DCMS music streaming mark sutherland

Making Ends Meet in the Streaming Age: the real problem with Spotify

A successful career in music has long since ceased being a surefire route to private jets, penthouse suites and luxurious mansions. With the streaming model of music consumption the norm, and financially deprived artists crying out for widespread change, we take a closer look at how the system currently works, and why – as always – it’s the creatives left with the smallest slice of the pie.

Spotify Streaming Genre

How do you listen to your favourite artists? While some of us choose to support the bands and songwriters we love by snapping up their records on vinyl, the majority of consumers – and the majority of those record buyers, in the main – rely on streaming for the bulk of their listening. It’s not surprising. The ease, and quality, of steaming platforms such as Spotify, Tidal, Amazon Music, Apple Music and Qobuz serves up a fluid user experience, with an oceanic archive of music old and new to row through. You can explore, organise and playlist, share and discover the whole gamut of commercially available music. What’s not to love?

Let’s start with the sorry fact that 8 out of 10 musicians make less than £200 a year from streaming. In their report, presented before the DCMS Select Committee, The Ivors Academy and Musicians’ Union surveyed its members and found that 82% earned less than £200 from streaming platforms, 92% said that this equated to less than 5% of their earnings overall. Half had noticed a continual decline in revenue overall, while 43% of those asked admitted that the lack of return from streaming has resulted in them having to get a job elsewhere. “These statistics show that music streaming does not play its part in supporting the careers of the vast majority of creators and artists on whose work it relies.” Naomi Pohl, the Deputy General Secretary of the Musicians Union said in response to these sobering stats. “We have to make the economics of streaming fairer; improved deals for artists, a bigger share of revenue for songwriters and an income stream for the first time for non-featured musicians.”

It’s a sorry state of affairs that artists, whose work is now more accessible than ever before, are failing to reap the rewards of streaming. But, how did we actually get here?


Let’s pull back a little and analyse who actually owns a song. The basic dynamic of song ownership is that half the copyright (the creative/compositional rights) is owned by songwriters and/or publishers while the recording copyright is owned by the label and the named recording artist. Time was, music sales were often so astronomical that each of these stakeholders could earn a sizeable crust from the reliable sale of physically-released media. While record stores or high street CD-stockists no longer serve as the primary gateway for consumers to purchase music, the endless free replication of digital files (each stream or download is, in effect, creating a new copy of the source master) means that the idea of music as an *object* with value is almost entirely out of the window, despite the increased demand.

Part of the problem stems from this fundamental tap-like model. The everything on demand dynamic arose when the advent of speedy home internet services, coupled with the introduction of domestic CD ripping, allowed anybody with a PC or Mac the speedy means to replicate and back up their CD collections. Ripping tracks to lossy MP3s. It also meant that, if you so chose, you could share the tracks you adored with internet-connected friends and family you think would get a kick out of them. Harmless, right?

Even before the arrival of file-sharing giants like Napster or Limewire, the simple act of sharing an MP3 to a long-distance friend on something like MSN Messenger back at the turn of the century, gradually nudged the ball closer to establishing a devastating economic precedent for the music industry, which it has struggled to keep pace with eve since. Exponential MP3 replication led to peer-to-peer hubs becoming vast repositories of pretty much everything you could hope to find. An astonishingly enticing prospect to budget-conscious music fans, many of whom assuming that taking a copy of an MP3 file, duplicated from a purchased CD, was a victimless crime.

Napster circa 2001
                                          Napster circa 2001

While services like Apple’s iTunes allowed its users to bypass CDs altogether, and legally purchase digital albums ready to be loaded into their iPods, music piracy continued to boom. Arguably encouraged by the iPod’s (and similar MP3 players) increasingly growing storage space, which all-but invited users to fill them to the brim with artist’s back catalogues – whether paid for or not. As the decade rolled on, the industry keenly felt the effects. As the CD reduced in primacy, the shift to digital purchases didn’t bring in anywhere near comparable income. This was perhaps most markedly evidenced by the decline of $5 billion dollars of physical music media sales in the US between 1999 and 2008.

