A music industry for the 99%

How label exploitation is causing a backlash against the corporate music industry, and how we can support small artists.

The cries of big label executives and wealthy artists have become all too common since the internet took the music industry by storm, sweeping away the great profits they reaped from compact discs and bringing with it a new age of access for listeners. For more than a decade, labels have been trying to come to terms with the radically new music market the internet has ushered in, but instead of trying to adapt to the new reality, they continue in their attempts to fight it, always looking back at the good old days, instead of trying to make the best of the present and prepare for the future.

This fight isn’t about what’s best for the people who actually make music or the masses who listen to it, but how corporate executives can earn the highest possible revenues. This is why the industry, namely the labels and the top 1% of artists, became big supporters of Apple after the launch of the iPod and iTunes. After years of declining revenue, in large part due to piracy, Apple offered a solution to the problem labels had been ineffective in finding a solution to. The labels’ focus wasn’t on innovation or the future, but on retaining their existing profitable situation for as long as possible, and for that reason their profits collapsed. Apple made it easy and convenient to buy music online, and while it wouldn’t bring back the glory days of the compact disc, it was a good solution to a problem the labels hadn’t been able to address, and desperately needed solved.

How to say “I own you” to the music industry. Photo: IBTimes

More than a decade on, digital music sales are now declining, as well. This time we’re told the culprit threatening the revenues of labels are streaming services, and labels are on the attack. The line being used by labels and a number of multimillionaire artists who profit from the current state of the music industry is that such services don’t fairly compensate artists, but as we’ll see, this is simply propaganda being spread by the corporate music industry and their media partners, trying to cover up the real problems that are finally coming to a head. Streaming services have the potential to revive music industry revenues to levels digital downloads could never deliver, but they also change the perception of what it means to pay for music. In the past, listeners had to purchase tracks or albums directly, but streaming services break that trend, allowing listeners to subscribe to a large catalogue, then listen to whatever they want. The labels’ problem with streaming services isn’t actually how much artists get paid, but that they allow people to pay for a catalogue, instead of for music directly. Labels fear what this could lead to.

However, this fight against streaming ignores larger changes taking place. Technology hasn’t just threatened the business model of labels, it’s bringing their very existence into question. As access to the tools of production become increasingly democratized, artists are able to record their music with minimal investment, and since they can communicate with their fans easily through social media, they’re increasingly wondering if the ever-expanding split of revenue labels are demanding is fair for the services they provide. Artists wonder whether it’s the work of the label that’s crucial to their success, or if technology will allow them to make it on their own, while retaining the rights to their music. There’s still a debate around the necessity of labels, but a growing number of artists are pursing independent careers and forging new paths that challenge the existing industry structure.

If we’re to promote independence for artists instead of pushing them to sign with a label, the government also has a role to play. The social services and arts programmes that are currently provided aren’t designed to support an independent path for artists, and will have to be significantly altered. The social safety net will have to focus on universal benefits that aren’t tied to an employer or require payment for access. This will create a fairer system that doesn’t just benefit small artists, but society as a whole. In order to encourage independence, arts programmes will need to be focused on further democratizing the tools of production, instead of on funding or promoting specific projects.

The media says the music industry is finally starting to stabilize, but piracy was only the beginning.

The most recent developments, which give more power to artists, are dividing the music industry into two camps: the labels and their big name artists who profit from the status quo, and the growing number of small artists who see a way forward without the exploitative influence of labels. The growing movement against label exploitation has the potential not only to further erode their role in the music industry, but to destroy the current order and birth a new dynamic for music moving forward.

The fight against streaming

There’s been some discord between the corporate music industry and streaming services since streaming began to grow in popularity, but it wasn’t until Taylor Swift decided to pull her music from Spotify and pen an op-ed accusing the company of not paying artists fairly, that the growing divide entered the mainstream conversation.

When this occurred, the media latched on to the story, and almost unanimously accepted what Swift had written. They did little questioning, essentially rewording and reprinting Swift’s letter. Did they not see anything wrong with the arguments they were reading, or were they too close to the labels to look critically at the facts? Even a quick read of the op-ed should lead one to ask questions, and a glance at the facts shows they don’t line up with the problems labels and celebrity artists have identified.

The main argument levelled against streaming services is that their subscription model doesn’t properly value music because subscribers aren’t paying for an album or a song directly, like they did with CDs and digital downloads, but for access to a library. They know they can’t push for the outright elimination of streaming, so instead they’re trying to get a larger share of the revenue by trying to show that current payouts don’t properly compensate artists. This could be a fair argument, but it ignores the crucial piece of information that royalties are not paid directly to artists, but to the label, which takes its cut before paying other rightsholders.

The industry’s problem with Spotify, in particular, stems from their desire to restrict how listeners can access music. While they may have reluctantly accepted that a growing number of people will pay for subscriptions instead of buying albums or songs directly, they can’t accept that people should be able to access on-demand music without any form of payment. Spotify is the only streaming service that offers an ad-supported free tier where users can choose the music they want to listen to on-demand. Artists are still paid for all listens on Spotify’s free tier, as listeners are frequently interrupted by ads, but money isn’t really the issue labels are concerned about, at least in this instance.

Instead of sticking to the old model of paying for albums, streaming breaks the mental link of having to pay directly for music. When people downloaded music from file-sharing websites or through torrents, it was still largely accepted that doing so was wrong, and that people were supposed to pay directly for their music. But with streaming services, because people pay for subscriptions or listen to ads, the guilt is no longer present. Listeners may not see a problem with that shift, but labels and wealthy artists do. Many of the same artists who fight streaming services have previously voiced their displeasure at listeners’ ability to buy songs individually instead being forced to buy the full album. These artists don’t want listeners to have choices as to how they access music, but want to force them to stay within the model that’s most profitable.

