(NYTIMES) - When the pandemic hit last year, British singer-songwriter Nadine Shah saw her income dry up. The concert bookings that sustained her vanished and, at age 34, she moved back in with her parents on the north-east coast of England.
Like musicians everywhere staring into the abyss of their bank accounts, Shah - whose dark alto and eclectic songs have brought her critical acclaim and a niche following - began to examine her livelihood as an artist. Money from the streams of her songs on services like Spotify and Apple Music was practically non-existent, she said, adding up to "just a few pounds here and there".
So she joined other disillusioned musicians in organising online to push for change. Last year, Shah testified before a parliamentary committee that has been taking a look at the economics of streaming, raising the prospect of new regulation.
"If we got paid a meaningful income from streaming, that could be a weekly grocery shop; it could contribute to your rent or your mortgage when you need it the most," Shah said. "That's why I felt compelled to talk about it. I saw so many artists struggling."
Shah is one voice in what has become a grassroots referendum on the music industry itself. In Britain, more than 150 artists, including stars like Paul McCartney, Kate Bush and Sting, signed a letter asking Prime Minister Boris Johnson for reforms in the streaming economy. In the United States, the Union of Musicians and Allied Workers, has waged a guerrilla campaign against Spotify, demanding higher payouts.
Despite solidarity among many older and independent artists, the most successful current pop acts have largely been silent on the issue. While many musicians paint Spotify as the enemy, the shift to streaming over the past decade has returned the industry to growth after years of financial decline.
Artists' complaints about streaming are as old as streaming itself. Soon after Spotify arrived in the US in 2011, musicians began combing through their royalty statements, raising alarms about the fractions of a penny they got for each click.
Back then, streaming was an unproven model. Now, with Spotify, Apple Music and services from Amazon, Tidal, Deezer and others, it is the dominant mode of consumption, making up 83 per cent of recorded music revenues in the United States. Spotify, which now has 356 million users around the world, including 158 million paying subscribers, paid out more than US$5 billion to music rights holders last year. ( 2020)
The heart of musicians' critique is how that money is distributed. Major record labels, after contracting for much of the 2000s, are now posting huge profits. Yet not enough of streaming's bounty has made its way to musicians, the activists say.
Part of the dispute is over streaming's basic economics. Spotify, Apple Music and most other major platforms use a so-called pro rata system of royalty distribution.
In this model, all the money collected from subscribers or ads for a given month goes into single pot, which is then divided by the total number of streams. If, say, Drake had 5 per cent of all streams that month, he (and the companies that handle his music) get 5 per cent of the pot - meaning that, effectively, he gets 5 per cent of each user's money, even those who have never listened to his music.
This system, critics say, favours artists with mass appeal. Features like playlisting and algorithmic recommendations, they say, contribute to an effect in which popularity leads to more popularity, putting niche genres at a disadvantage and extending the gulf between music's haves and have-nots.
Industry estimates put Spotify's payout rate for recordings at about US$4,000 per million streams, or less than half a cent per stream. As that money may pass through a record firm before making its way to an artist, hundreds of millions of streams may be needed for a musician to net anything substantial.
The Union of Musicians and Allied Workers have called on Spotify to pay 1 cent per stream, which may be impossible under Spotify's current model - the company says it pays about two-thirds of its revenue to rights holders, and that amount is dependent on how many users and streams the service has at any given moment. Spotify also has a free tier that allows users to listen to music with ads, which reduces the average amount that each listener contributes to the pot.
Apple, which does not have a free tier - and is warring with Spotify over antitrust issues in Europe - seized this opportunity to say that its Apple Music service pays an average of about a penny per stream, counting payments for both recordings and songwriting.
In October, the British Parliament's Digital, Culture, Media and Sport Committee opened an inquiry on the economics of streaming music, and the hearings - with aggressive questioning of tech and record executives - have riveted the industry. Its report is expected in coming weeks, and speculation has bounced around over what recommendations, if any, the committee will make.
Despite artists' gripes, contracts at the major record companies have been evolving steadily in recent years in ways that benefit performers. Joint-venture deals and shorter commitments are now more common, say music executives, lawyers and artist managers.
And the royalty rate is going up, too. A study by Professor Steven S. Wildman of Michigan State University in 2002 found that, on average, artists getting their first contract from a label were offered royalty rates of 15 to 16 per cent.
Mr Tony Harlow, chief executive of Warner Music UK, said earlier this year that since 2015, its royalty payments to artists had "raised from 27 to 32 per cent".
That may be cold comfort for older acts that are stuck with lower rates. Eve 6, the alternative-rock band whose 1998 hit Inside Out has over 100 million streams on Spotify, is not recouped on its original contract, and so earns nothing from streams of that song, said Jon Siebels, the band's guitarist.
