What To Do About Streaming

It’s no secret that streaming services like Spotify and Apple have drastically altered the way music is consumed. In the Luminate Year End Report of 2022, within the share of total album-equivalent consumption by format, on-demand audio streams boasts a whopping 83.2% of the industry total, with second place being a mere 8.2% for physical albums. For better or worse - the internet era in music is here to stay. While streaming services have made the lives of consumers easier, with unlimited access to all your favorite songs 24/7, it has let down artists in the form of fair compensation. In an email sent to Universal Music Group’s global staff, chairman and CEO, Sir Lucian Grange, addressed the need for streaming service evolution in which he says, “There is a growing disconnect between, on the one hand, the devotion to those artists whom fans value and seek to support and, on the other, the way subscription fees are paid by the platform. Under the current model, the critical contributions of too many artists, as well as the engagement of too many fans, are undervalued.” He goes on to express the need for an updated model that is inherently artist-centric. 

What is the current model you may ask? It’s called the Pro-Rata payment model and, in short, it prioritizes and rewards the largest artists in the game. This model, currently used by Spotify, Apple, and more, works by pooling all the money garnered by your precious $9.99-$10.99 monthly subscription fees and dividing it by the number of total streams on the platform. This, in turn, identifies a ‘per stream rate’ which is then multiplied by each song’s number of streams. Miley Cyrus’ latest single is going to accumulate more streams than your favorite shoegaze indie-rock garage band (just a guess) - therefore your subscription dollars will go towards Miley, despite you never listening to her. 

Fans want to support the artists that they love; they’re fans for a reason! Many industry voices urge for the use of the ‘User-Centric Model’. This system, as opposed to the Pro-Rata model, takes a percentage of each subscriber’s fees and is paid out only to the artists to whom that user listens. Point for shoegaze garage band! Platforms such as Patreon are essentially implementing this idea; allowing users to subscribe to particular channels, with their subscription fees going directly to the artist of their choosing. 

This model is not a catch-all solution, and Impala has stepped up to the plate. The Independent Music Companies Association, otherwise known as Impala, has created an infographic hosting a ten-point-plan on ways to reform streaming into a more equitable system. They have come up with 4 new-and-improved streaming payment models that could either be implemented, or entirely replace, the Pro-Rata model. 

First up is the ‘Active Engagement Model’, which would attach a premium royalty value to plays where the listener has actively searched for a particular track or artist. The same would happen if the user were to save, “like”, or pre-order a record and/or album. Spotify tends to algorithmically serve listeners lean-back plays that they believe the user would like (i.e. “If you liked The 1975 you might also like…” or “Zach Bryan Radio”), thus the Active Engagement model would undercut this, and instead, reward artists that the user has specifically gone out in search of. My only hesitation with this idea is that it feels like it could inherently harm smaller artists. I often come across bands unknown to me through the exact algorithms that this model is working against - so it makes me wonder if this system would unintentionally reward those who are stuck in their same-old music habits. 

The second model is called the ‘Pro-Rata Temporis Model’. There is a difference between listening to the first 30 seconds of a song and listening to the entire 9 minutes and 7 seconds of Lynyrd Skynyrd's “Free Bird” - and this model addresses the value discrepancy! The Pro-Rata Temporis model pays out more money for listens of longer tracks than shorter tracks. At the 30 second mark of any song a royalty rate is rewarded, but this model would give further payments triggered at 5 minute intervals within a single track, up to 15 minutes and 30 seconds. This would doubly benefit long songs and reward patient people that both listen more and all the way through. 

Of particular interest to me is the ‘Artist Growth Model’. Despite being a good idea on its face, I find this model to be the least likely to catch on. It centers on the idea that the more streams, and wealth, an artist accumulates, the less incremental value each further stream generates. Thus, smaller and more niche artists would generate a bit more per stream than the top artists in order to accelerate their own growth and popularity. While I love the initiative to support emerging artists, I can’t help but feel as though Spotify and other streamers would refrain from punishing larger artists for their success - as they would essentially be biting the hand that feeds them. 

The fourth and final proposed model is called the ‘User Choice Model’. This model, similar to a service like Patreon, offers the space for users to buy things directly from the artists they love, straight from the streaming service. This could include merchandise, meet and greets, exclusive rewards, etc. Whereas an artist used to make merch in order to sell songs, nowadays they are making music in order to sell extra merch! This model would allow the artist to generate more income, in addition to streaming royalties, as well as nourish a more direct relationship with their fans. Personally, I love this idea - it feels the most approachable and realistic. At the end of the day- Spotify, Apple Music, Tidal, and the like are all businesses and tech (not music) companies. As opposed to us music fanatics who want to see small artists thrive and for our money go to the artists that we like - a corporation’s bottom-line is to make money. Truthfully, I’m not sure if there is an inherent strength in numbers when it comes to this debacle but I am sure that if key players such as Taylor Swift, who is known to ‘fight the man’ in cases like these, were to make a fuss about this, we’d see more change. There is not yet a perfect solution, but that doesn’t mean there won’t be one day. As for now, do your due-diligence and support your favorite artists by buying the ridiculously pricey $50 concert t-shirts (a discussion for another time..). 

Citations: 

10 Steps to Reform Streaming Models.” IMPALA, 19 Jan. 2023, 

https://www.impalamusic.org/10-steps-to-reform-streaming-models/. 

“Luminate Year-End Music Report.” Luminate, 12 Jan. 2023, 

https://luminatedata.com/reports/luminate-2022-u-s-year-end-report/. 

Paine, Andre. “UMG's Sir Lucian Grainge: 'the Economic Model for Streaming Needs to Evolve'.” Music Week, 11 Jan. 2023, 

https://www.musicweek.com/labels/read/umg-s-sir-lucian-grainge-the-economic-model-for-strea ming-needs-to-evolve/087228.