What is a music stream? Artists and labels in battle over digital income
Dispute rages over how royalties should be split in the age of Spotify, Google and Apple
The demand was made in a joint submission to the European Commission’s consultation on copyright, via the newly formed coalition AMP.
Some have suggested this is a contractual dispute, not an issue for the EC. Independent label group Beggars has been paying its artists 50% of streaming revenues for some time, although it is said to have reduced it recently as streaming becomes a bigger share of revenue.
The reason why the issue goes beyond simple negotiations is that it comes down to determining what a stream is. It’s the continuation of a debate that also covers downloads.
Remember, the paid-for MP3 download is only about a decade old – in most countries even younger. Streaming subscriptions have been around for about half that time. The market has changed so quickly that the rules appear to have been made up on the hoof – with labels unsurprisingly setting rates that result in them keeping the most royalties.
The labels decided that a download was a sale, and so pay artists about 5% to 20% depending on the deal. Some labels have even continued to deduct costs associated with physical distribution – including packaging deductions. Artists whose deals were signed before downloads became a reality have argued it’s licensing, and so they should get 50% of royalties. FBT Productions, which produced some of Eminem’s early recordings successfully sued Universal Music Group for underpayment of royalties on this premise.
To put it simply – labels have decided that the royalties for both downloads and streams should be accounted for to the artist as sales, while publishers and songwriters’ collecting societies have decided that they are something in between. Perhaps it is time that we decide once and for all what they are, instead of forcing artists to take legal action.
There is no denying that labels are saving money by not having to press CDs, transport them to stores and foot the bill for returns, when it comes to downloads and streams. Yet record labels do make substantial investments in artists, including marketing and promotion, so it may a bit much to expect them to reduce their share to 50%. How about 30% to 40%?
More importantly, if all labels – not just some of the independents – would be willing to sit down at the table with artists and hammer out a royalty distribution model that’s fit for the digital age, perhaps there would be no need for the EU to get involved. Working in partnership to increase the value for all concerned, instead of constantly having to resort to litigation – now there’s a novel idea.