The anger of the corporate music industry doesn’t make a lot of sense though, which is probably why the labels are letting wealthy artists lead the fight against streaming services and what they mean for the perceived value of music. Artists have the backing fans of their fans, sometimes blindly, while listeners would be more quick to turn on label executives. Anyone who takes a closer look at the numbers can see that streaming services are not only paying their fair share to rightsholders, but have the potential to earn the industry a lot more than in the past.

Music industry revenues hit their peak during the CD era, and labels have been looking back at that period nostalgically ever since.

In 1999, the average music consumer spent $64 annually on music. The cost of an annual streaming subscription is currently $120. If the industry can convince enough people that $10 per month is worth the convenience of streaming, it has the chance to make even more than it did with CDs, which makes its opposition to streaming services all the more confusing, since listeners are clearly showing their preference for them. In its surveys of the global music industry in 2014, the International Federation of the Phonographic Industry (IFPI) found that revenue from streaming grew by 39% and in all major markets, with more than 41 million people paying for subscriptions. Statistics for the first half of 2015 show the number of tracks streamed in both the United States and the United Kingdom have almost doubled over the same time in 2014. Streaming is growing at unprecedented rates, but will it result in sustained growth for the industry?

Spotify’s CEO detailing how his company exploits artists… Wait. Photo: US News

Sweden is home to The Pirate Bay and Spotify, and is the first country where streaming really took off. Streaming accounts for 80% of total music revenue in Sweden, and while revenues haven’t returned to their CD era peak, they have rebounded from the low of 782 million SEK (US$81 million) they experienced in 2007. In 2013, revenues totalled 991.2 million SEK (US$113 million), and while they dipped a little in 2014 as the revenue from downloads and physical sales dropped due to continued streaming growth, the CEO of Sweden’s IFPI believes revenues will grow again in 2015.

The example of Sweden demonstrates that even a market almost completely dominated by streaming services can yield rising revenues for the industry, which means labels and big name artists will prosper. It’s worth noting that the streaming service dominating the Swedish market is Spotify, the only service offering ad-supported on-demand streaming. Despite the numerous artists speaking out against streaming on behalf of their labels, some multimillionaire artists see its earnings potential, and are trying to get in on the boom before it really takes off in the United States.

A few months before Apple launched their own on-demand streaming service, Jay-Z relaunched Tidal, a streaming service he’d bought from a Norwegian company. He hoped to capitalize on the sentiment Taylor Swift and the media were pushing that artists weren’t being paid enough, but he severely miscalculated. While Swift tried to frame her argument and actions as a benevolent stunt to fight for small artists, Jay-Z opted for a different tactic.

For Tidal’s launch, he lined up more than a dozen multimillionaire celebrities on a stage to tell the world they didn’t get paid enough, and their call rang hollow. While they may have had the support of some of their fellow big name artists, Jay-Z and Tidal were quickly questioned about their claims, and had few answers. Even the media, who were happy to parrot Swift’s claims largely without scrutiny, couldn’t let Jay-Z’s stunt go unchallenged, as they knew the masses couldn’t sympathize with a bunch of celebrity musicians complaining about their earnings, especially when they’d probably all flown to the event in private jets.

“Pity us! We’re poor millionaires!” Photo: NYPost

Tidal was promoted as a service that would pay artists fairly, but when the media finally got answers about how much the service would pay in royalties, they found it was little more than what Spotify was offering. Payments would only be significantly more if listeners signed up for Tidal’s premium service, which is double the price of other streaming subscriptions, and even then the label would take most of those extra royalties (unless the artist was independent). Not the boon for artists it was framed to be, or at least not for small artists.

On top of everything, the multimillionaires who partnered with Jay-Z to relaunch Tidal each got a small stake in the company. They used this to promote the service as being “artist-owned”, to create an image of solidarity, of artists banding together to fight the other streaming companies, which they presented as evil corporate entities trying to profit by not paying artists fairly for their work. As we’ll see, this final point is a far better descriptor of labels than streaming services.

Tidal isn’t, however, a communal organization created by artists, and people saw through the image the celebrities were trying to present. They’d built a streaming service that operated like any other, the only exception being that the service they were promoting was one they had a part-ownership in, which meant that on top of their regular streaming revenues, they’d also receive a percentage of the service’s profits and a fine payout in the event of an acquisition. Instead of being a service that works for artists, Tidal is the platform of the music industry’s elite, who wanted to make a little more from the current boom sector. Its launch was not only deceptive, but perfectly illustrates the problems with the arguments of rich artists and their massive labels against streaming services: money isn’t really their problem.

This flawed launch did something important though. The argument in the media, particularly the larger media organizations, had been almost exclusively in favour of big artists and labels up to that point, but Tidal’s launch injected a dissenting opinion into the consciousness of the masses, and really gave those challenging the dominance of labels an opportunity to enter the conversation in a more prominent way.

As was previously mentioned, whenever the media publishes attacks on streaming services, they’re seemingly always from wealthy artists, never from label executives. While the artists have a better public image, there’s another good reason for this. Even though labels may disagree with the business model of streaming services and how they’re changing the perception of how we pay for music, labels are making some very favourable deals with streaming services that manage to cut artists out of the picture, meaning a greater share of revenue goes directly to the bottom line instead of having to be split among various rightsholders.

In May 2015, Sony Music’s contract with Spotify leaked, finally exposing the terms of their deal, and what it showed wasn’t good for the labels. The Verge’s Micah Singleton broke down the contract, and the numerous ways the labels were getting around paying artists. Here are a couple of the things he found:

  • Spotify agreed to pay up to $42.5 million in advances to Sony Music over a three year period. Singleton asked a music industry insider whether such advances are usually shared with artists, and was told they are not. The contract also includes a Most Favoured Nation clause which guarantees Sony Music larger advances if any of the other labels are given a better contract.
  • Spotify agreed to provide Sony Music with $9 million in free ad space over three years, with another $15 million in ad space available for purchase at a discounted rate. These could either be used for free promotion of Sony Music’s artists, or sold to third-parties, with Sony Music keeping the profits.

