How DSPs can bring about a new music altruism

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MBW Views is a series of exclusive op/eds from eminent music industry people… with something to say. The following comes from Eamonn Forde, a long-time music industry journalist, and the author of The Final Days of EMI: Selling the Pig and Leaving The Building: The Lucrative Afterlife of Music Estates. UK-based Forde’s new book, 1999: The Year The Record Industry Lost Control, is out now via Omnibus Press.

Completely unconnected to anything that is written below, Oxfam recently published its Inequality Inc. report that said, “The world’s five richest men have more than doubled their fortunes from $405 billion to $869 billion since 2020 — at a rate of $14 million per hour — while nearly five billion people have been made poorer.”

Oxfam added that we could see the arrival of the world’s first trillionaire in the next decade. We are witnessing a whole new social, cultural and economic phenomenon that is predicated entirely on the aggregation and ring fencing of personal wealth on a scale that was, until relatively recently, inconceivable.

About 25 years ago, a financial analyst told me that it was impossible to become a billionaire before the age of 30 unless you inherited the bulk of the money or were one of the beneficiaries of a kleptocracy. They held up Bill Gates as the proof of concept (he was 31 before he became the world’s youngest billionaire in 1987). The internet changed all that. In 2008, when Facebook had only been going for four years, Mark Zuckerberg became a billionaire. At the time he was 23.

Utterly unconnected to this is the news that ‘Blinding Lights’ by The Weeknd recently became the first track to cross 4 billion streams on Spotify. Plus there are (unconfirmed) suggestions that Taylor Swift’s music was streamed over 1 billion times in the first 12 days of this year.

Streaming services absolutely love pumping out press releases and statements that celebrate record-breaking successes like this. Spotify has even created a playlist called, in humble block caps, BILLIONS CLUB where it encourages you to stream (at the current count) the exulted tier of 560 tracks that have each generated over 1 billion streams. YouTube also has its own Billion Views Club playlist which (at the current count) has 324 videos that have each had over 1 billion streams.

Because the one thing these tracks all have in common is the need for even more promotion.

In yet more utterly unrelated news, the European Parliament has voted in favour of a potential major overhaul in how streaming revenues are allocated. This includes calling for a revision of “pre-digital” royalty rates as well as having a pop at schemes that see lower (or zero) royalties applied in certain instances. It was not mentioned by name, of course, but it is impossible here to not think of Spotify’s Discovery Mode where lower royalties are accepted as part of a wider push of tracks on the platform.

There is also talk from the European Parliament of a quota system to give European acts more of a leg up and for greater transparency to be imposed on DSPs to properly disclose what music in their catalogues has been created using AI.

There was a phenomenal amount of support for all of this inside the European Parliament, with 532 MEPs voting for the resolution and a mere 61 voting against it. (A further 33 MEPs abstained, perhaps unable to vote as they went searching for their spines.) Concerns about the inequalities of streaming are gaining traction far beyond the bailiwick of the music business.

Legislative changes can come with great power and impact. But sometimes something else needs to be added on top to really make a difference.

That is why I am thinking the next step here could be some form of taxation that is imposed on The Weeknd, Taylor Swift and the other billion-streaming unicorns, that handful of acts who are hogging all the seats at the DSP banqueting table, gorging on almost all the available income inside their ornate palaces of obscene wealth, oblivious to the noses of millions of other, much less fortunate, acts outside desperately pressing their noses up to try and see inside these diamonds as big as the Ritz.

The solution to this widening wealth inequality can be the inverse of something that is already happening in the streaming economy.

Both Spotify and Deezer think it is absolutely fine and completely fair to demonetise streams that do not reach a certain threshold. This is being presented as a war on AI, white noise and the opportunistic gaming of payment systems by nefarious operators.

It has, however, been criticised as “an unfair ‘reverse Robin Hood’ system” by Denis Ladegaillerie, founder and CEO of Believe, while Impala has a lot of questions for Deezer and Spotify about how these schemes came about and what they mean for smaller and independent artists.

If we run with the logic that the tracks at the very bottom of the payment pyramid can be demonetised, then surely it follows that tracks at the very top of the pyramid could be remonetised.

Effectively a form of “success tax”, or more bluntly a cap on earnings, is applied to the most successful tracks. Once a track crosses a billion streams, they are “taxed” by the DSP and a percentage of their earnings over and above that 1 billion streams gets redirected to a central pool that is shared by the acts and the tracks earning the least on that DSP.

Let’s say it’s 10%. We could call it a tithe. It might just take off.

This will probably get me painted as some sort of pinko communist sleeper agent within the music business. How dare I suggest that the most well off people in the streaming economy take a (relatively small) cut in their earnings that is redistributed to the least well off people in the streaming economy? OK, calm down, Karl Marx.

“This will decimate the earnings of the successful!” you might cry. Exactly. Decimate does not mean “annihilate”. In its original Latin military meaning, it refers to a reduction of 10%. I do not believe this will see The Weeknd have to take on a window cleaning job at the, umm, weekend to make ends meet.

This is a case of paying things through to the niche artists, to the possible stars of tomorrow, to the pioneers, to the ones toiling at the margins. Think of it as an investment in the overall vitality and diversity of music and bequeathing it a future. Think of it as artists taking a proactive step, albeit a tiny step, to close the streaming music wealth gap. Rather than pull the ladder up behind them, they can give those at the bottom assistance onto at least the first rung.

There is a hugely unequal class system that has emerged in the streaming world. And, like all class systems, it hinges upon a desperately pronounced wealth and power imbalance. The rich, by the very nature of their existing wealth, only get richer and the poor get poorer. The successful are algorithmically rewarded with more success and an even bigger luxury yacht while everyone else is left floundering in the icy waters or dragged below the surface by the undertow caused by those giant luxury yachts racing around wherever they like.

In a healthy and egalitarian capitalist economy, taxation systems are there to – in theory – ensure that a) everyone of means contributes economically to the overall society and b) that those of most means contribute more than those of lesser means. Taxation bands are there to – in theory – bring this about. In the UK, for example, a basic rate of taxation of 20% is applied to people earning between £12,571 and £50,270, rising to 40% on earnings of between £50,271 and £125,140, then rising again to 45% on earning over £125,140.

Of course this is massively open to abuse. Or, rather, it is open to dead-eyed opportunists and the shameless being “tax efficient” by putting experts on the payroll whose only job is to seek out loopholes in a nation’s tax laws or to relocate a business to a nation (i.e. a tax haven) that takes a more “benign” approach to taxation. “Being rich costs a lot of money,” runs the cliché. But being wealthy also means having the resources to pay someone to exhaust every avenue to ensure your wealth is taxed as lightly as possible.

Wealthy individuals and companies can dance through loopholes to lower (or evaporate) their tax burden. Sometimes governments are complicit in this or look the other way. And sometimes the European Commission has to get involved in it all when things are seen as having been taken a bit too far.

Here the DSP could take its tithe straight from the unicorn artists and redistribute it internally. It becomes unilateral. No tax havens here. There will be no possibility of the streaming billionaires being coldly strategic with their accounting to shirk responsibility. They, in the spirit of altruism, should accept this as part of their corporate social responsibility within the streaming economy.

Acts love to get involved in charity events and ask fans to donate to good causes. It makes their halos shine that little bit brighter, they believe. But here is their chance to lead by example. To literally put their money where their mouth is.

When we see the arrival of the first streaming trillionaire, then we can revise this further.Music Business Worldwide

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