Fair Pay for Music Artists

In today's digital age, music streaming has revolutionized how we consume music. Platforms like Spotify, Apple Music, Google Play, Pandora, and YouTube have made it easier than ever for listeners to access a vast library of songs at their fingertips and reduce the spread of piracy. However, the solution of one problem birth a more complex problem, this convenience comes with a significant downside for the creators themselves – the musicians. The current payout rates of these streaming services are insufficient, making it challenging for artists to earn a sustainable income from their craft.

According to the image above, the estimated number of streaming plays needed to earn the national minimum wage of $1,472.00 is staggering:

• Google Play: 216,471 plays
• Apple Music: 230,000 plays
• Spotify: 334,545 plays
• Pandora: 1,132,308 plays
• YouTube: 2,102,857 plays

These figures highlight a critical issue in the music industry: the disparity between the effort required to create music and the financial reward received from streaming services.

The Challenges of the Current Streaming Model

The economics around unlimited streaming models are not so simple. Giving consumers virtually every piece of music ever recorded at their fingertips has come at a price for service providers in the streaming game on the one end and artists on the other. In the wake of losses sustained during the explosion of free and ad-supported digital music, major labels and their publishing partners have fought to maintain heavy financial control over the industry and the squeeze is felt on both ends of the supply chain. On the surface, label guarantees and shares of ad revenue may seem like a positive for the industry - it gives them the cash to spend on producing more music and uncovering more artists. However, commercial needs of a major label we know do not necessarily dictate diversity. Instead, we increasingly see label profits growing and support reserved for only the most successful - read marketable - artists through playlists and featured/preferred placement.

For a streaming service provider like Spotify, a rolling debt to major label shareholders represents a significant hurdle on the road to profitability - as their recent stock listing and associated documentation show.⁷ The ascent of Spotify to its place atop the music consumption market has been fueled by capital injection rather than revenue. It’s hard to believe that such a successful product operates at such a huge loss.

If service providers such as Spotify are unable to turn a profit, it’s no wonder the artists whose content they offer are struggling too. With per-stream royalty rates being tied up in calculations that are dependent on the service providers’ total revenue (made tenuous through the balance between ad-supported and paid memberships), predicting how much you can make as an artist on streaming platforms becomes difficult. So much so that the most insight many artists get into their streaming royalties comes in the form of sporadic checks with a number next to “digital royalties.”

And the money isn’t going to artists— neither is it helping music fans, So where is the money going?

In an industry driven by physical sales and digital downloads( Before the era of Spotify), all parties were aligned and shared proportionately in the revenue per sale. In an industry driven by streaming subscriptions, certain parties are guaranteed revenues while others—specifically the artists—are not. So, artists and songwriters are left to carve up what’s left after everyone else takes their cut, which isn’t much.

So the question we as musicians ask ourselves is , What is the way forward in this chasm loop?

The Growing Wings for a Decentralized Music Ecosystem

As the music industry evolves, the solution of a problem birth another problem and the loop keeps on going on but, certain bodies and communities get to have the favor from the dynamic waves. So far, the Major Labels and their publishing partners have been the holders of a big piece of the pie through all the waves of change. The introduction of decentralization & AI innovation has been on a widespread in so many industries that plays a crucial role to consumers and the music industry as at the verge of anticipating an inevitable shift towards decentralization. Blockchain evangelists will tell you that supply chains and other economic structures complicated by intermediary processes can be simplified and their efficiency increased by digitizing the transactions involved, distributing them on a public ledger and allowing the parties involved to interact with each other directly rather than having to go through a central node.

Perhaps no other industry exemplifies the problem blockchain was designed to solve more than the music industry. I believe untying the knot of contracts, transactions, assets and stakeholders that make up the music industry and realigning the threads into a more streamlined, transparent and autonomous structure will benefit everyone: not just musicians, labels and service providers, but music fans too.

The widespread adoption of decentralization is already being fueled by platforms like Tiktok, Telegram, Theta etc. and sooner , DSPs will need to adapt its model. Will this happen any sooner for platform like Spotify, Apple music? I don't think so, there are too many pockets that will lose once they make a switch.

The move to blockchain will facilitate a robust, efficient and transparent compensation system for music artists, knowing that funds are going directly to the rights holders when a purchase is made ,this will also encourage music fans to contribute more directly to the long term success of their favorite artists and the overall sustainability of their artistic vision.