I mentioned in an earlier post how the greed from the major record labels could end up killing streaming services. Since then, Swedish musicians are threatening to sue major labels Universal Music and Warner Music over streaming royalties. This is following a similar pattern from the lawsuits against the labels over iTunes sales and how those sales got paid back to the artists as royalties. Artists like Whitesnake, Def Leppard, Don Henley and Eminem led the way.
Even Billy Bragg stated the same via his Facebook account;
“These artists have identified that the problem lies with the major record labels rather than the streaming service and are taking action to get royalty rates that better reflect the costs involved in digital production and distribution. UK artists would be smart to follow suit.”
The major labels operate with a digital (streaming and mp3 sales) business model that is rooted in the past. The majors still pay a less than 10% royalty rate to artists for digital income. The 10% average rate is based on the age when the record companies produced a physical product like vinyl or CD, stored it in a warehouse and then transported that product to a brick and mortar store. Of course at that time all of these steps in the process where accounted for.
However in the digital age, there is no need to even produce a physical product like vinyl or CD however the labels are still short-changing their artists. If the streaming rates paid to the labels were so bad, trust me, the majors and the RIAA would be the first ones screaming theft. By being silent on the matter means that the majors are making real good money from streaming.
Spotify pays 70% of its revenues to music rights holders. By the end of 2013, they expect that those payments will exceed $500m. How much of that money gets passed on to musicians depends on the terms of their contracts with labels. Maybe the RIAA should be lobbying hard to get a bill passed where streaming is seen as a license and seventy percent goes to the artist. But we will never see that, as the RIAA is there to protect the record labels, not the artists. However they claim in their rhetoric that they are working on behalf of the artist.
From a metal perspective, Century Media Records pulled their music from Spotify in August 2011, citing that physical sales have dropped drastically in all countries where Spotify is active. Then in July 2012, they opted back in. By February 2013, they released a Spotify app. What a turnabout by the label? Metal Blade pulled music of Spotify in September due to no real agreement in place.
If you are on a major label roster you should have followed the Def Leppard route. Due to disagreements they were having on the digital payment terms with their label, they then refused to let their label put their catalogue on digital services.
However, then in order to cash in on the Rock Of Ages movie and the sudden interest in “Pour Some Sugar On Me” and “Rock of Ages”, they released digital “forgeries” of these classics and they released them on their own terms. Do you hear Def Leppard complaining about streaming and iTunes rates for those two songs? This year, they even released their “Hysteria” forgery.
Once upon a time, the artists had the power. Then in the Eighties, the labels stole it back. With the rise in revenue due to the CD, it made the labels mega rich powerhouses. Well it’s time for the artists to take back the power. Basically the labels without any artists are worth nothing. However, a lot of the artists just don’t see the big picture.
Those times of when recording was really profitable are over. Long gone. Recording revenues are shrinking. Streaming is trying to bring back some of it. If more and more people are paying for it the overall pool of money grows. These services need time to grow. However, as I mentioned previously, how much of that money gets passed on to musicians depends on the terms of their contracts with the labels?
Maybe Spotify and Deezer should become a label and start signing artists themselves as it is obvious that the major labels don’t care about their artists.