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Streaming Fortunes, Starving Artists

Streaming Fortunes, Starving Artists

By Chase Owens

Imagine you are a child, it is summer, and you just had the most wonderful business idea: a lemonade stand! So, you convince your encouraging mother to take you to the store and gather the supplies you will need. You juice the lemons, craft an artistic masterpiece of a sign, and set up shop by the road, awaiting thirsty customers. Business comes fast and steady, with almost every walker in the neighborhood stopping by to grab a refreshment, filling your decorated jar with cash and loose change. You cannot believe how much you made by the end of your long day, and you excitedly race up the steps back into the house to show your mother how well you did. But instead of sharing your joy, she takes the jar, pulls out a single quarter, hands it to you, and walks away with the rest.

Would you feel cheated? Would you feel like something was stolen from you? This may be an extreme example, but it is a fact of life for many musical artists in the modern age of on-demand streaming. In a world dominated by industrial giants with the largest music catalogs in the world, artists are forced to use these services to display their art to the masses, often through record deals with major labels. You may wonder how it could possibly be an issue for artists to use streaming services when it offers such a large market to consume their music. The answer is simple: money.

Falling back to our over-exaggerated lemonade stand example, think about how sustainable that business model is. Once again, the answer is simple: it is not. Now apply this model to the lives of small and upcoming artists, trying to make their dreams of making music for a living a reality. With smaller artists pouring time, money, and resources into the production of their music, they cannot afford to accept these tiny dividends from companies based upon the success of their art.

The amounts paid out by streaming services vary, with no service having the same standard of payout. The titans of this industry, Apple Music and Spotify, both pay their artists less than a penny per stream. Apple Music pays approximately $0.00783 per stream, while Spotify pays significantly less with $0.00437 per stream (How much do streaming services pay musicians in 2023, 2023). The true issue with this method of payout is uncovered when we examine the financials that each company reports. In 2022 alone, Apple Music generated $8.3 billion in revenue with more than 88 million subscribers (Shewale, 2023). From June 2022 to June 2023, Spotify generated $12.4 billion in revenue with more than 551 million active monthly listeners (Spotify technology revenue 2023, 2023).

To further understand how artists make money, we must examine the role that music labels play in this relationship. Many artists who are on the come up will eventually be signed to a label. Artists sign with labels because they offer benefits such as studio space and time, as well as distribution channels for physical and digital copies of albums, singles, and EPs. In return, artists must turn over the rights to their music, meaning that labels make money based off how well it sells and performs on streaming services. From all the revenue that labels make, they pay a certain percentage of the royalties to the artist. Through this cycle, the revenue is diluted and by the time it makes it to the artist, only a fraction is remaining.

The label route is not the only option available to artists, however. Many famous musicians, such as Frank Ocean and Taylor Swift, are independently releasing their music, meaning that they receive 100% of the royalties paid out from streaming services. Sounds great, right? Well, the issue with this path is the extreme expense that most upcoming artists cannot afford. Frank Ocean and Taylor Swift both exploded early on in their careers, signing with big name record labels like Def Jam and Republic. After reaching high levels of success within the industry, it was easy for these artists to switch to independent releases because they had the funds, as well as the reputation, to support themselves. For up-and-coming artists, this model is not sustainable, leading them into the same trap that has befallen so many before them.

Another factor to take into consideration is tours, the main source of income for most artists. The process of touring is complex and requires a great deal of planning and resources. By signing with record labels, artists will gain access to this support in booking venues and promoting their shows. Attacking the tour lifestyle as an independent artist with no reputation or money? A recipe for failure, no matter the quality of their work. In such a competitive industry, musicians must do whatever they can to succeed, even if that means sacrificing their rights to their own art.

What can artists do to escape this seemingly inevitable trap that is laid before them? As of now, there is no clear answer. However, even with the odds stacked against them, artists are continuing to break out through streaming services’ discovery playlists and song recommendations, as well as through social media apps like TikTok. In an ever-changing industry, artists must evolve too, finding new ways to market themselves and create pathways that will lead them to success without compromising their control over their work. The image of success looks different for everyone, so while there is not one route for artists to follow, it is time to break the pattern of imprisonment so many find themselves in.

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