Of course, the definition of fair compensation is elusive and varied. In one context, fair is used to describe the accuracy of payments – using blockchain technology to track royalty allocations would ensure appropriate payments to all parties, for example. In another context, just means fair – an independent artist should receive the same royalty rate as an artist from a larger label who has negotiated a better deal with a streaming service. Another use of the word just means sustainable – artists should receive royalty rates that provide something akin to living wages. A user-centric royalty system – artists are paid based on the number of times a specific user streams their music – fits this definition.
The report also revealed a paradox of public support for independent artists: Although seven in 10 people want independent artists to make more money from music, 28% of music streamers use the free version of a service instead. than to subscribe to its paid level. People certainly listen to music in large numbers: nine in 10 respondents said they listen to music frequently (polls typically show that over 90% of Americans listen to the radio every week) and 54% of people listen to music. music several times a day. But since the free options pay artists much less than the paid version, people could do more to help artists get the most out of their music. For those free listeners, music streaming services such as Spotify and Pandora offer free listening.
There is also a mismatch between supporting better remuneration and understanding how royalties are paid. When asked how much music streaming services should pay artists as a percentage of their revenue, only 12% of respondents said 76% or more, and 46% think artists should receive 50% or less. Subscription services typically pay artists 70% of total revenue, whether it’s subscription fees or advertising sales. The average American cannot be faulted for not understanding the financial distribution of streaming income. Instead, the survey suggests that people can generally support fair compensation for musicians without needing to know the complexity of recording contracts and royalty regimes.
The bigger question is how to convert public support for independent artists into more money in the pockets of these artists. Public support does not affect the way labels negotiate with artists. When music streaming services negotiate with record labels, distributors, and rights groups like Merlin, audience sentiment doesn’t matter. Music streaming services could take the information from the investigation to heart, however. Playlists and radio stations dedicated to independent artists could find a welcoming audience.
However, public sentiment could turn into government action and may have helped spur government intervention. From November 2020 to March 2021, the UK Parliament held seven hearings on the economics of streaming services payments to artists. Then, on June 2, 2021, the head of the House Judiciary Committee sent a letter to the CEO of Spotify. Daniel Ek seeking information on its Discovery Mode, a program in which artists trade their promotion for a lower royalty rate that “has sparked a ‘race to the bottom’ in royalty payments,” the letter said.
Congress certainly listens to complaints from record companies and music publishers about digital services, but they should act on behalf of their constituents. Again, the Downtown survey found that only 12% of respondents believe the government should set fair royalty rates.