Small returns for artists from music sales

Sony paid about $2.7 billion for a 60 per cent stake in EMI - adding two million songs from top names such as Alicia Keys (top) and Kanye West (above) to its already-considerable publishing catalogue - to ride on the surge of paid subscription stream
Sony paid about $2.7 billion for a 60 per cent stake in EMI - adding two million songs from top names such as Alicia Keys (above) and Kanye West to its already-considerable publishing catalogue - to ride on the surge of paid subscription streaming worldwide.PHOTOS: REUTERS
Sony paid about $2.7 billion for a 60 per cent stake in EMI - adding two million songs from top names such as Alicia Keys (top) and Kanye West (above) to its already-considerable publishing catalogue - to ride on the surge of paid subscription stream
Sony paid about $2.7 billion for a 60 per cent stake in EMI - adding two million songs from top names such as Alicia Keys and Kanye West (above) to its already-considerable publishing catalogue - to ride on the surge of paid subscription streaming worldwide.PHOTOS: REUTERS

According to a report, musicians received just 12 per cent of the $59 billion in sales generated from their work in the United States last year

ATLANTA • Creating music can pay off for musicians, but companies jumping on the bandwagon to market it can strike a bigger jackpot.

Musicians received just 12 per cent of the US$43 billion (S$59 billion) in sales generated from their work in the United States last year, according to a report on Monday by Citigroup.

The figure includes revenue from CD sales, on-demand streaming, advertisements on YouTube, radio royalties and concert tickets.

The report is likely to fuel longstanding complaints that record labels and technology companies are getting rich off the work of artists.

Wages for artists stagnated for almost a decade after music moved to the Internet, forcing musicians to tour more to increase their income.

Technology companies, radio stations and record labels capture the largest share of music sales, according to the report, including more than US$15 billion in advertisement revenue.

Consumer spending for subscriptions, CDs and concert tickets generated more than US$20 billion last year.

Music businesses, including labels and publishers, got almost US$10 billion, while artists took home only US$5.1 billion.

Companies are cashing in.

In May, news came that Sony was buying EMI Music Publishing, adding two million songs from top names such as Alicia Keys, Queen and Kanye West to its already-considerable publishing catalogue and cementing its status as the world's largest music publisher.

The Japanese company paid about US$2 billion for a 60 per cent stake in EMI, to ride on the surge of paid subscription streaming worldwide.

But artists are still "not getting their fair share of the economics", said Mr Jason Bazinet, the Citigroup analyst who wrote the report.

He set out to study whether artists are as underpaid as they have claimed over the years.

"The answer is yes," he said.

The report could help push musicians further into the arms of streaming services such as Apple and Spotify, which can potentially offer them a larger share of sales if they forgo a record deal.

Spotify has given young artists money to support the development of their careers, hoping that that will encourage them to release music directly onto the service.

Separating artists from record labels would enable streaming services to reduce their costs dramatically.

Paid streaming services pay out the majority of their sales to rights holders, a relationship that prevents them from turning a profit.

Spotify, which has more than 80 million paid subscribers, still lost US$1.5 billion last year.

While the growing popularity of paid streaming has boosted record labels' sales, the trend has also reduced their role in the process of distributing and marketing music.

Placement in Target stores does not matter as much as it once did - a development that could play well for musicians.

Record labels will need to adjust by giving artists more favourable deals, according to industry consultant Vickie Nauman.

But "because the music industry has so many intermediaries - and because the consumption of music is so fragmented across various platforms - the artist (still) captures very little of the aggregate revenues", she noted.

For those fortunate to have huge fan bases, the money from touring is now where the jackpot is.

Irish rockers U2, for example, grossed US$316 million from their Joshua Tree Tour last year.

British pop-rock band Coldplay's A Head Full Of Dreams Tour collected more than US$500 million in a two-year blitz across five continents, including two shows in Singapore last year.

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A version of this article appeared in the print edition of The Straits Times on August 08, 2018, with the headline 'Small returns for artists from music sales'. Print Edition | Subscribe