If you subscribe to a subscription music service such as Spotify or Apple Music you probably pay $10 a month. And if you are like most people, you probably do so believing your money goes to the artists you listen to. Unfortunately, you are wrong.
The reality is only some of your money is paid to the artists you listen to. The rest of your money (and it’s probably most of your money) goes somewhere else. That “somewhere else” is decided by a small group of subscribers who have gained control over your money thanks to a mathematical flaw in how artist royalties are calculated.
There is a better way to approach streaming royalties, one which addresses all of these problems, and it’s called Subscriber Share.
The premise behind Subscriber Share is simple: the only artists that should receive your money are the artists you listen to. Subscriber Share simply divides up your (subscription fee) based on how much time you spend listening to each artist. So if you listen to an artist exclusively, then that artist will get the entire (share of the fee), but if you listen less they get proportionately less.
I bet a lot of music fans – and artists – will be surprised that this is not how streaming royalties are presently calculated. Indeed, the 'money pool' method that's currently in place divides the money that's available among total plays for all artists. Thus, a hair salon running Spotify on 'random' 24/7 decreases the amount paid out to the independent artist who gets repeated plays from dozens of diehard fans.
Sharky Laguana makes some great points in his article – as well as in this earlier article he wrote for The Kernel which I think explains Subscriber Share even better – but I'm wondering how the ad-supported 'free tier' that Spotify relies on to attract new adopters complicates things. Would Spotify be able to maintain two tiers of royalty calculation: the pool for ad-supported plays and Subscriber Share for subscribers? Is that necessary?
Of course, the question is whether the services would even consider this change. Sharky is correct in that once music industry folks have something set in stone it's going to take some really big chisels to get it changed. His idea for 'Silent September' proposed in the article is interesting and worthy of conversation, but unfortunately seems a bit quixotic. The idea's purpose of poking at the major labels carries one big truth: the majors will have to be on board for Subscriber Share to become a possibility. Regardless, I'll probably still participate to some degree … I'm mainly listening to independent artists anyway.
I feel the best way a change like this could come about would be if a new service adopted this royalty method and made their policy overtly public, attracting artist support and in turn shaming the other services. I assume Tidal uses the 'pool' method of calculation … for all their talk of supporting the artist, this would seem like pushing on an open door for them. What about the newly launched Baboom? This service names their payout method Fair Trade Streaming … "we want your fan's subscription to go directly to you" is a sentence found in Baboom's press material to potential artists. I assume this means they are adopting some form of Sharky's Subscriber Share method. I'll look for confirmation, and this story will certainly continue to develop.