|Title:||Dealing with Digital: Economic Organisation of Streamed Music|
|Citation:||Towse, R. (2020) Dealing with Digital: Economic Organisation of Streamed Music. CIPPM/Jean Monnet Working Papers, No 1-2020|
|Key Related Studies:|
|Linked by:||Digital, Culture, Media and Sport Committee (2021)|
|About the Data|
|Data Description:||The study is supplemented with data from the Norwegian music industry regarding streaming services and streaming rates.|
|Data Type:||Secondary data|
|Secondary Data Sources:|
|Data Collection Methods:|
|Data Analysis Methods:|
|Cross Country Study?:||No|
|Government or policy study?:||No|
|Time Period(s) of Collection:|
“The intervention of digital service providers (DSPs) or platforms such as Spotify, AppleMusic and Tidal supplying music streamed music has fundamentally altered the way that song-writers and recording artists are paid and the operation of copyright management organisations (CMOs). Platform economics has emerged from the economic analysis of two-and multi-sided markets, offering new insights into the way business is conducted in the digital sphere and is applied here to music streaming services. The business model for music streaming differs from previous arrangements by which the royalty paid to song-writers and performers was a percentage of sales. In the case of streamed music payment is based on revenues from both subscriptions and ad-based free services. The DSP agrees a rate per stream with the various rights holders that varies according to the deal made with each of the major record labels, with CMOs, with representatives of independent labels and with unsigned artists and songwriters with consequences for artists’ earnings. The article discusses these various strands that contribute to understanding royalty payments for streamed music in terms of platform economics, with some data and information from the Norwegian music industry giving empirical support to the analysis.”
Main Results of the Study
Despite promising to be a solution to revenue losses in the music industry, streaming has a more disruptive character.
• Underlying contractual arrangements give artists less control over the earnings from their performances, with many contracts having no formal provision for the division of streaming royalties.
• The making available right has reduced payments to performers, with a lack of clarity as to whether labels are exempt from performer equitable remuneration for streamed music.
• Most song-writers and performers have relatively low earnings, with only the superstars truly benefitting from this business model. Streaming rates are too low for most to sustain a full-time career as a recording artist (for example, a performer on Spotify would need 200,272 plays per month in order to sustain minimum wage). Despite this, music streaming platforms earn considerably more (a differential sometimes referred to as the ‘value gap’).
• The study concludes by speculating about the longevity of streaming as a business model for the music industry, with large players such as Spotify failing to make a profit, and facing increasing competition from multi-sided platforms such as Apple.
Policy Implications as Stated By Author
The study does not offer any explicit policy suggestions.
Coverage of Study