October 9, 2023

Remunerating Artists Through Streaming

In the digital age, music streaming platforms have become how most of the world consumes music. The sheer accessibility and convenience of music streaming services—alongside the largely affordable prices—have made streaming so popular.

Despite the enormous growth, a significant problem still remains: How to achieve fair artist remuneration.

Many artists have become disenchanted with their earnings via music streaming platforms. This year, Drake urged Spotify to pay artists bonuses and some artists have left streaming platforms in previous years.

So let’s break down artist pay through streaming and platforms and how it could be improved:

The Downsides of Pay-Per-Stream

The primary issue for music business artists is the pay-per-stream model. Although it appears simple on the surface, it has immense implications for the artist's income.

So how does it work? First, artists receive a fraction of a cent for each stream of their songs. However, the exact payout varies on numerous factors: The streaming platform's revenue, the artist’s contract, and the user’s subscription tier.

Here’s the issue though: An artist would need millions of streams—not an easy feat to achieve—to even make the minimum wage in the United States.

And the issues don’t stop there either:

1. Erosion of Album Revenue

Historically, album sales were a significant revenue stream for artists. However, streaming platforms prioritize individual songs, which can lead to a decline in album consumption.

As a result, artists may experience a decrease in overall earnings, impacting their ability to sustain their careers. In many cases, artists must seek other methods of income—including live tours and merchandise.

2. Disparity Between Big and Emerging Artists

Established artists with extensive back catalogs benefit from the constant streaming of their hits. In contrast, emerging artists often struggle to accumulate streams, leading to income inequality within the industry.

In the 90s, before streaming services emerged, it was easier for new artists to make a living while breaking into the industry. Today, this is no longer the case.

3. Impact on Creativity

Some argue that the pressure to produce songs with mass appeal, conducive to constant streaming, can stifle artistic creativity. Artists may find themselves chasing trends rather than exploring innovative and niche genres.

In addition, the unstable income means artists are less likely to make alternative music and more likely to create a more mainstream sound.

4. Uncertain Income Streams

The unpredictability of streaming income makes financial planning challenging for artists. It can be challenging to budget for recording, touring, or other essential aspects of their careers.

As a result, music companies that manage artists must help artists make money through other methods.

5. Pressure for Consistent Output

The demand for a steady stream of new music to maintain relevance on streaming platforms can put immense pressure on artists. To keep up with the algorithms and user expectations, artists may feel compelled to release music at a rapid pace. This constant churn of content can be mentally and creatively taxing.

Emerging artists, in particular, face the challenge of building a following while meeting the platform's demands for regular releases. As a result, the quality of the music often suffers.

6. Loss of Album Concept

Streaming platforms—with their emphasis on individual tracks—have deviated the focus away from the traditional album format.

In the past, artists crafted albums as cohesive bodies of work, with a deliberate sequence of songs and thematic elements. Streaming's preference for single tracks can reduce the importance of the album as an art form, something that frustrates many music businesses and artists.

How Music Businesses Can Help Artists

Music businesses—especially record labels— play a huge role in helping artists navigate the choppy waters of digital streaming. Here’s how:

Facilitating Revenue from Streaming Platforms

Record labels are well-equipped to support artists in maximizing their earnings from streaming platforms. For instance, they provide economic support, marketing resources, and industry expertise. Although labels earn a portion of streaming revenue, their support can greatly improve an artist's potential income via streaming.

Financial Backing for Streaming Success

Labels often offer financial advancements to artists, which can be especially beneficial in the context of streaming. These advances help artists cover recording costs, promotional expenses, and other streaming-related investments. They enable artists to leverage streaming platforms effectively, even though advancements are usually repayable.

Strategic Streaming Promotion

Record labels excel in promoting artists on streaming platforms. They leverage their industry connections to secure playlist placements and optimize release strategies. As such, a record label can ensure their artist reaches a broader audience.

The Alternative Income Streams for Musicians

In some cases, musicians simply have no other choice but to seek other income methods. Here are some of the most common ways an artist can earn money:

Live Performances: Concerts and live performances serve as a crucial income source for artists. Innovative virtual and hybrid performances emerged during the COVID-19 pandemic to adapt to the situation.
Merchandising: Many artists leverage their brand by selling merchandise, including clothing, accessories, and collectibles.
Patronage Platforms: Crowdfunding and patronage platforms like Patreon and Kickstarter enable artists to receive direct support from their dedicated fans.
Sync Licensing: Licensing music for use in films, commercials, and television shows can be a lucrative avenue for artists.
Music Production and Songwriting: Some artists with expertise in music production or songwriting can generate income by collaborating with other musicians.
Music Licensing for Media: In addition to sync licensing for films, commercials, and television shows, artists can explore licensing their music for various media purposes.