I have worked in the music industry since I was 16 years old. In the three years since, I have seen the business change significantly more than I expected. Streaming is now fully embraced by the three major record labels (who still dominate the music industry by a landslide over independent labels and artists), who happen to receive a reported 75% of all streaming payouts. These payouts are about $.007 per stream. Let’s use Drake as an example. Every time you stream a Drake song, Spotify (still the largest music streaming service) has to pay less than one penny to the rights-holders of said Drake song–not Drake, though. Drake, being signed to a major label, likely earns 10-15% of $.007 of each stream. His producers and songwriters make around 15% and the label takes anywhere from 70-75%. Drake was the most streamed artist of 2015 with 1.8 billion streams–worth $12.8 million in payouts. All in all, Drake probably pocketed $1.5 million. Artists who aren’t as popular as Drake and are signed to labels typically do not make anything close to that.
This is the core of the issue with streaming and how it has shifted the music industry. The labels are doing fine. Not as well as they were doing in the 1990s, pre-Napster, when they were selling millions of CDs a week from new releases and various back catalogue–but the labels are making money. They are getting a large cut of every stream. They even get a cut of the $10/month premium subscription fees. But the artists are making less money than ever off of their music. Artists must become more and more business minded as streaming grows. Major artists are throwing tons of money into making their album releases more than just album releases, but events. Kanye premiered his album The Life of Pablo at his Season 3 fashion show at MSG, Beyonce has released two stunning full length visual albums (to not only accompany but elaborate upon her music), the list goes on and on. Up and coming artists, though, are finding new ways to spring into relevancy–through SoundCloud and Spoitfy playlist placements, synch licensing for commercials and television, increased collaborations and creating entire brands around their music and content.
The advice I can give to the music lovers reading this who care about the artists is please pay for a premium subscription on a streaming service if you’re not gonna buy albums, please buy your favorite albums (vinyl is back in for a reason- it sounds great and it’s cool to own a huge physical copy!), please buy tour tickets and merch from your favorite artists and share your favorite music with your friends. You never know what a song may do for someone else.
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