Sounds like a dream world, right? A magical place where artists would get fairly compensated for their creations.
Almost everyone in the music industry will admit that the current way that streaming music is set up is unsustainable for artists, labels (both major and independent), and even for the streaming services themselves (Spotify has yet to make a profit).
Despite these flaws, streaming music has become the normal way we consume music.
There is no perfect fix for streaming but Sharkey Laguana, a musician and entrepreneur, is trying to start a royalty revolution. We recently read a blog he posted about a protest called Silent September, and we think he’s on to something great.
But before we look at how to change streaming royalties, we have to understand how they are currently paid.
The Big Pool vs. Subscriber Share
Currently, streaming royalties are given to rights holders based on their percentage of all the plays on a service. This means that even if you never listen to Justin Bieber, he is still getting a hefty percentage of the total royalties a streaming service makes because he pulls in more listeners than your average independent musician.
This is the Big Pool system. It works great if you are an artist on a major record label who is getting millions of plays.
It doesn’t work so well for indie artists. You might have a good-sized fan base who listens to your music on streaming services, but if you’re not getting a half million plays, you aren’t significantly affecting the Big Pool percentages.This is why streaming income for independent artists is so low.
This is where subscriber share comes in. Subscriber share simply means that royalty payments are based on how much each individual user listens to a particular artist. Though not currently used by most streaming services, it has the potential to more fairly distribute income across the music industry.
Spotify takes 70% of its profits and pays them out as royalties for artists. This means that if you are a premium subscriber at $10 per month, $7 out of the $10 you give to Spotify are going to musicians.This is not a bad or unfair percentage. The problem with streaming royalties comes from the ways these payments are given out in the current Big Pool system.
For example, in the Big Pool system,if I am a premium subscriber and never once listen to Nicki Minaj, she is still getting a hefty percentage of the money I pay to Spotify because she makes up a large percentage of plays on Spotify.
However, if streaming services moved to subscriber share, and I listened to Odeza 15% of the time and Nicki 0% of the time, Odeza gets $1.05 out of my $7, and Nicki Minaj gets none.
Of course,this doesn’t mean that major artists won’t get paid. They will still get the money from the millions of plays they are currently getting. If Nicki makes up 35% of what another premium user listens to, she will get $2.45 out of the total $7.
What subscriber share means is that all artists get compensated fairly for their music. In the subscriber share system, when a music fan consistently listens to an indie artist they love, that artist will get paid fairly for the amount of time users are spending listening to their music.
Spotify loses no money in this system, major labels don’t lose, and indies don’t lose.
Time for Streaming to Make The Switch
The main problem is implementation. Spotify is not going to completely overhaul their entire system if they don’t have a reason to. This is where Silent September comes in.
Spotify needs a push from major players in order to switch their infrastructure. (We’re looking at you, Taylor!) This means that the 3 major labels need to be on board. This means that independent musicians need to shake up the majors and get them to pay attention.
We need to shift the percentages.
The best way to shift the Big Pool percentages is to listen to truly independent artists on whatever platform you normally listen on. But it’s going to take a lot of plays.
So when you aren’t actively listening to music, simply turn down the volume, but keep the music playing (this is where the “silent” in Silent September comes from).
If enough people are playing independent artists in the background, we can shift the percentages and make the majors take notice.
This September is a great time for this protest, because the 3 major labels’ contracts with Spotify expire in October of 2015. If we can make them take notice before they re-sign contracts, we can help be the catalyst for change.
Silent September is a simple way to help make a difference in the lives–and the wallets–of independent musicians.
The originator of Silent September, Sharkey Laguana, wrote a more in-depth article on Silent September, and exactly how streaming royalties work, which you can read here. If you have a few more questions, check out the FAQ here.
If you would like to participate in Silent September with us, we have created a playlist of completely independent musicians in our local area who deserve your support. We will be adding playlists regularly of great independent music, so be sure to subscribe to our Spotify account and follow us on Twitter to stay updated!
If you are an independent musician and would like to be featured on our playlist, you can tweet at us, or comment below!