A new large-scale survey of European music artists has found that seven in 10 are unhappy with the royalties they receive from music streaming services, but levels of dissatisfaction have fallen significantly over the past two years.
The survey, conducted by the IAO, the umbrella organization for artists’ organizations across Europe, looked at 9,542 Artists from 19 EU countries, an estimated 480,000 Working artist. Of those surveyed, 4,215or 44.2%has been signed to a record label, while the rest 5,327 is an independent (DIY) artist and session musician.
The IAO described the study as “This is one of the most comprehensive surveys of artists’ careers and financial status.
findings 69.1% of respondents are “somewhat dissatisfied” or “very dissatisfied” with the payments they receive from streaming services. only 5.1% “Very satisfied” or “somewhat satisfied” with the payment received.
However, it marks a significant improvement from an IAO investigation in 2022, when the full 87% of respondents said they were “very” or “somewhat” dissatisfied with payment from their digital service provider (DSP), and 4% Indicate that they are “very” or “somewhat” satisfied.
IAO’s Streams and dreams Investigative reports attribute this to higher payouts from DSPs and new EU rules regulating how artists are paid in the digital ecosystem.
“after [European Union’s] The DSM Directive has been implemented in member states’ national legislation, most DSPs have increased subscription fees and user bases have grown,” the report states.
“Royalty pools have increased, as have payments to rights holders. 2023 is the best year in recorded music history, with record label revenue reaching $28.6 billion“.
Over the past year and a half, most major music streaming services have raised subscription prices at least once, resulting in higher compensation for rights holders. These payments are typically proportional to the DSP’s revenue.
Still, “dissatisfaction remains high given the fierce competition in DSPs,” which is to be expected. 100,000 arrive 120,000 New tracks (ISRC) are uploaded every day,” the report states. “The number of artists and labels releasing music on DSPs is outpacing the expansion of the royalty pool.”
The report provides a brief overview of how streaming services pay out royalties:
All DSPs operate under a similar revenue-sharing model: approximately 52-55% of revenue is allocated to labels and publishers, who then distribute these revenues to artists based on individual contractual agreements; 13-15% is allocated to PRO, songwriters and publishers; the remaining 30-35% is retained by the platform. No matter which DSP it is, Apple Music, Spotify, Amazon Music, Deezer, Tidal, YouTube Music, they all operate under the same revenue sharing licensing plan. To expand the royalty pool, DSPs must increase their revenue, or reduce their share of the proceeds.
Recently, some music streaming services have attempted to change their payment models in an attempt to address issues such as fairness in royalty payments, streamer fraud, and low-quality tracks flooding DSPs thereby reducing revenue.
The first one out of the door is sound cloud, the company began to apply a “user-centered” payment model in 2021. The model allocates money based on the actions of each subscriber, with the revenue raised by each user allocated to the artists that user listens to.
Streaming services tidal It has also implemented a user-centric model for its pricier Hifi Plus subscription plan.
“The number of artists and labels releasing music on DSPs is outpacing the expansion of the royalty pool.”
IAO’s Flows and Dreams report, 2024
However, other DSPs have gone in the other direction and implemented universal music group The first is called the “artist-centered” model.
under DieselA version of this payment model where artists at least 1,000 Have at least monthly traffic 500 There will be a “double boost” in royalty payouts for unique monthly listeners. Artists actively scouted by subscribers also receive increases in royalty payments.
Since last year, Deezer has signed an agreement with Universal Music Group to implement artist-centric payments, Warner Music Group and Merlin.
Spotify Elements of the artist-centered model were also implemented. Starting this year, streaming services will no longer pay royalties for tracks received. 1,000 Number of plays in the past 12 months. It is worth noting that only 19% In 2023, artists on Spotify had over 1,000 listeners.
“There are still groups that take advantage of artists’ low bargaining power by not providing fair compensation, full transparency, or giving artists the opportunity to renegotiate their deals.”
IAO’s Flows and Dreams report, 2024
While this payment model is intended to curb the uploading of low-quality and/or unpopular tracks to music streaming services, some have criticized it as potentially disadvantaging less popular artists and those just starting out in their careers status.
“The long-term impact of these changes remains to be seen,” the IAO report states.
A key reason for the IAO’s investigation is to assess the implementation of new EU rules on payments to artists. as Digital Single Market Copyright Directive (DSM), starting in 2019, EU countries implemented a series of new rules affecting artists, including:
- The right to adequate and proportionate remuneration;
- The right to receive transparency information about the use of sound recordings
- The right to adjust the contract when the initially agreed remuneration is too low
- The right to request alternative dispute resolution, and
- The right to revoke the transfer of rights without utilizing the recording (“Rights to Revoke”)
Surveys show the impact of the new rules will be rather limited. Not only are most artists still dissatisfied with what they pay DSPs; 64.7% of respondents said their payments still lack transparency and detail.
also, twenty three% Those who tried contract adjustments were successful; and 30.6% Those who seek to revoke a transfer of rights because the work is not being exploited will be able to do so.
The IAO report suggests that artists still have some way to go in understanding their rights and how royalties are paid.
“This research… shows that many artists do not know enough about their rights and that many labels, especially smaller independent labels, may not understand the obligations they have to fulfill [under new EU regulations]. Therefore, some of the problems described in this report may be solved by enhancing knowledge about the music industry itself.
“At the same time, there are clearly still those who take advantage of artists’ lower bargaining power by not providing fair compensation, full transparency, or giving artists the opportunity to renegotiate their deals.”global music business
