They come like clockwork, once or twice or even four times a year. These small booklets produced by the record industry are packed with data that the media regards as definitive on the health of our industry. The information in these reports — the data on how much of something is sold and how much money it generated — is presented in an easy digestible form, packed with gently sloping bar graphs and juicy green arrows that almost always point up.
Journalists love these reports; the information contained in these documents is probably the most widely circulated PR produced by the record industry today. Every time you read a new story about how streaming has “saved” the industry and that a surge in vinyl sales have filled in the gaps in musicians’ revenue, what you’re reading can likely be sourced from one of these glossy reports produced by the industry.
It’s important to make note of this — that the data, the context and the messaging are sourced either directly from the record industry giants or published by one of their front groups like the RIAA or the IFPI. Nobody really hides that, but then nobody really explains what that means, either.
“If they can get you asking the wrong questions, they don’t have to worry about the answers.”
All these numbers, graphs and arrows — “data” — frame all discussion about the effects of streaming in terms that the industry prefers. The arrows point up. Growth is measured in percentages — numbers printed in huge, bold-faced fonts. Streaming is bringing in more money, they say. That’s the answer to the question they want you to ask.
So why are all of our friends still broke?
That’s the question we want to ask. Who’s getting rich from these big numbers and upward trends? There’s more money (relatively: many of these reports do not adjust for inflation and total industry revenue is still less than half of what it was in 1999). But for who? Who’s getting it?
There are other questions too. How much do the streaming platforms pay per stream? It would be trivial for the industry to publish each platform’s average rate per stream in these same glossy reports, and also record how much of that rate makes it to producers, musicians or rights-holders. In fact, it would be ridiculous to believe these rates are unknown to the authorities behind these reports. Of course they know how much they profit per stream from Spotify, AppleMusic and YouTube, and how much they pay in costs. People like David Lowery have spent years asking artists to send in their royalty reports to reverse engineer the payment algorithms and come up with something like an answer in his annual Streaming Price Bible. The RIAA or IFPI or the labels behind them could easily interrupt the flow of highly massaged data and provide a clear, credible and definitive answer to this.
They won’t tell us, though, because these documents are not produced by the accounting department. They’re the product of a highly choreographed influence campaign, and they are intended to persuade, not explain.
By all measurements it is an incredibly effective one. Journalists re-package this content with little to no editorial comment, original research or even a glance at the full report (if they’re even provided with it: IFPI only provides a teaser of their Global Music Report; they sell the 170 page report itself for £15,000.) The industry spends time and money to convey a singular message, and it is rather remarkable how often one hears it and how uniform the pitch is.
That message is that things are hard, but streaming has saved us, we’re all in this together and things are looking better and better every day.
How many musicians actually make a living from streaming royalties?
That’s what we want to know, and it’s embarrassing it took this long for someone to make a credible attempt at coming up with an answer. Needless to say, the answer didn’t come from the industry.
Britain’s Intellectual Property Office (frequently referred to as “UK IPO”) is the operating name for the UK Patent Office, responsible for the business of approving, rejecting and handling inventor patents, trademarks and other matters of intellectual property. In September 2021, four authors from UK IPO published an official document that completely blew me away.
It’s not just you, and it’s not just your friends that are broke. It’s almost everyone, and it’s almost assuredly by design.
In what could be the record industry’s guiding belief, Thomas Pynchon once wrote that “If they can get you asking the wrong questions, they don’t have to worry about the answers.” The title of the UK IPO’s report — Music Creators’ Earnings in the Digital Era — suggests they’re asking precisely the right question. It’s actually the second sentence in the document:
“From your favourite rock and pop artists, to film and TV scores, to classical and ambient, music is often the backdrop to our lives. But how do artists earn money from their music? Before COVID-19 lockdowns, artists earned much of their income from live performances. But the pandemic changed that: artists could no longer rely on live performances to make a living and had to look at their other sources of income. This shift brought into sharp focus several issues around streaming, including the way in which artists are remunerated.”
The report provides deeper context by breaking down the question into five more:
- How have changes in the digital music marketplace impacted upon the earnings of music creators?
- How do different stakeholders understand current issues regarding music creators’ earnings?
- How is revenue from streaming distributed to music creators?
- How have the levels, distributions and patterns of earnings changed over time?
- How concentrated, or otherwise, is the distribution of earnings?
To get answers from an industry that has trouble even acknowledging the questions, the authors used a wide variety of sources, conducting focus groups, mostly anonymous interviews with stakeholders and commissioning surveys of over 700 musicians. They also obtained nearly 30 years of anonymized publishing & record contracts from the Musicians Union, royalty data from the UK Performing Rights Society (PRS) and Mechanical-Copyright Protection Society (MCPS) and anonymized sales and royalties from “a UK independent record company” (this part in particular is fascinating if you’re involved in the industry at all.) They also purchased streaming data from 2014 to 2020 collected by the UK Official Charts Company.
This is precisely the kind of industry data which is not used to “persuade” but to “explain.” The data sourcing is robust and probably the best public survey on this subject that has ever been published, and maybe even attempted.
Being an American it is difficult for me to comprehend that this came from a government office. The only reason I can figure out why it’s not being quoted as holy scripture everywhere right now is that a lot of people — even many of those that quoted bits of the report — didn’t actually read it. The conclusions are astounding. And affirmative. Because it’s not just you, and it’s not just your friends that are broke. It’s almost everyone, and it’s almost assuredly by design.
