Musicians must now be paid more for their streamed songs — but is this a big blow to Spotify?

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It’s widely known that musicians get paid fractions of a penny for their streamed songs on Spotify, Apple Music, Pandora, and other streaming services. 

In fact, UC Irvine media studies professor Peter Krapp told Mashable it would take about 4 million Spotify streamsfor a songwriter to make minimum wage in California over the course of a month. 

But this past weekend, the U.S. Copyright Royalty Board ruled that songwriters must be paid more for their songs. 

Now, streaming companies must pay 15 percent to music publishers, the largest portion in history (and a 43 percent increase).

Previously, streaming companies like Spotify had to give a minimum of about 10 percent of their revenue to music publishers — the big companies that artists hire to collect cash for their copyrighted songs. 

“The decision represents two years of advocacy regarding how unfairly songwriters are treated under current law and how crucial their contributions are to streaming services,” National Music Publishers’ Association CEO David Israelite said in a statement. 

For the big players in the streaming industry — the likes of Spotify and Apple Music — this could look like bad news: Streaming companies already don’t make money. 

Spotify, for instance, lost over half a billion dollars in 2016. And Apple Music executive Jimmy Iovine noted last year that “The streaming business is not a great business.”

But these higher payment requirements don’t necessarily mean that the golden number of $9.99 — the well-known subscription price for Spotify, Apple Music, Google, and Amazon Music Unlimited — is suddenly going to spike as streaming sites struggle for profitability. At some point in the coming years, these subscription prices will almost certainly increase, but not because artists are going be paid a little more.

Streaming companies like Spotify already make their own agreements with music publishers, assistant professor at Drexel University’s music industry program Robert Weitzner told Mashable. “It doesn’t mean that the rate Spotify pays would increase,” he said, noting that Spotify or Apple Music may already pay above the 15 percent that is now required by law in the U.S.

Music publishers — like the publisher currently suing Spotify to the tune of $1.6 billion dollars — already negotiate with Apple, Amazon and others to get as fair price as possible (the “market rate”) for the artists they represent. 

Spotify and Apple music now dominate the music streaming landscape. In January 2017, Spotify announced hitting 70 million paid subscribers.

Image: Statistica

But in the coming five to seven years, Weitzner says to expect a subscription increase. 

“In the long run, they are gonna try and raise their prices as the services get better and they contextualize their offering,” explained Weitzner. This contextualization means Spotify will offer a more immersive experience beyond just listening, similar to what the company is beginning to already roll out now with its new multimedia features like videos and news.

Every streaming service now offers massive loads of content, into the tens of millions of songs. But that’s soon going to become typical and unremarkable. Future customers will likely pay more for bringing in other features, similar to Netflix adding award-winning content to its platform — and charging a higher price for it.

In the present day, the ruling is still meaningful to musicians, who spent years attempting to get the copyright court to bump up their minimum rates. “It’s important to acknowledge that songwriters and publishers should be getting more,” said Weitzner. “This helps anchor the conversation.”

And even if the mandatory artist royalty increase did eventually cause streaming prices to go up, UC Irvine’s Krapp wouldn’t mind — as artists would be getting paid more. “I welcome idea the idea of more royalties,” he said. “It’s potentially a great decision, and I’d be happy to pay more.”  

Krapp thinks the streaming giants will be able to justify a price increase to consumers by proving streaming is the best way to discover new music that you’ll like. “The value proposition is finding things you won’t necessarily find elsewhere,” he said, noting that with the disappearance of record stores, people can’t casually peruse music in-person like they once could. 

The days of exploring the aisles of Tower Records may be gone, but if streaming services get it right, listeners still might continue to discover new music — even if they must pay to find it.

Read more: http://mashable.com/

Marissa SafontMusicians must now be paid more for their streamed songs — but is this a big blow to Spotify?

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