Streaming royalties: a better method
The initial experience with streaming creative music is depressing at best, as thousands of streams barely result in a dollar of revenue. The situation may improve as the subscriber base increases, but a more equitable distribution of revenues may also be required.
One of the challenges of streaming revenue is pooling of subscription fees and resulting cross-subsidy amongst listeners. The existing method seems to favor more popular tracks by shifting fees from one listener to support the listening habits and preferences of another. We'll refer to this as the "pooled" model.
One thing we thought we learned at the Jazz Connects conference in NYC earlier this month (courtesy of Rasmus Rex, a PhD Fellow at Rhythmic Music Conservatory in Copenhagen, Denmark) is that the technology exists for each subscriber's payments to be directed to the artists that the individual subscriber listens to. We'll refer to this as the "attributed" model.
The "attributed" model seems to us a superior method that respects the listening habits and preferences of each artist's audience member. Aligning audience payments with the artists they listen to puts streaming back into the same model as physical music (CD) sales, in which case creative music would be no worse off in the streaming world than it has been in terms of market share of CDs or downloads sold.
A simplified example might help to illustrate the difference between the two models:
Imagine two subscribers paying $10 per month, creating a pool of $20, or $14 net of platform/distribution fees. Also imagine that one listener streams a pop single 10 times and the other listener streams a jazz track twice, representing the total of all listening, or 12 streams.
Under the current "pooling" method, 10/12th of the pool ($11.67) would go to the pop artist, and 2/12th ($2.33) of the pool to the jazz artist.
Under the "attributed" model, the jazz artist would receive 1/2 of the pool ($7.00), and the pop artist would receive the other half, each receiving the full fee from their respective audience. We think this is a more equitable distribution, and reflects the artists' true audience. The artist with the bigger audience would receive higher royalties.
The "pooling" model relies on averaging effects and more varied listening patterns to create a fair distribution. According to Rasmus Rex, listening is still highly concentrated. If it is also true that creative music listeners distribute their listening more broadly, or listen less frequently in a more attentive or intentional manner, then "pooling" works to disadvantage creative artists.
We support the "attributed" method of streaming royalty payments and urge the independent and creative music community to join in the appeal. If no one listens to a track, the artist arguably should not be paid. But for each artist to be paid in proportion to his/her active listening audience seems fair.
Apart from streaming, listeners usually pay once for the CD or download, no matter how often they listen subsequently. In contrast, streaming makes it possible for artists to be paid for as long as listeners want to revisit their music. The debate here is whether artists with fans who are frequent listeners should be paid more than artists with less frequent listeners, through the cross-subsidy of subscription fees.
Read Rasmus Rex Pedersen's research on this topic here, wherein he studies streaming data from WiMP (TIDAL in the US) and refers to the "pooled" model as "pro rata," and the "attributed" model as "per user" for royalty settlements.
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