After several clunky attempts to legally stem the tide of file sharing, the industry switched tack. Spotify launched in 2009. With this inaugural streaming service, came two choices, there was the radio-type model, where users could choose which tracks to stream from the colossal archive of legally available music, with the downside of suffering periodic ad breaks. There was also the subscription model. For a fixed monthly fee, this same archive was available to the users to download, store and playlist as they saw fit, ad-free. The streaming paradigm was set.


Over the next decade, Spotify soon became a byword for on-demand music listening, it was joined by several other similarly featured platforms, yet Spotify towered over all.

But, the critical fact was that the fundamental apportioning of revenue had not adjusted since the halcyon days of multi-million selling records, with each of the song’s numerous stakeholders (songwriters, publishers, label and performing artist) working off contracts that sliced up the income into percentage-based segments. Compounding this further, is the fact that Spotify’s current payment system works on a ‘pro rata’ basis, which means that all the money from subscribers is divided up to pay royalties across the whole platform, as opposed to just the artists specific customers play. The average payout, per stream (for those not in big leagues) equates to around £0.009 per stream, meaning that – as NME pointed out – it would take 3,114 plays for an artists to make minimum wage. While Spotify’s payment model leads mainly to artists picking up the lowest amount of the return, many point back to lamentable deals set by record labels as a major part of the problem.

Record producer Steve Albini, in a recent lengthy Twitter thread, explained that pre-steaming, major record company deals often led to artists taking a ‘point’ share on the percentage of sales, and having to recoup the advance they’d been provided with before seeing any profit. This led to a dynamic where the band effectively paid for everything, while the label took home 80+% of that sale percentage. Albini points to how independent labels adopted a profit-sharing mechanism, to allow artists much greater rewards. He explains that, in his view, major labels are now fundamentally intertwined with streaming services like Spotify; “[Bands/artists] remain bound by these awful deals, executed years prior to streaming, with terms that have never risen above grossly unfair. In the streaming era, the majors engineered for themselves part ownership of services like Spotify in exchange for blanket licenses to their catalogs. Literally when Spotify makes money, they make money, and they do not give half a shit if any money is accrued to royalties for the bands.”


A similar point is made by former Domino Records exec Jamie Collinson, who pointed out, in the Evening Standard, that ““When Spotify emerged, [the majors] showed less interest in a high per stream payout than they did in giant, ‘direct to profit’ catalogue advances”


While we can unpick just how fundamentally unfair for hard-working artists this whole dynamic is, what’s starkly apparent is that, long-term, it is entirely unsustainable. Greater public awareness – such as that sought by the #BrokenRecord campaign, spearheaded by new Ivors Chair (and Gomez keyboardist/guitarist) Tom Gray, is needed to inform the public that the industry is facing an uncertain future

“Streaming has been built by corporations for profit margins. It hasn’t been built with any sustainable cultural remit in mind” Gray told Music Ally TV, in that interview, Gray pointed to a possible user-centric model, wherein money goes directly to the artists that you listen to – surely the biggest moral appeal to switch from illegal downloading in the first place. “The reason that user-centric has been so useful in the conversation that I’ve been having with lots of different people, is that it gives people real insight into the fact that their money isn’t connected to the value that they assign to music.” Gray said, “It just goes in and it disappears off. ‘Why doesn’t my money go to my music?’”

Further details on how the #BrokenRecord campaign can be found by reading the below Twitter thread from Tom.


This type of artist-angled model is surely a better indication of how the industry will eventually settle. The alternative is surely too apocalyptic to imagine. It’s a future where being a successful musician is fundamentally unattractive, under-valued and wholly financially unsustainable. Doors will be open to nobody but those who have the means to cushion their minimal return, eliminating countless vital voices from the running. But we can take some positives from the fact that labels are making some major changes to the model, and adjusting to the issues facing artists. Both Sony and Warner have announced that they are scrapping un-recouped advances for legacy artists, meaning that countless musicians and songwriters will finally be receiving more per month for the streaming of their music. The pressure of groups, like #Broken Record is impacting on the business. We can all do our bit to insist that streaming giants, record labels and song stakeholders – park short-term gain, work collaboratively and build a healthier music industry.