How many musicians actually make a living from streaming? The industry knows the answer, but they’re not telling. Now we know why.
To provide a clear answer to the question posed earlier: the authors suggest that “a sustained achievement of around 1 million UK streams per month may be some kind of guide to a minimum threshold for making a sustainable living out of music.” Note the authors are not claiming a musician can make a living off 1 million UK streams alone, which several journalists misunderstood when reporting on the investigation’s executive summary. The 1 million UK streams is presented only as an indicator; someone with 1 million UK streams would likely be an artist in a position in which “UK streams are complemented by non-UK streams and other sources of income.” In other words: if you’re an artist averaging a million streams per month, you probably have a lot of other revenue streams flowing too.
The authors then dive into their data trove to estimate how many achieved this milestone in 2020. They estimate that approximately 720 UK artists in the whole of last year averaged a million UK streams per month. That’s it: less than 1,000 artists might be able to make a living off streaming per year (and it follows it’s not necessarily the same 720 artists every year.) By way of comparison, the UK National Lottery claims to create six new millionaires every week.
Who are these 720 artists? They’re probably not your friends, unless you hang out in extremely select company. The data describes the shape of streaming as a dystopian industry in which a neo-elite — defined as a fraction of 1% of all streaming artists — grab the lion’s share of revenue.
“Based on a sample of data concerning each October from 2014 to 2020,” they write, “the top 0.1% most popular tracks achieved more than 40% of all streams in all years and the top 0.4% of tracks accounted for more than 65% of all streams from 2016 onwards.”
Expanding the tier to the top 1% of all tracks accounts for 75% to 80% of all streams. And the top 10% of all tracks accounts for nearly all of it, the entire market: one tenth of all tracks account for 95% to 97% of all streams, in all years from 2016 to 2020.
Put another way: 90% of all new releases amount for barely 3% to 5% of all streams.
Readers here may remember our 2019 story Purged: How a failed economic theory still rules the digital music marketplace. In it, we shared the economic fable of the theory of “The Long Tail” — the belief, widespread in the early days of the internet, that digital commerce would result in retailers everywhere selling “less of more.” This theory is still the underlying principle upon which most digital labels are run today, whether their owners have heard of The Long Tail or not. That principle is that with nearly infinite “shelf space” in digital storefronts compared to brick-and-mortar retailers, labels would shift from selling many copies of a few blockbuster songs to selling relative few copies of many songs. Your label wouldn’t sell 1,000 copies of two tracks, but 10 copies of 100 tracks — so pump out them out as fast as you can.
Streaming is a dystopian industry in which a neo-elite — just a fraction of 1% of all streaming artists — earn the vast majority of all streams.
In reality, the exact opposite happened: in nearly every industry that has been disrupted by digital transformation, overall sales, as with streaming, have become more intensely concentrated around “hits” than ever before. We’re selling a lot more of a lot less, shelf space be damned.
Incredibly, even the victors of streaming — this neo-elite — are being squeezed. “Royalties for top hit songs are being shared among an increasing number of composers and lyricists per work,” the authors note. “In contrast, the revenues for top hit recordings are being shared among a declining number of featured artists per recording.” Essentially, more people are helping themselves to a piece of each hit song — except the performers.
The report has some grim figures for overall musician earnings as well. More than a third of musicians report earning £5,000 or less from music in 2019 (that is, before the pandemic crushed live music revenue). Nearly half earned less than £10,000, and nearly 2/3rds earned less than £20,000.
In one of the most shocking revelations in the report, the authors have also discovered the existence of a profound gender pay gap among musicians. Men report a substantially higher median income of £20,160; women just £13,057. That gap of 35% is astonishingly high — more than twice the national gender pay gap for all UK employees, estimated at 17.4% in 2019 by the UK Office of National Statistics.
The authors, to be sure, provide a vital piece of historical context for the report: there is a dearth of evidence, they say, that recorded music was ever the basis of a “substantial income for large numbers of musicians, even when total revenues were higher in the 1990s.” This is true, but doesn’t compare like-with-like. Digital transformation has created a ruthless efficiency in business and especially in the music industry. Giant national distributors have been replaced by a small handful of digital distributors with as few as a dozen or so employees. Retail has been eviscerated and with the shuttered stores went tens of thousands of jobs, rents, inventory and fixtures. Advertising is now targeted compared to the giant print ads and radio spots of the past.
The authors concur with this, brushing aside the music recording sector’s claims that current royalties are fair because of their “high level of spending on A&R and marketing, and the economic risks involved in signing new artists.” The authors point out that digital transformation has slashed the associated costs of manufacture and distribution, and this decline in expenses “has not been matched by any new cost.” For this particular pie, there are far fewer hands grabbing pieces before the artist gets their share. There is compelling evidence suggesting the fewer hands are simply taking larger slices.
Streaming music has made many people millionaires, it seems, and a vanishingly small number of them are the people who made the music.
How did we get here? We’ve published a lot about that, the winners and losers, the villains and grifters circling the industry even in the best of times.
Where are we now? The answer to that question is capably answered by this report, and if you need a good data-based snapshot of where we really are, this is the best I’ve found. Knowing the ground we’re on determines where we go next, and it is vitally important we get it right this time.
Photo by Agê Barros
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