Quantity of content and accessibility are two key factors which are determining the future of the music industry. Streaming is growing in popularity year on year as more of us find ourselves in a position to access vast databases of content from our fingertips. Nielsen’s mid year report (2014) shows us the increase in on-demand streaming. (see below)
(In millions – On-Demand Audio & Video Streams)
2014 2013 %CHG.
Total On-Demand 70,295.0 49,515.1 +42.0%
Audio On-Demand 33,653.5 22,415.6 +50.1%
Video On-Demand 36,641.7 27, 099.5 +35.2%
Musicians came together to call for fairer rules and greater transparency in terms of royalty distribution by digital music services. A report released by the international Council of Creators of Music (CIAM) last week named “Fair compensation for Music Creators in the Digital Age” recommends certain changes that should be enforced by streaming services in order to ensure their future sustainability.
Professor Pierre-E, the author of the report explains the recommendations within the study:
The current percentage of revenue paid to the rights holders by music streaming services is between 60-70%. With these services most likely to become the main source of music consumption in the future, 80% should be the minimum of gross revenues from all sources paid towards all rights holders. Professor Lalonde indicated the current level of revenue is inadequate given the dependency of these services on music content.
The study also recommends a fairer split of monies from streaming platforms, currently the split is geared more favourably towards record labels and performers vs. songwriters and music publishers. A 50/50 split between recording and composition would be a fair division.
But what is currently going on within the music streaming services? Digital Music News recently informed us on the documents filed by Pandora in US Congress and the Copyright Royalty Board informs us on their re-tooled, finances-first ‘Music Genome’ project.
Pandora, a digital music streaming platform recently signed a private deal with Merlin (indie label group). This deal will put a process they call ‘Steering’ into practice. ‘Steering’ will see songwriters and artists being played a lot more with Pandora shifting playlists towards cheaper content.
Indie artists will see their music being played more but, at a lower royalty rate. Being under half of what performance rights group SoundExchange requested that Pandora and others should pay in the future and also lower that what is now required by US statute.
Pandora has wanted to lower its royalty rates for a while now and US copyright law allows parties to construct private royalty deals which supersede federally-established rates.
But what about the listeners, Pandora’s users? The specifically tailored playlists recommended by the streaming service will surely be impacted by ‘steering’ listeners towards cheaper content. If you’re a user who loves listening to new indie artists then your sure to be steered towards this and, unfortunately, towards lower royalty payments.