Spotify, Labels Strangle Artists’ Ability to Earn During Pandemic

Streaming numbers are down. Concerts are a bust. How does an artist make any money ?

By King Lars

Photos by Morning Brew

The live music industry has experienced a complete tailspin in recent months. Massive tours have been canceled, nearly every single venue across the country has been closed, and even the industry giant Live Nation is facing financial issues and lawsuits due to shady ticket sales. 

If it was not enough that the coronavirus pandemic has completely destroyed the infrastructure of the live music industry, it seems that this is not the end of the woes currently faced by musical artists. 

The current landscape of live music is established on making money through touring. This is where artists sell the bulk of their merch and stay afloat in the competitive arena of live music. However, with this significant portion of the industry completely knee-capped, what are the alternatives for music performers trying to make a living? 

Well, streaming just ain’t it. Artists only earn a fraction of cent per play on massive streaming platforms like Spotify. For even larger indie acts, this can amount to only around $2,000 per year — barely enough to cover rent in certain big cities, much less make a living as a musician. 

Where does it all go? Well, a survey in the music industry found that early 70% of proceeds from streaming go straight to shareholders. While certain artists are only taking home thousands of dollars annually, these shareholders are taking in more than $6 billion. Let that sink in. 

To make matters worse, music streaming has been down since we entered into the COVID-19 pandemic. When bars and stores first closed back in March, streams dropped by 7.6 percent, to less than 20.1 billion. The same report also found that digital sales decreased by 10.7 percent. This was a puzzle for many in the industry who initially believed that these figures would increase in order to offset the inability to attend concerts and shows. 

Spotify alone is not responsible for diverting funds away from the artist. The company does not provide direct payment to artists but instead to labels, distributors, publishers, and copyright collection societies. Each of these entities takes their cut before passing along the scraps. This means that even smaller artists without labels can make significantly more streaming income compared toa bigger act with greater popularity — the middleman is just getting their piece of the action. However, their cut happens to be the majority of the take, with labels reportedly taking in anywhere from 50 to 85 percent of streaming profits. 

One major issue with the current music industry is that the business model is completely archaic. The way things worked back in the hey-day of record sales does not apply to the current landscape. Artists and labels are not selling as much merchandise, and streams and increasingly taking over. However, those who hold the reins at the top are stubborn and refusing to let go. This has resulted in many artists going their own way, self-releasing their music, and cutting out the middleman entirely. However, even with these measures, many artists are doomed to toil endlessly at a day job in order to put a roof over their heads, effectively relegating the artistic process of music-making as a glorified hobby. 

With the livelihood of artists being challenged, only time will tell if they will rise to the occasion and take their destinies into their own hands. In the meantime, the music industry has largely become a vassal state where those on top reap the rewards, while those toiling at the bottom are given what’s left. 

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