Streaming saved music. Artists hate it.
Alexis Jamet
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By Shira Ovide

Streaming services like Spotify and Apple Music rescued the music industry. They’re also tearing it apart.

My colleague Ben Sisario says that musicians complain about streaming economics that can translate millions of clicks on their songs into pennies for them. Last week, a group of musicians protested outside Spotify offices for changes in how they are paid from streaming.

Ben spoke with me about why streaming music has been a letdown for many musicians. The challenges reflect a larger question: What happens when the promise of making a living online from music, writing or building apps doesn’t match the reality?

Shira: How has streaming changed the music industry?

Ben: It’s been the industry’s salvation. Largely because of Spotify and other subscriptions, streaming provided the industry something it never had before: regular monthly revenue.

To oversimplify, the big winners are the streaming services and the large record companies. The losers are the 99 percent of artists who aren’t at Beyoncé’s level of fame. And they’re angry about not sharing in the music industry’s success.

If more people are paying for music, why isn’t that money trickling down?

There’s a complicated and opaque formula that determines how the $10 monthly subscription for Spotify or Apple Music makes its way to artists. After those services take their cut, about $7 goes into a pot of money that gets split a bunch of ways — for the record labels, songwriters, music publishers, artists and others.
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The more people listen to music, the less each song is worth because it cuts the pie into smaller and smaller slices. I’ve seen financial statements from some fairly popular independent musicians that suggest they’re making a pretty good living from streaming. But often, unless musicians have blockbuster numbers, they aren’t making a great deal.

Who is to blame for this?

The streaming services and the record labels both bear responsibility.

Spotify pays a big chunk of its sales to the record labels, and then it’s up to those labels to distribute the money to musicians. The music industry doesn’t have a great track record of paying artists fairly.
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But Spotify is also nowhere close to its stated mission of “giving a million creative artists the opportunity to live off their art.” It likely has around seven million artists on its platform, and Spotify’s figures show that only about 13,000 of them generated $50,000 or more in payments last year. How can that number possibly get to a million?

Haven’t many musicians always felt exploited and underpaid?

Yes, but the streaming model has exacerbated the divide between superstars and everybody else. It’s also a fallacy to dismiss musicians’ complaints. Economic inequality has been around a long time, but it still should be addressed.

What’s the solution? Can streaming ever work for everyone?

There is talk of changing the payments systems to a “user-centric model” that would allocate payments based on what people listen to. If I listen only to Herbie Hancock on Spotify, my subscription fee goes only to him, after the service takes its cut. Proponents say this system would be more fair, especially to artists in niche genres. But there have been studies that say it’s not that simple. And I wonder if it’s too late to change.

Are any companies doing it differently?

There’s a smaller music service, Bandcamp, that musicians tend to like. It lets artists limit how often their music is streamed and takes a relatively small commission on sales of song downloads, T-shirts and things like that. It’s proof that Spotify isn’t the only way it can be done.
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I’m also interested to see what Square might do with Tidal, the streaming service it bought last month. It’s not going to change the economics of what a streaming song is worth, but Square is deeply integrated with things like merchandise sales. It could come up with new ways to help artists make more money or connect and market to fans.
The New York Times