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Streaming has made it more difficult to succeed in the music industry
The internet was supposed to democratize music, but artists are still dependent on major labels to break through and make big money, according to researchers at the University of Oslo.
Most people agree that those who make great works of art should get paid for what they do. But how can we trust that greedy middlemen don't run away with the artists' fair share?
“There are traditions going back centuries that protect artists, so that they can continue to make music that people enjoy. Currently, consensus is that the system for ensuring this is not working properly,” says Yngvar Kjus, associate professor of music and media at the University of Oslo.
This is partially due to the rapid digitisation of the music industry. Kjus heads a research project that for the past three years has examined what happened to copyrights and economics when music rapidly moved from a physical format to the internet.
Streaming services have taken over
Today, you can access a huge selection of music through commercial streaming services such as Spotify and Tidal. If you can stand advertisements, you can also watch and listen for free on Youtube. How much money the artists earn, depends on the contracts they have with their intermediary, often a record company.
“Revenue from streaming increases. In the contracts we have studied, we see that the record companies promise the artists up to 18 per cent of the revenue. Which is an increase,” says Kjus.
He encourages artists to read carefully through their contracts.
“The fee might look good, but the artists are expected to cover more of the production costs. Some companies ask them to cover the cost for mixing and mastering themselves.”
Not long ago, when you bought a CD, a share of the payment ended up with those who had made it. How much depended on the agreements with the intermediaries. Today, the calculation is based on the number of streams on the streaming services, and agreements between the various mediators, such as the artist, record company, distributor and streaming service.
“The main difference is that the streaming money is no longer distributed directly from listener to artist. Now the artist's share corresponds to the share of the total streaming. For certain genres and artists, this has major consequences.”
Stratification within the streaming economy
Kjus has interviewed 18 established Norwegian artists about economics and copyright. Several suspected that the biggest artists receive the lion’s share in the current economic model. The researcher admits that they are partly right in their assumptions.
“Those who want to earn a lot must be backed by a major company. At the same time, you are vulnerable to rapid changes. You can be given a low priority if they want to focus their efforts on another artist.”
This is why many artists prefer to manage themselves. This has some advantages, but the prediction that the intermediaries, such as record companies, management and PR agencies, would become redundant, has not occurred.
“It has become easier to produce music on your own, but distribution has become more difficult than ever,” says Kjus, who sees a clear stratification within the new streaming economy.
“You still have a large undercurrent and many have meaningful experiences of creating and listening to music on Soundcloud or Youtube. But the major companies have used the transition to streaming to strengthen their own position.”
Fraud and distrust
“The concentration of power is enormous in the music industry. It is difficult to succeed if you do not get the right placement on Spotify or are included in their playlists,” says Arnt Maasø, associate professor at the Department of Media and Communication.
He has interviewed directors of record companies and other players in the industry about the situation in the digital market. Maasø says there is much ambivalence.
“Many people feel completely dependent on a presence on the streaming services, but they have a hard time trusting the companies and agents,” he says.
A third of those who responded in a large survey conducted by the research project MUSEC, say that they don't quite trust the numbers provided by the streaming services. Maasø links this distrust partly to the 2018 Tidal scandal.
In this scandal, investigative journalists for the Norwegian newspaper Dagens Næringsliv and researchers at NTNU the Norwegian University of Science and Technology revealed that Tidal's figures for Kanye West and Beyoncé had been manipulated by someone inside the company.
“There have also been other examples of fraud. Some companies have tried to increase the streaming share of their artists with the help of robots. Reports from investigative journalists suggest that robots could account for as much as 2–3 per cent of the streaming, which amounts to a lot of money,” says Maasø.
“Spotify says that they are trying to solve the problem, but they do say how widespread this is,” he continues.
Although artists and record companies are dissatisfied with the lack of transparency from the streaming platforms, Maasø reminds us that it was not necessarily better before, when record companies held their cards close to their chests and some bands never received the money they were promised. Manipulationg the system today may, however, have even greater consequences.
“The whole world is one market. It's not like when label managers went out and bought all the singles they released in order to get the songs on the sales list. When you use robots to increase the streaming numbers and steal a larger portion of the money, you affect things on a whole new scale.”
Major players have all the advantages
But in spite of sceptisism, the streaming figures from Spotify are useful to the industry.
“Many find that the figures give more choices on behalf of artists. They know when they reach new audiences and can schedule concerts where people are listening,” says Maasø.
Which songs will be boosted by Spotify's curated playlists are almost impossible to predict. Spotify has more than 30 per cent of the market, and when they offer to curate the musical label of major brands like McDonald's through Spotify for brands, they control even more of the streaming activity.
Yngvar Kjus suggests changes in the legislation in order to match the listening model.
“The copyright law distinguishes between the music each individual chooses to listen to, and the playback that is not controlled by each individual, such as radio, TV advertising, and so on,” he says.
The latter is monitored in Norway by Gramo, who demands a fee for all such playback.
“Spotify’s playlists compare in many ways to the way music is played on the radio, where you do not choose artists. The performers should be allowed to take part in that economic growth. For example, one could develop a model to supplement the payment that goes from listneres, via the record companies, and to the artists.”
More awareness of rights today
Succeeding financially in today's music market is about the path from production to the ears of the listener, and securing the right to get paid for it ending up there. Knowing your rights is more important than ever.
“There is a difference between owning a work and owning a recording. Many of the artists who don't collaborate with a producer, but do the recording themselves, know that they own 100 per cent of the music. They have the rights to both the song and the recording, and they know that these are two different things,” says Kjus.
Very few people think about law and economics when they start making music. But Kjus sees that awareness of copyright is increasing among Norwegian musicians, and believes that many have understood that a membership in industry organisations such as Creo and GramArt, is valuable. They all balance between creativity and calculations.
“If you publish a lot of music and own everything, it may give you income in the long term.”
About the project
Music on demand: Economy and copyright in a digitised cultural sector (MUSEC) is a research project at the Department of Musicology at the University of Oslo. Yngvar Kjus, Arnt Maasø, Anja Nylund Hagen, Ruth Towse and Olav Torvund have investigated how values and rights are negotiated and evaluated when music is produced and distributed via digital media.
This article is produced and financed by the University of Oslo
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