These sections of the contract showed millions of dollars in revenue for Sony Music that didn’t have to be passed on to artists. While it’s impossible to calculate the amount artists receive based on the leaked contract, as that also depends on the individual contracts artists have signed with their labels, it does suggest that not only is Spotify paying its fair share, but that the labels are making a lot of money from streaming that they don’t have to split with artists and other rightsholders.

Spotify’s financial disclosures show it pays out more than 80% of its earnings to rightsholders, and operates at a loss, making it increasingly difficult to argue that Spotify doesn’t pay rightsholders fairly, and is unfairly profiting off the work of artists. The numbers simply don’t back this argument, which should increase the scrutiny on labels.

SoundCloud Clubhouse, the hipster’s dream venue. Photo: SoundCloud Blog

The labels have also started making deals with SoundCloud, a popular audio distribution platform, which provides another indication of how they’re trying to get money that doesn’t have to be shared with artists. While the new SoundCloud deals have the company beginning to pay royalties to rightsholders when their songs are played, and agreeing to launch a premium streaming service in 2016, they also give equity shares to the labels.

It’s no secret that Twitter’s been interested in acquiring SoundCloud in the past, but their primary objection was the service’s uncertain position with regards to copyright. The deals with the labels not only fix this issue for the future, but absolve SoundCloud of its past copyright infringement, leaving a good chance for an acquisition in the future, which would lead to payouts for the labels that wouldn’t have to be passed on to artists.

The attack of the corporate music industry on streaming companies is not only confusing, but shows the growing divide between artists who support the labels on one side, and those who see the labels as an exploitative force on the other. While labels may have liked the attack on streaming in the beginning, as people have started to look into the shallow arguments being presented, it’s been impossible not to see that the real culprit of unfair pay within the industry is not streaming companies, but the labels themselves, and even the media is no longer able to keep critical views from their reports.

The fight against streaming companies has quickly evolved into a debate about how to provide fair pay for artists, which is certainly not what the labels intended. Their initial attack tried to frame streaming services as the reason artists weren’t getting paid, but a growing number of people are realizing the real entities profiting from the exploitation of artists are the labels. As a result, labels are seeing an even greater threat to their dominant position in the industry than at any time in the past, even greater than when piracy obliterated their revenues. A growing number of artists are speaking out against the exploitative practices of labels, and while that has occurred to varying degrees in the past, the changing nature of the industry, particularly the democratization of access to recording tools, could see them dethroned once and for all.

The revolt of the artists

The past decade of uncertain earnings for artists has made them look at the role of labels with renewed scrutiny, and for those who were already critical the labels, it gave them the room to speak out in a way they couldn’t in the past.

In their current form, labels are a largely exploitative force in the music industry. Where it used to be that they were more of a partner for artists, helping them develop their craft and grow their followings, they now place their focus almost exclusively on their high-earners, while continuing to sign small acts to ensure they will get a piece of their earnings if they do gain traction with listeners. In the past, a label was essential if an artist wanted to be successful, but the democratization of the tools of production and the ease of promotion through social media and other online venues radically alters this equation, and a growing number of artists are taking notice.

Society has become far more polarized since the recession of 2008–2009. This has occurred in politics, where in a number of countries support for centrist parties and candidates has evaporated, with more people going to the left or to the right, as well as with the distribution of income, where the middle class has shrunk and a greater percentage of wealth is going to those at the top. The music industry hasn’t escaped this trend.

The debate around fair pay is dividing artists into two camps. The first supports the line of the labels, against streaming services as the next evolution in the music industry, and is made up primarily of the 1% of artists who benefit enough from the current system not to be too critical. The second group is largely made up of small artists who see the foolishness of the arguments being presented against streaming, as well as some major artists who’ve started to use their privileged positions to speak out against the narrative of the labels. While Taylor Swift and the artists supporting Tidal belong to the former group, a growing number of artists big and small seem to be joining the latter.

Artists who are critical of the labels and the celebrities who have sided with them spoke out after the perverse launch of Tidal. Marcus Mumford criticized the service for its tribalistic launch and how it was simply a ploy for a group of wealthy artists to make more money, not to help small artists. Lily Allen was more direct in a Twitter rant that followed the launch, calling the service out for its high price and exclusivity agreements, before tweeting her own solution:

Her rant showed the anger some artists feel toward labels and their exploitative behaviours.

By linking the fight against streaming services with the demand for better pay for artists, it becomes harder to see which artists would actually benefit from increased streaming royalties. The artists who earn sizeable amounts from their recordings aren’t small artists, but the major ones. When Taylor Swift argues that she isn’t fighting streaming services for her own benefit, but to help all artists, she’s being disingenuous, if not outright lying. Her ploy wasn’t about artist pay, but ensuring the people who wanted to listen to her newest album, 1989, which was formally announced less than a month after her op-ed against Spotify was published, had to purchase it. It was a way to ensure she had the highest-selling album of the year and maximized her earnings, not about fighting for fair pay for small artists.

As was mentioned previously, some artists don’t want listeners to have a choice in how they access music. Swift may well fall into this category, as she ensured her album was only available in the ways that were most profitable for her, and because she has such a huge following, she was able to get away with it. A small artist would have never been able to pull off a similar stunt.

Nobel Prize-winning economist Paul Krugman has observed that the trend toward greater income inequality in Western societies is also present in the music industry, where a greater portion of artist earnings is going to the top 1%. Increasing payments to rightsholders from streaming companies would have an almost insignificant effect on small artists, but a huge one on celebrity musicians, further amplifying this trend.

He also says that touring is where artists make most of their money, so focusing on revenues from recordings shouldn’t be the top priority, particularly if the goal is to best help small artists. This holds true for all artists, big and small, as even though Taylor Swift was the top earning artist in the United States in 2013, earning close to $40 million, 75% of her earnings came from touring.

