Are small Independent Artists being erased? [Op-ed by Jeff Price]
Veteran music tech founder Jeff Price has strong opinions, and he’s not afraid to express them in blunt terms. In this op-ed, Price takes on the push by major labels to change how streaming royalties are calculated for small developing artists.
Op-Ed by Jeff Price of Word Collections via Medium
Spotify announced that beginning in early 2024, it will stop paying artists royalties earned by sound recordings streaming less than 1,000 times over the prior 12 months and instead pay them to the artists whose recordings streamed more than 1,000 times in the prior 12 months.
The reason for this new major label/Spotify “theft”/indentured servant model seems to be due to the major record labels losing, and continuing to lose, significant market share to the DIY/indie artist sector. The major labels solution, get Spotify to take the royalties earned by DIY/indie artists money and hand it to them.
The impact to the developing artists can be seen by analyzing how much in royalties have been paid by Spotify for recordings with less 1,000 streams to DIY entities like TuneCore, DistroKid and CDBaby.
In December 2022, TuneCore announced it had collected and paid over $3 billion to its artists. When I left TuneCore in 2012, the company had collected and paid out about $900 million in royalties from paid downloads (streaming was just starting and Spotify had just entered the US market). This leaves $2.1 billion paid to TuneCore in royalties from digital services over the next ten years. So let’s say $1.8 billion of it came from streaming royalties. Of the $1.8 billion, Spotify most likely represents over 70% due to its market dominance (and Apple and Amazon not entering the streaming market until years later). This means that about $1.26 billion of the $3 billion over the past twelve years was earned from streams of recordings from TuneCore artists on Spotify.
In my experiences, about 20% of the sound recordings will earn about 80% of the revenue. 80% of $1.26 billion is $1.008 billion in royalties earned by all the TuneCore artists whose recordings streamed more than 1,000 times. The other 80% of the recordings that streamed less than 1,000 times by TuneCore artists earned the other $252 million (which is 20% of the $1.26 billion)
Under the above assumptions, and under this new major label/Spotify “theft”/indentured servant model, the $252 million that TuneCore DIY/Indie artists used to buy drumheads, guitar strings, pay for rent, health care, food, van rentals, phone bills vanishes from their pockets and is instead put disproportionately into the pockets of the major music companies.
In effect, every single artist on the planet that has a recording that streams from one to nine hundred ninety nine times on Spotify is printing money for the major labels. This is the new cost artist have to pay to have their recordings on Spotify; either work for the majors and hand them your money or you don’t get to exist in the largest streaming service in the world.
Man, that’s just not right.
Jeff Price is the founder and former CEO of TuneCore and Audiam and the founder and current CEO of Word Collections, a global publishing administrator for spoken word and music.
