How Musicians Get Paid: Pt. 2
Last week we talked about how musicians get paid in the streaming age. This week we establish if that model is fair and what the alternatives are.
Anytime I explain to someone how streaming services decide what to pay each artist, they’re usually a bit shocked by how unintuitive it is. We talked about this last week, but if you didn’t read that or need a refresher, here you go.
Artists get paid whatever fraction of the stream share that they command. In other words, an artist’s payout is their streams divided by the total streams on the platform multiplied by the total artist revenue.
As an example, if Bruce Springsteen had his music streamed 1,000 times on some streaming service and there were 1,000,000 total streams across the whole platform, then he would be paid 1,000 / 1,000,000, or 0.1% of the total pool of money for artists. Now that we understand this calculation, we can think about some related questions. Is this fair? And are there alternatives?
Music Streaming Payouts & Equity
The most consistent complaint I hear about streaming service payouts is that they make it impossible for middle class artists to make a living. Even if you’ve built a small but dedicated fanbase, most subscription dollars are going to the biggest artists on the platform. An (imperfect) analogy would be if I bought a CD from a local band in 1989 and 99% of my payment went to pop star Paula Abdul. To try to improve upon this situation, people have suggested changing how we slice the payouts pie or finding ways to make the entire pie larger.
Other Ways to Slice the Pie
Time Streamed Share: Rather than slicing the payouts pie based on your share of streams, we can slice it based on your shared of time streamed. For example, if people listened to 1,000 minutes of my music and there was a total of 1,000,000 minutes of music streamed across the entire platform, then I’d get 0.1% of the total pool of money for artists.
This method is a bit fairer because it’s agnostic to song length. In our current world, there’s a financial incentive to make shorter songs because then users can run up your play numbers more quickly. More concretely, in the time I listen to Led Zeppelin’s 8-minute epic “Stairway to Heaven” once, I can listen to PinkPantheress’s 1.5-minute song “Pain” 5 times. That’s more money in PinkPantheress’s pocket. Because of this, we’ve seen songs get shorter on average. By chance, I wrote about this for The Economist last week.
User Level Share: Rather than calculating an artist’s share across all listeners, you can calculate the artist’s share for each listener. For example, if I spent my entire month listening to indie rockers LKFFCT, then the entirety of my subscription would go to them, net of fees to payment processors and the streaming service.
In each of these scenarios, the overall size of the payment pie is the same. We’re just reallocating who gets what. Because of that, there will always be winners and losers. It’s not like you’d switch the calculation mechanics and suddenly every local band would be rolling in the dough. I think the time streamed share and user level share are more equitable for artists than the current system, but given the dynamics of fame, music will always be a world rife with income inequality.
Ways to Make the Pie Bigger
Rather than re-slicing the pie, can we increase its size? Sure. At Audiomack, we’re trying to do this with a program called Supporters. Supporters allows listeners to give an artist a tip. Artists, in turn, can give supporters rewards, like early access to songs.
Bandcamp has related functionality where users can buy music and merchandise directly from the artist on their site. In fact, for the last few years, one Friday per month Bandcamp has waived their revenue share, so everything goes directly to the artist, net of payment processor fees.
These initiatives are a bit more interesting to me because they aren’t zero sum (i.e. giving revenue to one artist doesn’t take it away from another). They just allow more artists to win. In fact, if we give artists enough alternative ways to generate revenue outside of streaming, it might make a middle-class, musical lifestyle more attainable.
A New One
"love song (hesitations)" by Shiloh Dynasty, Lofuu, and dprk
2023 - Lofi Beats
During 2014, an unknown singer began uploading clips of herself singing to the short-form video app Vine under the name ShilohDynasty. Though the clips only contained an acoustic guitar and her voice, they were absolutely arresting and quickly went viral. In fact, they went so viral that notable artists began sampling them.
Fast forward to today and ShilohDynasty is almost a myth. Without any remaining social media presence or official solo releases, she has managed to rack up hundreds of millions of streams across multiple streaming platforms. This has been possible because producers are still so enamored by the lo-fi, enigmatic sounds in her old social media clips that they will chop those up and turn them into new songs. “love song (hesitations)” is one of those songs, albeit the vocal comes from a longer recording that was leaked last year. Nevertheless, it gives you a sense for why she continues to captivate lo-fi listeners all these years later.
An Old One
"Nick of Time" by Bonnie Raitt
1989 - Soft Rock
Bonnie Raitt shocked the world when she won Song of the Year at the 65th Grammy Awards last Sunday. This wasn’t a shock for lack of talent. From her voice to her guitar, Raitt is dripping with talent. It was shocking because Raitt was decades into her career before most of the other nominees were born, and the Grammys typically do not celebrate artists that old in their major categories.
But every once in a while, the Grammys leave you happily surprised. Because of that, I decided to revisit Raitt’s 1989 Grammy winning album Nick of Time. The title track, a meditation on getting older, is as gorgeous as records come.
Want to learn why there used to be 2 songwriters on hit songs but now there are at least 5? Understand why in my latest essay for Tedium.
Want to hear the music I make? Check out my latest EP.