All must bow before the Taylor Swift money-machine (after they’ve bought a ticket, of course). Photo: EW

Labels make the most from recordings, which is why there’s been such a focus on that revenue stream, but they haven’t ignored the growth in touring revenue. In their increasingly predatory fashion, they’ve begun trying to get a percentage of artists’ touring revenue, as well. In the past, labels took a piece of whatever the recorded music earned, but didn’t have access to an artist’s earnings from touring, merchandise sales, endorsement deals, and other sources of income. However, in recent years that’s started to change.

A growing number of artists are signing 360 deals, which essentially give labels a piece of everything an artist does. Under a traditional deal, the label only made royalties from recorded music, and therefore that was the only aspect of an artist’s career they were particularly concerned with. That’s no longer the case with 360 deals, as now touring, merchandise, licensing, and other revenue streams can be included in the deal, which means the label is able to influence far more of the artist’s career, and take a cut of the revenue from each stream. The number of areas included in the deal vary by artist, but labels are seeking more and more as time passes.

While not signed to a 360 deal, Jared Leto and his band 30 Seconds to Mars were sued by their label in 2008 for trying to prematurely break their unfair contract, and documented the whole process in the documentary film Artifact. Not only did he show what was happening with his band, but he looked at the wider industry and how it has evolved. Since then he’s become a much more outspoken critic of labels and their predatory actions. After the release of the film he did an interview with The Hollywood Reporter where he addressed the real problem with streaming:

The streaming companies are paying record labels, but record labels are not paying artists. I’d welcome anybody to debate that. Record companies are taking giant advantages. They’re taking pieces of stock options or technology companies in exchange for guaranteeing rights to artists’ streams; there are all kinds of deals being made, and artists aren’t a part of those deals.

Leto talked about exactly what was outlined previously. Spotify’s filings show it is paying rightsholders, but all that money has to go through labels first, and doesn’t seem to be getting to artists on the other side. Labels are also signing deals with streaming services and other technology companies to maximize the revenue they don’t have to share with other rightsholders.

While it’s tough to calculate exactly how much each rightsholder receives from streaming, there has been some data out of France that confirms what Leto says about record labels not paying artists. SNEP, the French trade group for recorded music, did a study with Ernst & Young and found that 46% of the total payment made by a listener to a streaming service goes to the label, while about 7% goes to the artist. These are bad enough numbers, but Music Business Worldwide broke it down further.

Exploitation, charted. Source: Music Business Worldwide.

After accounting for the fee taken by the streaming service and the taxes that would have to be paid, they found the label takes 73% of the remaining payout, while the writers and publishers take 16%, and the artist is left with 11%. These numbers may be for France, but the report gives no indication that the breakdown should be much different in other major music markets.

The label gets 73% of the final streaming payout. The artist gets 11%.

What’s probably even more surprising, and an even greater indictment of the corporate music industry and their media partners, is that in all the reporting about streaming services, fair pay for authors, and the current state of the music business, these numbers rarely emerge, which suggests that the media, like the labels, don’t want listeners — or artists — to know the real breakdown. Most people probably know it’s unfair, but not the full extent.

This unfair relationship is one of the reasons Leto considered leaving his label, and taking his case to court. In the end he settled, as the financial burden of the lawsuit was too great and the label offered the band slightly better terms, but Leto described his frustration with the current state of the industry:

I think we’re in a state of transition — the power record labels once had has been eroded, with the help of technology, social media, and new and alternative distribution methods, but there still isn’t a clear new model. You see people experiment and have success, but largely, they’ve been one-offs and gags, and they haven’t been duplicated with much success. I do believe it’s an industry ripe for disruption and has a massive amount of potential, but for people taking a traditional route, when you get to a place that we are at, I think that things are likely to get worse before they get better. You have to be innovative or you die.

30 Seconds to Mars is still signed to a label, but Leto clearly sees the potential for another model. He asserts that it hasn’t yet been discovered, but a growing number of artists are experimenting with new ways to connect with their fans that allow them to retain ownership of their rights, partnering with distributors or promoters when necessary to do tasks they can’t perform on their own.

The indie kids are coming. Macklemore in the tiger print coat, Ryan Lewis on rollerblades.

One of the major examples of this in recent years was the massive success of Macklemore & Ryan Lewis’ album The Heist and its hit single “Thrift Shop”. They made the album without a label, but because they’d already been gaining significant momentum in the lead-up to the album’s release, they were able to sign a deal with the Alternative Distribution Alliance (ADA), which is owned by Warner Music Group, to help with distribution and promotion.

This partnership has led some to question the credibility of Macklemore’s claim to independence, but the fact remains that he and Ryan Lewis made the album without a label, and retain ownership of their master recordings. They paid the ADA to provide a service they would’ve had a tough time replicating on their own. In Artifact, one of Leto’s main concerns about going independent is having to take on so many other tasks on top of the music. Macklemore’s deal with the ADA helped him solve this problem, at least to a certain degree, and as a result he saw success on a level he may not have been able to achieve by going solely on his own.

Does this mean the independent path isn’t viable? That it isn’t worth pursuing because choosing to go independent may make it more difficult to see the kind of success that only a small number of celebrity artists ever see? Of course not. It simply comes down to a choice every artist has to make over what their goals are with regards to their music.

Another path for independent musicians is practiced by Amanda Palmer, who in 2009 asked her label to drop her band The Dresden Dolls. Since then she’s been pursuing an independent career, often turning to her fans to fund her projects. She challenges the idea that the only way to be successful as an artist is to fill stadiums and sell millions of albums. This version of success is one she associates with the dying corporate music business, and believes we’re entering a time where artists can make a good living through direct support from their fans. The artists who pursue this path won’t become multimillionaire celebrities — the idea we’ve come to accept as being a successful musician — but artists who live like everyone else, except instead of working in an office, they make their living from their art.

Bold declarations purposefully written childishly stylishly.

Palmer’s experience shows this model is viable, and she believes it’s the future of music. In 2012, she raised $1.2 million on Kickstarter to fund her album Theatre is Evil and its accompanying tour, and was incredibly transparent about where the money was going. After paying for the rewards she’d promised to her backers, as well as recording the album and going on tour, she hoped to have $100,000 left over to put in the bank. Is that an unreasonable payday from an album and tour that may have taken a year or two to create?

More recently she decided to try another crowdfunding experiment, this time on the Patreon platform, which was launched in 2013 by Jack Conte of the independent band Pomplamoose. While Kickstarter is generally for a single project, Patreon allows creators to secure ongoing funding from their fans. In the case of Palmer, she now releases everything she creates for free, but invites those who enjoy her work to help fund her projects on Patreon. At the time of writing, she has the support of nearly 6000 patrons, resulting in more than $36,000 in support every time she releases a new song, video, piece of writing, or some other form of art. It’s an arrangement most artists could only dream of, but it’s a situation more accessible now than at any time in history.

The success Palmer’s had with crowdfunding shows a radically different way for artists to make a living, and for fans to support the artists they love. This would be incredibly difficult to pull off without the internet, and while it may not be the model for every artist, it definitely provides another option. Many artists and commentators have expressed negative outlooks on the future of music, but Palmer sees the shifts that have occurred as bad for the business side and good for the art.

“The power and control is quickly going back to artists for the first time in a long time — maybe since the advent of recorded music.” — Amanda Palmer

Even without pursuing radically different funding models, a growing number of musicians are choosing to go independent, and are making a living doing so. After Taylor Swift published her op-ed attacking Spotify for not paying artists fairly, independent artist Ron Pope published his own, saying that in 12 months he made over $250,000 from Spotify streams alone, and he didn’t get nearly the number of plays as big name artists. Pope makes a good living from streaming because a label doesn’t take the majority of his earnings. He owns his masters, so he gets paid first.

Macklemore, Amanda Palmer, and Ron Pope each show a different path artists can take to find success without a label, while still making a good living. And there are potentially far more avenues artists can take that haven’t yet been tried. While the past had a single route to success: getting noticed, signing to label, recording music, and working hard with the hopes of hitting it big; the future may have many different paths to achieve the unique sets of goals each artist sets for themselves. This may be scary for some artists, but it’s also very refreshing.

This is also where Leto’s assessment may be flawed. He sees the old model of going through a label as broken, and is waiting for the new, independent form of fame to emerge. But maybe there is no single new path, and his expectation that there should be one shows that his thinking, to a certain degree, is still stuck in the old system. The future, with its multiple ways to achieve varied forms of success, may be more risky than in the past, but it also provides more opportunity for artists.

In her op-ed targeting Spotify, Taylor Swift wrote, “Music is art, and art is important and rare. Important, rare things are valuable. Valuable things should be paid for.” She’s right in saying that music is art and that music is valuable, but she’s wrong when she tries to claim it’s rare. Music is more abundant now than at any time in history, and the increasing democratization of the tools of production is only making it more so.

Reports from the Bureau of Labor Statistics Data in the United States suggest the number of musicians making a full-time living from their work has increased 71% in the past decade, and data out of the United Kingdom shows the following:

  • 41,000 people reported working as full-time or part-time musicians on the Labour Market survey, up from 25,000 in 2001.
  • PRS for Music, which collects royalties for songwriters, reported 112,000 members in April 2015, up from 70,000 only five years earlier.
  • 47,751 albums were recorded in 2014, according to the Official Charts Company, up from 11,654 in 1994.

As should be expected, the data shows the number of musicians and the amount of music being published has increased significantly, and is continuing to do so. Music is in no way rare, and platforms like SoundCloud and YouTube make it easier than ever to listen to for anyone with an internet connection, so even those who can’t afford to pay can enjoy the pleasure of music.

Music is certainly valuable, but does that mean it should have a price?

To those who see music first as a business, that would make sense, but as cultural element that’s crucial to our societies, the idea that we should keep music behind a paywall for only those who can afford the right to listen seems insane. Yet this is the narrative we’ve lived under for the past several decades, since recorded music really took hold.

Independent artists like Amanda Palmer show us models do exist for artists to make a living from their music, while allowing everyone to listen to it, regardless of whether or not they have the ability to pay. A similar tactic is being employed by many small artists trying to grow their fanbases. They release their music as widely and as openly as possible, and while some fans do still buy the music, the artists see the free distribution of their music as an investment in their careers.

The necessity of labels is becoming increasingly dubious. They aren’t very interested in artists when they’re small acts who aren’t earning big money, which is why they focus their promotional budgets on their big names. The only time small artists get the attention of labels is if they earn that attention, doing most of the work on their own. What’s the point of signing to a label if they don’t provide much help to a small artist, especially when access to recording equipment is only getting cheaper, and the best way to find an audience is through playing shows and communicating consistently with fans on social media?

There is still a group of artists that benefits from the corporate music industry, namely the celebrity musicians, and a future music industry composed of independent bands would be unlikely to see artists with such large followers and high earnings. This explains why artists like Taylor Swift are speaking out against streaming companies, instead of against labels. They don’t want the industry to change significantly, because it works quite well for them in its current form.

The disintegration of the current music industry is inevitable, and anyone watching with an unbiased eye can see it.

A music industry for the masses

Artists deserve to be paid fairly for their work, but listeners also deserve to have access to music, as it’s an essential cultural component of our societies. Capitalism likes to put a price on everything, but maybe when it comes to music — or even to art in general — it’s time we change that trend, and institute a new system that works for the mass of people, not just for the dying labels.

When we think about what’s best for artists, we tend to focus on the multimillionaire celebrities who control much of the media’s attention, but only looking at what helps those who are already profiting from the system doesn’t help us find solutions to help small artists thrive. The idea of the starving artist has been with us for centuries: someone who’s so passionate about their art they accept the trappings of poverty in order to pursue it. Despite how much the world has changed, many artists still live this reality, or have to juggle their artistic pursuits with a low-paying job in the service industry.

By focusing so much on money, we make it impossible for some to share their creativity with the world. Photo: Flickr

Paul Krugman has noted that just as the general wealth distribution of our societies is becoming more unequal, so too is the distribution among artists. The big name artists are still increasing their share of touring revenue, so while access to the tools of production is becoming more democratic, the distribution of income seems to still be lagging.

But if we want to build a music industry that works for all artists, and provides open access for listeners, how would we have to change the current structure that’s so heavily based around big names and corporate profits?

There are a number of improvements we can fight for that will not only make the arts a more attractive pursuit, but will help artists — and everyone else — to lead better lives. These changes will help us break the shackles of money, and let people focus more on enjoying life and indulging their creativity rather than simply working in order to achieve a certain level of financial security.

The United States is the only developed country without a universal health care system, and it lacks other elements of the strong social safety nets other developed countries tend to have. It’s not often presented this way, because the media tends to focus on what works for the rich artists instead of the mass of artists, but Krugman says the same basic social guarantees that would help many of the country’s workers would also benefit artists. This should be obvious, but to some it isn’t.

There has been some progress on expanding health coverage in the United States with the passage of the Affordable Care Act (more commonly known as Obamacare), which essentially requires all Americans to buy health insurance while the government provides subsidies for those with low incomes, but even then people still have to pay for access to health coverage. Not only do they need to pay for their insurance plans, usually on a monthly basis, but there are still co-pays and other fees that citizens of countries with universal health coverage wouldn’t usually have to worry about. It also tends to link health coverage to employers, but since many artists are self-employed they’re left in a precarious situation.

Not only does this put a strain on the incomes of struggling artists, but it also weighs on their minds. Simply knowing that if they get sick they’ll have to try to find the money to pay for treatment and medication would weigh on anyone’s mind if they had limited savings or income, and the stress of having to worry about it can actually make someone sick. Consider instead someone with health coverage provided by their government. They never have to worry about how they’ll afford treatment if they get sick, and when they do get sick they simply have to make an appointment with their doctor, no questions (or money) asked.

Recent studies have shown that when people have health coverage, their mental health sees a notable improvement. This is a direct result of the reduced financial pressure people with low incomes feel when they have such coverage, as they don’t have to worry about how they’ll pay to see a doctor if they get sick.

There are a number of other examples of universal public services like health coverage that would go a long way to helping the mass of artists get by that the multimillionaires tend to ignore when talking about how the music industry needs to change to support “artists” because the financial concerns of big and small artists are very different. Artists who don’t have to worry about money are more likely to support something like the Affordable Care Act, as it is a step in the right direction and does result in some positive change, but for a small artist with an unstable income, it’s not enough, and being forced to pay for health insurance could actually put them in an even tougher financial situation.

A health care system that works for small artists, as well as the whole of society, as it’s hard to separate the two on this topic, would have several important traits:

  1. It would be free at the point of access. This would ensure that no one is turned away from a doctor because they can’t pay. It’s possible this should only be the case for certain services, but it should definitely be the case for anything essential.
  2. It would cover the full range of health services, which would result in numerous benefits. Instead of only treating people when they’re sick, health officials could take a greater role in promoting healthy lifestyles and providing preventative care. It would also ensure that people get treated when they’re sick, no matter what the cause, as delaying treatment can result in higher costs down the line.
  3. It would take the provision of health services away from for-profit companies. Without customers, there’s no profit. Therefore, for-profit companies have a financial incentive not to fully cure people, to drag out the course of their treatment, to overprescribe drugs, and to take other actions that don’t help people stay healthy or get better as quickly as possible.

Considering these principles, it’s worth looking at a few of the health care systems around the world to see what they’re doing that works well, but also where they can improve. The system Americans are most likely to have heard about is that of Canada, particularly when right-wingers warn of “socialized medicine,” but the Canadian health care system is far from the picture the wealthy try to paint in their attack ads.

A classic LP, if there ever was one. Photo: Wikipedia.

In Canada, citizens are covered by public health insurance provided by their provincial governments. Almost all the funding for the public insurance comes from general taxation, and essential services are free at the point of use. The Canadian system isn’t actually “socialized,” as most services are provided by private entities, which bill the public insurance plan. The fees clinics can charge for services are set by the government, and since all clinics are covered, Canadians can choose their family doctor, provided that doctor is accepting new patients. The Canada Health Act makes it illegal for private clinics to charge for any services that are covered by a public insurance plan, ensuring equal access regardless of a patient’s ability to pay. No one can skip the line just because they can pay out-of-pocket for the procedure (unless they cross the southern border).

While Canada’s public insurance covers most health services, it generally does not cover dental, eye care, or home care, with some exceptions for children, seniors, and low-income people. Canada is the only country with a universal health care system that does not cover prescription drugs, though prices are lower than in the United States. As a result of these areas of limited coverage, many Canadians also hold a private insurance plan, usually subsidized by their employer, to cover the services that aren’t provided by their public insurance. These plans usually have co-pays of between 20% to 50%. It’s less likely for the self-employed to hold private insurance, as it can be expensive when not subsidized by an employer, so most artists would only have public insurance.

Is Canada’s health care system the best in the world? No, but in general it works quite well for those it serves, covering basic health needs. However, a lack of coverage of extended services and prescription drugs leaves some people with a financial burden.

