The music industry is in the midst of a rapidly changing digital marketplace. With the advent of technology and internet, music is being consumed and created ubiquitously, becoming an important part of our lives. Today, listeners have easy access to more access to music than ever before, but fair compensations to creators of that music are not taking place.
Digital markets in the music industry have grown and diversified at a rapid pace, giving birth to streaming services, such as Spotify and Deezer. In recent years, the popularity of download services has been flat-lining, while streaming services have enjoyed a continuous increase in new subscribers. Thus, for all artists, record labels, and listeners, streaming services have become one of the most widely-used channels for accessing music and a source of income.
Source: IFPI Consumer Insight Report 2017
Statistics from IFPI (International Federation of the Phonographic Industry) reveals that nearly a 50% of revenues of record companies worldwide came from online digital services. Digital revenues increased by 17.7% to 7.8 billion USD, driven by a steep 60.4% growth in streaming revenue, the largest growth in eight years.
Source: IFPI Global Music Report 2017
No one can deny the impact digital services have had on the innovation and growth of the music industry. However, the laws regarding copyrights and royalty payments have struggled to adapt. Artists are paid royalties through an outdated set of laws and private deals that date back decades. While the rest of the world jumped into the digital age, the laws in the music industry have struggled to adopt and adapt to these transitions.
Because of the absence of laws that protect the creative works of artists, music right holders are not compensated fairly from the increased use of their music, taking away only a small portion of the revenues generated from their own work. Currently, the royalty rates for physical products and digital downloads are around 9.1 cents for compositions five minutes or less in length, while the streaming rates are at fractions of a penny.
For instance, in 2015, it was revealed that Spotify’s average payout to labels and publishers per stream was between $0.006 and $0.0084. After the labels take their share, the average payment to a signed artist was around $0.001128. To further exacerbate the problem, this payment is given 6 to 18 months after, making data of artists’ revenues extremely difficult to collect. In 2014, these complications have led Taylor Swift, a world-famous pop star, to delete her music from Spotify, a move that reflects the view of many of her fellow artists.
Restoring balance to the market by compensating artists fairly should be a high priority for all the creative industries, enabling artists to create their works freely without worrying about compensations and allowing listeners to enjoy the works of artists legally.
RECORD Foundation runs the first reward-based music service platform, RecordFarm. A solution to the traditional music industry, it creates the healthy environment where creative works are valued, curations from users are rewarded, and transparency is ensured. The new ecosystem, driven by blockchain technology and RECORD token, simplifies the process and eliminates unnecessary intermediaries.
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