July 20, 2022

Major Labels May Be Trying To Lower Indie Artists Streaming Royalty Rates

There’s nothing official yet, but if you believe where there’s smoke there’s fire then this report might be a warning of things to come in the streaming world. It looks like the major labels are trying to get higher streaming rates for their artists, or a lower rate for indie artists. They have good reason to do so, but that doesn’t make it right.

Major labels pushing for lower streaming rates for indie artists on the Music 3.0 Blog

Pay Less

First of all,  Believe (which owns Tunecore) CEO Denis Ladegaillerie says that the major labels are currently pressuring the streaming services to pay indie artists a lower royalty rate. A major reason is that the majors are losing market share to DIY indie artists, and that doesn’t look to turn around any time soon.

An even bigger reason is that with a smaller market share, the labels won’t be able to ask for as much money in the next round of licensing negotiations.

Pay More

Here’s a slight twist on the idea that’s basically the same thing. It’s been suggested by MBW’s Tim Ingram that the major labels are asking Spotify to pay a higher royalty rate for “quality” or “premium” artist content that comes from them. The idea here is that most people pay their monthly streaming fee to listen to the hits from these major artists. That’s not exactly true though, asthe latest trends in music tells us.

We now have data that shows that fewer people than ever are listening to the big hits. In fact, 72% of U.S. music consumption came from catalog content in the first half of 2022. Catalog means songs that are more than 18 months old. While the reasons behind this is something for another post, you can see why the majors are being proactive when it comes to royalty rates.

The majors do have leverage though. Regardless of the current music consumption habits, people still listen to hits, although they may not be from today. The streaming services still need that content.

Who Listens To What?

Indie artists may be uploading more music than ever but that doesn’t mean that anyone is listening.

Music Business Worldwide published a stat derived from Spotify’s own data that showed that nearly 80% of artists on Spotify today have fewer than 50 monthly listeners.

As I stated in the first sentence, none of this royalty revision talk is official, so nothing may come of it and streaming royalties may go on as they are now. But don’t be surprised if some big changes come around and they’re not kind to indie artists.

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