of income streams insofar as we’re getting any from digital music right now, but what I would suggest to people is, we don’t know how that digital realm is going to pay us yet. It’s still not working. It’s working for a tiny little handful of creators right now. That’s not a solution. That’s a problem.”
Cole instead wonders if bringing music streaming fully into the hands of the government—which would also mean building a different kind of royalty system altogether—might make it a more equitable system for everyone involved. For years, he’s been working on a proposal called the American Music Library, a taxpayer-funded streaming service that at once would act as a repository for all recorded music and also would guarantee free access to all listeners across the United States, not unlike the public library system. That would entail establishing a new royalty system that would give artists and songwriters a “stipend royalty” paid out directly. In his proposal, Cole estimates that “the American Music Library would be able to offer somewhere in the neighborhood of $0.01 per Artist master stream and $0.0075 per Songwriter composition stream,” which is considerably higher than any payouts currently offered by major streaming services.
“If you did a program like this that helped more artists and more songwriters to have a sustainable form of life, that would be a huge boost for … the economy,” Cole says. “Also it’s a huge job creation mechanism: If there were a lot more artists that were working full-time doing that, they’d hire more managers, they’d hire more music video people.” Since this service would be managed through the government, it poses several steep challenges — one of them being that anything deemed “obscene” wouldn’t qualify, which would disqualify a massive contingent of important, innovative music. Given that the service would function as an archive, that at once means a step forward for preservation efforts. But as Cole notes, that would also potentially allow for music that’s considered hateful, or made by abusive people, to exist on the platform as well.
Others advocate for moving offline and looking more holistically at culture cultivation writ large. Along with Holly Herndon, his partner in life and creative endeavors, Dryhurst is involved in a handful of different projects that challenge the paradigms of music consumption in the streaming economy. One of his ideas involves moving away from platform participation, and towards exploring group equity in real-life spaces, fostering both artists and fans who converge together, make music, perform and build communities around shared creative endeavors — which would also stimulate local economies. “You could try and each individually sell your record, or you could instead gather together and try and get everybody in the world who cares about [say] ballroom music to own, or at the very least crowdfund, the space that makes all of this possible,” Dryhurst says. “That takes the focus kind of away from trying to sell files and trying to scrimp point-one cent per play on some s****y streaming platform and more looking at: ‘What is the fundamental infrastructure necessary to keep a culture going?’ And, often time, space is pretty much the answer to that — space to record, space to play.” The idea is an echo of the self-reliant approach that touring punk and hardcore bands took throughout much of the 1980s — making a concerted point to play at spaces that welcomed fans of all ages in their hometowns and beyond, and creating communities around fanzines and booking local shows themselves.
Pelly sees a way forward in offering resources for artists to have the tools to continue creating into their own hands, in the way that the nonprofit Cash Music allowed for open-source coding, as well as supporting online as well as off. “I would love to see artists and independent labels and communities take the work of establishing those relationships more into their own hands, and to build websites on their own,” she says. “Where those types of recurring, subscription-based support systems could be more on their own terms instead of having these platforms being in the middle of this relationship… Also buying stuff from artists directly at the merch table, supporting independent record stores, mail ordering from labels that you’re a fan, that kind of stuff is also important. And it’s these things that seem really little that do add up to comprising a more meaningful relationship with music and art.”
Ultimately, having more models out there means more options, and further room to experiment with possibilities that don’t yet exist yet — a critical part of an ecosystem that allows for mainstream sounds to flourish alongside more experimental avenues. “The perpetuating of the logic of one-size-fits-all ultimately is damaging to the very thing that makes music or culture on the margins powerful: That it presents an actual alternative,” Dryhurst says. “While I’m not optimistic that such small initiatives will topple Spotify, I am optimistic that it might create something else entirely.” Krukowski adds: “My own personal sense of what works, what would be helpful and to music listeners, is the more platforms the better. The more possibilities the better… If you just keep going down this road, and you just don’t allow for any other models to develop, or alternative models to develop, then that’s all we’re going to get. We’re just going to keep going down this same trajectory. And this trajectory, it’s not hard to see, is really bad. It’s harmful to both the creative side and the listening side.”