Why are STREAMING services NOT PAYING more to WRITERS & ARTISTS
The war between publishers, writers, Music Streaming Services, record labels and everybody else in between is not going to stop any time soon. And there's lawsuits left and right being put forth every single day for every side to try to take more of the streaming dollars.
The music business worldwide page that I follow talks about a gentleman named David Israelite. President and CEO of the National Music Publishers Association, who wrote an outbid recently about highlighting how these Music Streaming Services make money. How much money they take from licensing the music, and how everything is divvied up between the individual people involved, especially the creators, the writers. A lot of this, because to a lot of you artists, especially those who write your own music, you don't really look at yourself as multiple pieces of the pie in terms of you're the writer, or the artist.
And sometimes you may be the record label, right. But in the real world, or at least according to the law that's currently in the U.S. by Congress years and years ago. The writers are the people that write the music. The artists, especially decades ago, did not usually write the music. They were the good voices, the people with the sex appeal and the writers where different writing was like a TV show. The writers wrote the whole thing and the actor just came in and acted what the writers wrote. That's how the music industry worked in the past. And of course, we got the record labels. So when one hundred dollars is being paid out or if a hundred dollars is made by Spotify, the way the gentleman broke it down, is that roughly a third of it, around thirty seven dollars is kept by the Music Streaming Services.
62%, ends up going to the record label or the publishers and the artists. That doesn't mean that the writers and then the artists get something like, 10 percent or something like that. The interesting point of this article is that Music Streaming Services continue to complain about how much they have to pay for licensing, that they only get to keep, you know, 30 percent or a third for delivering the music. Yet they didn't create the music. They don't really do anything with the music. They just become a delivery platform. And he compares it to other platforms like GrubHub or, for example, UberEats, that also deliver stuff. And they only charge about 10 or 13 percent max on top of it. And they make a very big profit. That's a pretty interesting point, right?
There's a ton of technology companies that act as platforms to deliver certain things. And they're being very successful at like 10 to 15 percent delivery charges, up-charges, or commission fees and like that. So that is a very interesting point. The rates that independent artists get also differ from what the labels charge these big platforms like Spotify and Apple Music for licensing their music. So a lot of this is going on. T he writers are stuck in a situation where the law, at least according to the article, prohibits them to really make more than the 13 percent that basically should be paid out by law to writers on any copyrighted artistic material, especially when it comes to music.
But Spotify hasn't even been able to do that. On top of that, Spotify stock has been skyrocketing. But they are also losing money every quarter. According to them, they're not profitable. They have a lot more expenses than the money they're keeping in-house. Another interesting thing that this article highlighted is that Spotify & Apple Music complained that they would actually keep more than thirty three percent of the pie when money is made from music. This guy is arguing that they have money, that they're complaining about not having enough money, but they have money because Spotify, for example, values other content creators like Joe Rogan, and other podcasts they pay money for and they value Joe Rogan at one hundred million dollars.
They gave him a hundred million dollar deal just to be exclusive to Spotify. And we don't know if Joe Rogan just gets hundred million for ten years. Or if he gets a hundred million and he also gets a small piece of the pie of the money generated from all the new subscribers that are brought onto the platform because of him, if they can even track that. But the point in his article is that Spotify does have money. But if you're going to make an investment in Joe Rogan or investment into another pocket, they spend two hundred million dollars to get them to come to Spotify and you write it off as an expense, of course, the pie left for the artist or the pie that's left at the end of the day to be split between the writers, the artist and the labels.
And look, it gets much smaller. So interesting articles are the only reason I want to talk about it, because, again, I want to give you more understanding, which gives me more understanding of how stuff is really paid out at what rates which should be paid out, what's not being paid out, & how much money these companies have. And again, to remind you that there's so many different pieces to this industry & the right associations of publishers and the intellectual property. So those are their clients. The label represents the artist, which a lot of times is not the writer. And then the clients of the Music Streaming Services are both the labels and the writers, in a sense, but not really the writers, because the labels end up producing the final content and then stream by these major Music Streaming Services.
Again, interesting to understand the mechanics of all of this. So hopefully this helps you guys with getting a little more information on how all this stuff works, what you're entitled to by law as a writer, what these Music Streaming Services make and so on and so forth.
To watch the video that accompanies this blog post watch below: