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Record labels reap 45 percent of royalties from streaming services, study finds; artists lucky to pocket 7 percent

Paul Lilly | Feb. 10, 2015
The streaming model isn’t benefitting musicians any more than CDs did, despite the miniscule distribution costs.

Ek also pointed out that free music for fans doesn't mean artists don't get paid for the work. On the contrary, ads allow Spotify to pay for every play a track gets. He went on to explain that choosing between an all-paid or an all-free business model doesn't work, as both have flaws. Instead, Spotify decided on a blended model that would allow it to scale, please listeners, and pay artists a fair sum.

What happens next?

Unfortunately, this study will probably do little to change things, and it's not just music listeners who will suffer as a result. If popular artists continue to jump off of streaming services as if they're on the Titanic during its final hour at sea, they'll be rejecting a money-making platform that consumers have embraced in the Internet era. In doing so, some listeners may be inclined to pirate music, and then both sides will lose.

Alternatively, artists could demand more transparency from their labels and a higher cut of the revenue. Labels will undoubtedly fire back that they bear the burden of production, distribution, promotion, and other expenses; but does uploading a digital file to Spotify justify raking in seven times as much revenue as the artists working for them get? That just doesn't seem fair from our viewpoint.


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