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The Music Industry In 2014: An Unfair Marketplace?

by Chloe Hashemi, marketing consultant for film and video production company LAMBDA Films

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As much as music enthusiasts and artists would like to romanticise about the music industry, in the last decade it has become more numbers driven than ever. With large volumes of music released each year, and more platforms cropping up to share this music, the irrefutable emphasis seems to be on ‘more, more, more’.

Music Streaming: a magnet for record label success, but where do the artists, songwriters, producers fit in to this well-oiled machine?

While Spotify’s growth has sky-rocketed this year, their royalty share is far from doing the same.

Case of point is Pharrell William’s ‘Happy’, which was the most-streamed song on Spotify in 2014. The upbeat track can boast a total of 260 million plays this year, and even though Pharrell Williams is not short of a penny, the royalties racked up from this momentous year of streaming did not match the figures. On the online radio site Pandora, ‘Happy’ racked up 43 million streams, yet only $2,700 was earned in songwriter and publisher royalties. Conversely, the record label who issued this same track was subsidized equitably; at the statutory rate of $0.0013 per stream, totalling $56,000. Spotify does not function on a strict “per play” fee, instead taking into account many factors such as an artist’s own royalty rate, and the country in which the music streamer resides in.

After looking at statistics such as these, it is no surprise that artists such as Taylor Swift, and more recently Take That are pulling out of any future Spotify ventures. Despite the chief executive of Spotify, Daniel Ek claiming his company has paid $2 billion since its inception in 2008, artists are still unhappy with their financial returns. As a trio, Take That have made a deal with Google, in which Google Play Music gets exclusive streaming rights, which means Spotify have lost out, and Take That fans are going to go elsewhere.

In the midst of all this criticism, streaming websites aren’t as bad as artists are making them out to be. They are not the biggest threat to the music world. The industry has seen a spike in people downloading music online illegally in recent years, which prevents musicians collecting royalties or credit for their work. Surely the existence of music streaming platforms such as Spotify limit the need for illegal downloads, as there is a single platform where people can stream all their favourite music without spending any more money, and without having to worry about it taking up large quantities of memory on their computer. It is minimal hassle, and with an extensive library of music at the listeners fingertips.

The Spotify website explains that the Spotify model aims to regenerate the fall in music consumption (due to piracy and decline in physical music sales) “by converting music fans from these poorly monetized formats to our paid streaming format, which produces far more value per listener.”

Another benefit of music streaming is that the sites exist as music ‘sharing’ databases. This means up-and-coming artists now have a platform for their music, which was not available before. A perspective from the industry of Luke Henderson, owner of Fluke Productions, a recording studio in East London, adds: “in spite of the disarray of the industry, there is a fair amount of people out there still making half decent music, and who without this platform we would not have easy access to.”

 

Chloe Hashemi

Chloe Hashemi is a marketing consultant for film and video production company LAMBDA Films, which is based in East Anglia, UK.

 

 

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