How a math trick helped a band earn 500% more in streaming music royalties


Fork recently reported a groundbreaking accounting revolution in the music industry:

Under SoundCloud’s “fan-powered” royalty model, unveiled in March, a listener’s subscription or advertising revenue goes directly to the artists they listen to for a specified period; it’s instead of the “pro-rated” model typically used by Spotify and other streaming services where money is pooled and shared among rights holders based on their market share.

In other words: you pay $ 10 per month for Spotify. In a “user-centric” or “fan-driven” accounting system, your $ 10 would be split across all the things you actually listen to. Let’s say you really, really like my band, and one month you use Spotify to exclusively listen to Roland High Life (which would be pretty cool of you). We would get your full $ 10. If you listened to other stuff as well, these artists would get a proportional share of that money, and we would earn a little less. Sounds fair, right?

Under the “pro rata” system used by most music streaming platforms, however, your $ 10 goes into a big pot. And even though you, personally, have listened to our new single 100 times this month, everyone has listened to Taylor Swift’s new version of “Wildest Dreams” (and nothing else) 15 million times. In this accounting system, we would be paid 0.000006667% of the total money in the pool for that month relative to our proportion of all streaming activity. Taylor Swift would get the rest.

Working-class musicians have long advocated this ‘user-centric’ approach to accounting, as studies have shown it to be fairer than the ‘pro-rata’ system, which tends to benefit only artists who do not. have already massively succeeded.

Example: When SoundCloud made this change with royalty payments, trip-hop group Portishead ended up making 500 percent more money for the same number of games.

I know what you are thinking: what the hell is still in love ?!

As Dada Drummer explains, the pro-rated accounting system actually rewards the use of bots:

If you google “Buy Spotify Coins” you will find a number of offers which are variations of this one:

“From 1,000 coins for $ 4 and up to 500,000 coins for $ 745, you can take your pick according to your budget and your needs.”

I have no idea which of these offers is real and which are scams, but the going rate seems logical, at least as a come-on. At the bottom of the scale, you lose money ($ 4 for 1,000 streams on Spotify will earn you around $ 3 in royalties). And at the high end, you double your money ($ 745 for 500,000 feeds will net you around $ 1,500). Does it really work? I’m not going to spend any money to find out.

But let’s say it does – and Van Vugt successfully uses some variations of click farms to boost his rain playlists to compete with even the most popular ones from Spotify, like Rap Caviar. Wouldn’t that explain the difference between what the Portishead song earned from user-centric accounting, who recorded the actual track listeners, vs pro-rata, which credited the group with a proportional share of all flows, including fraudulent ones?

Dada Drummer also points out that oddly enough, when in a rush to set up user-centric accounting, Spotify states:

A shift to user-centric payments would not benefit artists as much as many had originally hoped… the change would result in “at most a few euros per year on average” for artists outside the top 10,000.

Strangely enough, the artists outside the first 10,000 are explicitly excluded here. Practical, that! And that’s because – like WIRED recently explained – the three major music labels basically share monopoly power over the entire industry, and this payment system works for them:

Three major record companies produce two-thirds of all the music consumed in America. They are the most powerful buyer of music and talent, and they use that power to prioritize a handful of mega-stars and pop hits. They launch music into huge radio conglomerates and streaming platforms that control how music is consumed, and they collect an ever-growing share of the industry’s revenue.

[…]

As streaming grew in importance, the inordinate power of corporations came to control almost all music distribution and revenue. Spotify and Google’s YouTube account for three quarters of all streams in the world. In addition to the streaming services of the tech monopolies Apple and Amazon, four companies have near-total market power. “The level of control in these few big companies is very dangerous,” says Louis Posen, manager of the legendary punk label Hopeless Records. For him, it is no different indeed in an increasingly monopolized economy, and no different from a century ago, when the monopolies of railways, oil, steel and other essential goods controlled American commerce. “When only a few companies control power, bad things happen.”

If we can’t enforce antitrust laws for the music industry, then at least the Union of Musicians and Allied Workers has a dedicated streaming committee to try to bring more fairness to royalty payments, through methods such as user-centered accounting. Because it makes a huge difference.

SoundCloud says Portishead’s song gained 500% more under new royalty plan [Marc Hogan / Pitchfork]

Tears in the Rain: Do Androids Diffuse Electric Sleep? [Dada Drummer / Substack]

Great music must be dismantled to save the industry [Ron Knox / Wired]

Image: public domain via Pixabay

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