The English National Health Service (NHS) has its similarities to the Canadian system, but many differences, as well. Like the Canadian system, the NHS covers everyone, and doesn’t charge co-pays for visits to general practitioners. However, the NHS does cover a greater number of services than the Canadian system, including eye care, dental, prescription drugs, etc., but some do carry co-pays, with exemptions for children under 16, certain students, low-income people, women who are pregnant or who have recently given birth, and some other groups.

Drugs prescribed in NHS hospitals are free, while those bought outside carry a fee of £8.05, though this is rarely paid. In 2013, 90% of prescription drugs were dispensed free of charge. The NHS is objectively a better system than the Canadian one, as it covers a far greater number of services, leading people to worry less about what will happen if they have any health issues, and how they would afford to pay for such treatments.

The final health system we’ll review is that of France. Like the Canadian system, most French health care providers are private entities, but they bill the public health insurance. However, unlike the Canadian and English systems, coverage isn’t free at the point of access. Most health services and doctor visits have a co-pay, though many French citizens have private insurance to cover the difference. Low-income people are exempt from most co-pays.

Funding of the French health insurance system comes primarily from employer and payroll taxes, instead of from general taxation as in Canada and England. However, like other universal health care systems, the administration is incredibly efficient, unlike the convoluted private insurance system in the United States. The only real drawback of the French system is the presence of co-pays for far more services than in the Canadian and English systems, though their exemption for low-income people and system of private insurance to make up the difference for most everyone else goes a good way toward solving the issue of affordability.

While the United States doesn’t need to adopt the exact system of another country, looking at the examples that exist should show Americans how changing their system would result in great personal benefits. The current American system is built in a way that puts the profits of big corporations before the health outcomes of the patients it’s supposed to be serving. It needs a radical transformation that puts quality and affordability of care before profits. The elites will fight this, because the current system ensures they have some of the best health outcomes in the world, while the poor have health outcomes more like those of “third world” countries. No one should find this disparity acceptable, especially when it comes to health.

Universal health care systems work for average people, including those trying to make it in the arts. By removing the financial burden associated with health, they’re able to lead better lives, and put their focus on other activities instead of worrying about how they’ll pay if they get sick. While applying universal principles to health care is particularly important, they can also be expanded to things like childcare and post-secondary education, to give everyone a chance to succeed in life, regardless of income.

However, that doesn’t mean income shouldn’t be ignored, and focusing only on public services makes it hard to address. One of the biggest problems faced by small artists is a lack of income, and while the celebrities do like to talk about this side of the problem, they often do so in a way that will benefit themselves much more than any small artists. While big names are looking to maximize their earnings from royalties, small acts know they won’t make much money from recorded music, which is why so many of them share their music freely online. They make their money from touring and merchandise sales, and see giving their music away as an investment in growing their fanbase.

“I have to get to the next show somehow.” Photo: Flickr

Small artists can rarely make enough to survive on their music alone, and must take side jobs, which are often the source of the majority of their incomes, at least in the early days of their careers. Not only does this take away from the time an artist can focus on what they want to be their primary pursuit — their art — but it can demoralize them by drawing away their energy for tasks they wouldn’t otherwise be performing if it wasn’t for money.

If we really want to promote a strong cultural base for our societies, we need to ensure artists have the time and mental space to create, but the current system impedes this. Instead of fighting streaming companies, what we need to do is break the link between money and an artist’s ability to focus on their music, but how would we do this?

There’s a growing movement of support around the concept of a universal basic income, which would guarantee everyone a set income to cover the basic necessities needed to live, regardless of their employment status. Put another way, it ensures no one lives in poverty, but doesn’t provide them with a luxurious living either. A basic income isn’t meant to replace work, but provides a base level of economic security for everyone, where citizens can then work to achieve the kind of lifestyle they wish to live. This would remove the need of small artists to work their side jobs in order to get by, and would allow them to put their focus on what they really want to be doing with their lives — making art — and, by extension, making our communities more vibrant places to live.

The Alaska Permanent Fund is a good example of a programme similar to a basic income, in that it is a dividend paid to every resident as long as they live in Alaska for the calendar year, and plan to remain there in the future. It differs in that it’s paid in one lump sum, whereas a basic income would typically be paid in instalments over the course of the year. The amount of the dividend in 2014 was $1884, which is a great bonus, but not enough to pay basic costs of living.

The last time a basic income was on the agenda was in the 1960s and 1970s, and its supporters included Martin Luther King, Jr. and President Richard Nixon. There were several basic income trials held during that time, but the most notable was the Mincome trial held in Dauphin, Canada from 1974 to 1979. Unfortunately, the data was forgotten for decades, but in 2005, social scientist Evelyn Forget got access to the records, and published a report detailing her findings in 2011. One of the biggest arguments against a basic income is that it would reduce the incentive to work, but Forget’s findings show little change. Reporting on the trial for Motherboard, Whitney Mallett observed that

…the primary breadwinner in the families who received stipends were in fact not less motivated to work than before. Though there was some reduction in work effort from mothers of young children and teenagers still in high school — mothers wanted to stay at home longer with their newborns and teenagers weren’t under as much pressure to support their families — the reduction was not anywhere close to disastrous, as skeptics had predicted.

This information disproves the biggest argument against a basic income, and is backed up by the results of several trials that were held in the United States. A basic income provides only enough for a subsistence living, and since the vast majority of people want more than that, they continue working.

Forget’s research also showed improved health and educational outcomes among those who took part in the Mincome trial. An important aspect of those outcomes was an improvement in mental health, which, if you recall, is also a benefit of universal health coverage.

Since the recession of 2008–2009, support for a basic income has surged. Many Western countries are considering trials of their own. The Dutch city of Utrecht has announced a trial, and politicians in the Canadian provinces of Saskatchewan and Manitoba are calling for new trials. Switzerland is holding a referendum on whether to establish a basic income for its citizens, and Finland elected a government that supports a basic income.

