David Byrne Wants to Open the Music Industry’s Black Box

David Byrne has written a sobering op-ed in the New York Times concerning the abysmal artist payment practices in the music industry. I won't rehash his article (you can read the entire piece by clicking on his name above). Instead, I'll quote from it.

"It’s easy to blame new technologies like streaming services for the drastic reduction in musicians’ income. But on closer inspection we see that it is a bit more complicated. Even as the musical audience has grown, ways have been found to siphon off a greater percentage than ever of the money that customers and music fans pay for recorded music. Many streaming services are at the mercy of the record labels (especially the big three: Sony, Universal and Warner), and nondisclosure agreements keep all parties from being more transparent."

"Perhaps the biggest problem artists face today is that lack of transparency. I’ve asked basic questions of both the digital services and the music labels and been stonewalled."

"Putting together a picture of where listeners’ money goes when we pay for a streaming service subscription is notoriously complicated. Here is some of what we do know: About 70 percent of the money a listener pays to Spotify (which, to its credit, has tried to illuminate the opaque payment system) goes to the rights holders, usually the labels, which play the largest role in determining how much artists are paid."

"The labels then pay artists a percentage (often 15 percent or so) of their share. This might make sense if streaming music included manufacturing, breakage and other physical costs for the label to recoup, but it does not. When compared with vinyl and CD production, streaming gives the labels incredibly high margins, but the labels act as though nothing has changed."

"One industry source told me that the major labels assigned the income they got from streaming services on a seemingly arbitrary basis to the artists in their catalog. Here’s a hypothetical example: Let’s say in January Sam Smith’s “Stay With Me” accounted for 5 percent of the total revenue that Spotify paid to Universal Music for its catalog. Universal is not obligated to take the gross revenue it received and assign that same 5 percent to Sam Smith’s account. They might give him 3 percent — or 10 percent. What’s to stop them?"

"The labels also get money from three other sources, all of which are hidden from artists: They get advances from the streaming services, catalog service payments for old songs and equity in the streaming services themselves."

"Musicians are entrepreneurs. We are essentially partners with the labels, and should be treated that way. Artists and labels have many common interests — both are appalled, for instance, by the oddly meager payments from YouTube (more people globally listen to music free on YouTube than anywhere else). With shared data on how, where, why and when our audience listens, we can all expand our reach. This would benefit YouTube, the labels and us as well. With cooperation and transparency the industry can grow to three times its current size, Willard Ahdritz, the head of Kobalt, an independent music and publishing collection service, told me."

All of which is why I tell young artists to be very careful before they sign on any dotted line.