Words: Alice Hiley
Image: @cottonbro via Pexels

A committee of MPs has called for a “complete reset” of the way the music industry pays artists, calling out streaming services for delivering “pitiful returns” to even the country’s most popular pop stars. After a six-month-long inquiry, the government has found that artists are at an extreme disadvantage when it comes to earnings, in comparison with their labels.

UK record labels bring in a whopping £736.5 million annually, and artists currently earn only around 16% of this. MPs have suggested that a 50/50 split would be a “fairer share” for the artists whose talent and creativity labels rely on.

While physical purchases and downloads have been on the decline, streaming has grown exponentially since the early 2010s. It now accounts for the biggest listening revenue today, amounting to 80% of the UK’s total music consumption.

Julian Knight, chair of the Digital, Culture, Media and Sport (DCMS) committee, said “While streaming has brought significant profits to the recorded music industry, the talent behind it – performers, songwriters and composers – are losing out. Only a complete reset of streaming that enshrines in law their rights to a fair share of the earnings will do.”

How are earnings calculated for streaming?

Currently, Spotify is believed to pay somewhere between £0.002 and £0.0038 for every stream. Meanwhile, Apple Music pays around £0.0059, and YouTube pays roughly £0.00052 per stream.

To put that into context, a song hitting 1 million streams on Spotify will achieve around £2,000 in earnings.

This amount goes first to the “rights-holder”, who then shares it between all the parties involved in making the record. For bigger stars, the rights-holder is often their record label, while for smaller artists it may be an independent publisher. Alternatively, they may hold the rights to their music themselves.

Frequently, the recording artist will receive around 13% of this streaming revenue, with the rest shared between labels and publishers. This means that they would earn just £260 of the overall £2,000 earned from a million streams. Considering the need to pay agents’ fees and other expenses, artists often take away minimal income from even their most successful songs.

In 2019, the Ivors Academy and Musicians’ Union conducted a survey of professional musicians and their income. The survey found that the vast majority of artists –  82% – made under £200 from streaming in a year. Only 7% made over £1,000.

What happened at the inquiry?

Discoveries were made when renowned musicians and labels told their side of the story.

Singer-songwriter Fiona Bevan admitted to earning just £100 for composing a song on Kylie Minogue’s number one album, Disco. She told the committee that “hit songwriters are driving Ubers” to supplement the measly income they make from their music streams.

Meanwhile, Mercury Prize 2018 nominee Nadine Shah revealed that she had to move back in with her parents because of the poor income from streams. She has said that was “not significant enough to keep the wolf away from the door”.

According to Chic’s Nile Rodgers, the major fault of the current industry model is not the numbers themselves but a lack of transparency. He said: “We don’t even know what a stream is worth and there’s no way you could even find out what a stream is worth, and that’s not a good relationship.”

MPs accused three of the top music labels –  Universal, Sony and Warner Music –  of a “lack of clarity”.

The labels fought back, warning that changing the distribution of royalties could discourage investment in new music, making labels less keen to take risks on smaller artists. They also refuted comparisons between streaming and radio, where royalties are split 50/50. Universal CEO David Joseph commented: “Streaming is 24/7 in every country in the world… it’s clearly a sale, it’s not radio, it’s on demand.”

The BPI, Britain’s music industry trade association, was similarly cautious, heeding against “unintended consequences for investment into new talent”.

Representatives from the biggest streaming companies, including Spotify and Apple Music, said they would remain “open-minded” about changes to legislation. However, they also stressed that the platforms receive only 30% of streaming income, the rest going to other key stakeholders. Elena Segal of Apple Music said, “It is a narrow-margin business, so it wouldn’t actually take that much to upset the so-called apple cart.”

What might be set to change?

The report following the inquiry surmised that, although streaming services had “undoubtedly helped save the music industry” from a culture of piracy, it was clear that the system “does not work for everyone”.

The committee recommended a 50/50 split of royalties between artists and labels. This would allow musician’s rights to match up with existing legislation for TV and radio. This would mean that, of the £2,000 in royalties brought in by a million Spotify streams, an artist could take away as much as £1,000. This is almost four times more than the £260 they are currently estimated to pocket. The committee also recommended that artists should be permitted to reclaim their rights after a set time frame. Alongside this, they should be allowed to rewrite their contracts if their work succeeds beyond the initial remuneration fee paid.

What do artists say? 

The committee’s findings will be music to the ears of artists like Tom Jones, Paul McCartney, Kate Bush, and Mick Jagger. All recently signed an open letter to Prime Minister Boris Johnson calling for reform in the calculation of musicians’ earnings.

Musician Tom Gray, whose #BrokenRecord campaign prompted the inquiry, said he felt “overjoyed” that the findings “vindicated” his criticisms of the ways the industry treats artists. He said he hopes the government acts quickly on the recommendations set out in the report by passing new legislation to regulate streaming royalties.
The Musicians Union called the report “revolutionary”, and the Featured Artists Coalition together with the Music Managers Forum said it could “fundamentally improve” musicians’ financial security. They said: “This is a once in a lifetime moment to reset our business along fairer and more equitable lines.”