‘Major labels are paying artists more generously than they used to’

Ask many professional music artists about their income and they’ll tell you that the transition into the streaming age has been a tough one – that they’re not seeing the size of royalty cheques or record company advances to which their peers once became accustomed.

When it comes to the major labels, two common complaints from managers emerge: that they’re not transparent enough with streaming payout data, and that they claim too much of the proceeds from the likes of Spotify.

But according to a new global study, major-signed artists are actually better off in the modern era than they were when CD and download dominated the market five years ago… relatively speaking.

The IFPI has released details of new industry data that it compiled over the five year-period between 2009 and 2014 across the three major record companies: Universal Music, Sony Music and Warner Music.

This study covers local sales for locally-signed artists in 18 major markets outside Japan and the US.

It presents some rather surprising findings: while sales revenue of records fell 17% across the five-year period, total artist payments – in the form of royalties and unrecouped advances – declined much slower, down 6%.

“Record company payments to local artists in sweden increased by 111% from 2009-2014.”

According to the IFPI’s Digital Music Report, that means artist payments actually ‘increased significantly’ as a share of record sales revenue in the period – up by 13%.

Although such conclusions are sure to be met with a pinch of suspicion from some quarters – with IFPI representing all three majors internationally – its study certainly deserves industry attention.

Over the five years, the IFPI reports that overall payments by record companies to local artists totalled more than $1.5 billion across the 18 markets.

The territory that brought the most good news for local artists? Sweden, where paid streaming is by far the dominant music format.

Payments to Swedish artists over the five years rose 111% against a 47% increase of corresponding sales revenue.

Contrary to the aggravation displayed by a handful of prominent artists regarding streaming payments, the IFPI data concludes that in the majority of markets where subscription services make up more than 30% of revenues, artists are in fact receiving more money and a larger share of revenues than they were in 2009.

Indeed, the IFPI makes two succinct conclusions from its data that are sure to be debated until the cows come home:

  • ‘Across a substantial sample of markets, remuneration to local artists as a share of sales revenues have seen a significantly more positive evolution that the trend in overall sales income.’
  • [The data suggests that] in particular, paid streaming services have had a positive impact on overall payments to artists.’

The Digital Music Report quotes Glen Barros, president and CEO of Concord Music in the US, who calls for more clarity in explaining the revenue benefits of streaming.

“I believe that one of our problems is that we’re trying to evaluate a new business model through an old world mentality,” he says.

“Rather than worry about how many streams it takes to earn a dollar, we should be focused on converting music buyers into music subscribers. If we could get even half of the people that buy music every year to pay for a subscription, it’s simple math to see that it will be a healthy business.”Music Business Worldwide

Related Posts