The era of dirt-cheap music streaming is at an end – and about time too –

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Just to remind you, here is a breakdown of how your streaming tenner is divvied up. After the Government takes VAT, around 30 per cent of what’s left goes to the streaming company and 55 per cent goes to the record label (of which 16.5 per cent goes to the artist). The remaining 15 per cent goes to the song’s owner (almost always a big company), with around two-thirds of this going to the songwriter or composer. So that’s £2 of our ten pounds that goes to the actual people who create the music we love. But due to the complex way the money’s distributed, many artists see far less than this (it’s done proportionately: the bigger the hit, the more cash they get). 

Nile Rodgers, the Chic founder and David Bowie and Madonna producer, worked on a song that got five million streams. The income? “Meaningless,” he says. Meanwhile in the first quarter of 2014, Pharrell Williams was reported to have received just $2,700 for 43 million streams of his song Happy on the Pandora platform. The average UK musician earns £7,000 less than the national average of £30,000 a year.

The report contains some compelling arguments for a price rise. Streaming platforms’ monthly charge of £9.99 has been static for over a decade, since the whole streaming revolution started. This means that consumers have actually seen the price of their subscription fall by 26 per cent as the flat fee hasn’t risen with inflation. Academic research has found that the majority of consumers do not understand how artists are paid when their music is streamed. If they did, they’d surely be concerned. Separate YouGov research by the Broken Record campaign, which kickstarted the whole inquiry, found that the majority of surveyed streaming subscribers felt that musicians are underpaid and that record labels and streaming companies are overpaid.

Crucially, this same research also found that while 62 per cent of respondents would not be willing to pay more for streaming under the current structure, half would pay more if an increased chunk of their money went directly to the writers and artists they listened to.

Tom Gray is the founder of Broken Record and former member of Gomez, the Mercury Award winning band. He tells me that my price rise hypothesis could be correct. But he says that if prices were to go up, it’ll “still be cheap”. “It will cost you £12.99 and you still won’t blink. Particularly when a skin on Fortnite costs you eight quid – and that’s for a graphic that doesn’t even exist! We need to put this in perspective,” Gray says. “If prices did go up by a quid or two, am I going to be upset by that? Well, no. Because the price has been supressed for 13 years.”

(Gray isn’t convinced that a price rise is inevitable. This is because the increased chunk for musicians, if implemented, is likely to come out of the labels’ 55 per cent rather than the streamers’ 30 per cent. But I still think a rise is in the post.)

So what happens next? The Government has to decide whether or not to implement the report’s recommendations. I suspect some will be taken up and some won’t. Those that are implemented could be watered down, tweaked or even – who knows – strengthened. But the record industry is a powerful lobbying force. It will already be using all its might and charm to ensure its profit margins and future growth aren’t damaged. The biggest player, Universal, is gearing up for a likely multi-billion pound stock market float later this year and will, I’m guessing, fight tooth and nail to prevent a costly and distracting competition market probe into its vast UK division. Investors don’t like uncertainty.


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