The benefit of a basic income is that it would free artists from having to do work that doesn’t further their careers, while helping lift the mental burden that comes with worrying about how to afford food, rent, and other necessities. It also reduces the need to sign with a label, though there’s one final thing small artists should fight for to bring about an indie future: a further democratization of the tools of production.

Microphones are important to the recording process.

Technology has made it easier than ever for artists to record their music, share it widely to try to attract new listeners, and connect with their fans; but there are some things technology can’t do on its own, meaning there’s still a role for government to help in the democratization process. In many countries, there are already government agencies established to promote the growth of the arts. They provide a lot of great services, but their focus has to change. Right now they’re often too concerned with individual projects, and some agencies are particularly focused on the earning potential of projects, but this is not how art should be evaluated. Their mandate needs to be adjusted, so instead of trying to pick winners, their focus is on making the tools of production cheaper and easier to access for all artists.

There are a number of ways this can be achieved, and the following are some suggestions for the current state of affairs.

Free recording spaces

This seems the most obvious, and the one that will do the most to enable small artists to escape the clutches of a label. We’ve reached a point where anyone can do amateur recordings on their own, but it can still be rather expensive to buy the equipment to do professional recordings, especially if an artist doesn’t have a large following. This is probably the most attractive of the remaining reasons to sign to a label, despite the horrible contract terms, because they can provide access to professional equipment and the necessary financial support for artists to record their album.

Providing free recording spaces, stocked with the necessary instruments, equipment, and support personnel artists would need to make professional song, album, and video recordings would go a long way to putting the final nail in the coffin of exploitative labels. These spaces should be established in all major cities, and allow artists to book the time and equipment they need to make their recordings.

The Vancouver Public Library opened such a space in May 2015, which they call their Inspiration Lab, providing free access to four sound booths and a recording studio to anyone with a library card. Not only are they fully stocked with equipment to record and edit sound and video, but they have staff on-hand to assist artists with the equipment if they don’t know how to use it.

Another example of how such spaces could work are the YouTube Spaces that Google has established in a number of the world’s major cities. They’re open to any creator with a certain number of subscribers, who has good standing, attends the “Unlock the Space” orientation programme, and is at least 18 years old. Creators can then book recording times and attend events to network with likeminded people. The Spaces also provide free classes, some of which are open to everyone, regardless of subscriber count.

Without music, it’s tough for an artist to grow their following, but as it currently stands, recording can still be quite expensive. If we want to promote independence for artists, the most immediate step should be make it easy for them to make high-quality recordings.

Tour support programmes

We’ve already established that artists, big and small, make most of their money from touring, but it’s also one of the best ways for them to promote themselves and grow their following. However, touring can be an expensive proposition, and even with a basic income to cover their primary expenses, it would still be tough for them to afford to hit the road. This is another area where assistance could be provided, and could make a significant impact. The greed of labels has only increased in recent years, demanding 360 deals from small artists, which ensure the labels get a piece of an artist’s touring income, which used to be off-limits.

The exact details of such a programme would have to be formulated, but support could be provided in a variety of ways. It could involve allowing artists to rent equipment and instruments at reasonable prices, or even providing grants or interest-free loans to fund their touring efforts. The goal of the programme should be to make it easier for small artists to hit the road, allowing them to grow their fanbases, make some money, and increase their bond with their fans. An added benefit would be to ensure they don’t have to sign away a chunk of their earnings to a label.


Artists are passionate about their music and their careers, but sometimes they — like anyone — need someone experienced they can turn to for some advice. This can be for help with their music, a deal they’re offered, a path they’re considering, or any number of other things. The fact remains, sometimes it helps to have someone to turn to, and a mentorship programme should be established that recognizes this.

Something like this…or not.

It shouldn’t be like the relationship between the artist and their label handlers, who are more concerned with the commercial impact than what’s best for the music. Participation in the programme would be optional, for both artists and mentors, but it would provide benefits for each party. It would require only a small time commitment from the mentor, who would then get the personal satisfaction of helping a small group, and it would help them keep up-to-date on how the industry is working for small artists. For the small artists, they would have someone further along in their career to turn to for advice when they are uncertain about the best path forward.

The mentorship programme would also remove the need for the guiding hand of the label, and would promote yet another venue for artist collaboration outside the label structure.

It’s important that all of these programmes are broadly available, and not limited to projects that have the best opportunity for a return on investment, or to help those with big followings to grow them further. The point is to ensure small artists have equal opportunity to achieve their particular musical dreams, whether that’s to fill a stadium, or to have a small, close knit, supportive community.

The most important change for artists is to free them from the corporate structure that puts money before music, and has their art managed by an exploitative label.

The proposed policies would go a long way to turning the vision of an independent future for music into a reality. Universal health care would remove one of the key worries all people face in their lives: what happens when they get sick. But income is also a factor, and a basic income relieves this worry by guaranteeing artists a minimum standard of living. This would allow them to focus on their art, instead of having to waste some of their time working a side job, which could negatively impact their motivation and inspiration.

Broader societal changes will never be able to address the more precise needs of small artists, which is why specific programmes that target the music industry are still important. Ensuring equal access to recording and editing equipment not only relieves a financial burden, but takes away the need for a label. These recording spaces also have the potential to become larger community hubs, where artists can learn about their craft, and make friends with similar pursuits. Another programme should recognize the importance of touring both for an artist’s income and their ability to grow their fanbase by reducing the financial burden of going on tour. Labels can provide a certain degree of guidance for an artist’s career, but this can be done without the label through the establishment of a mentorship programme that pairs small artists with those further along in their career, to be there when the artist has questions or needs advice.

Not only is a better world possible, but an important piece of it is to empower artists to a greater degree than the current system is able to achieve. It’s impossible to put a price on the value music, and art more broadly, creates for our societies. The quality of our lives would be lessened without music, and the aforementioned policies would not only give us more time to enjoy them, but would allow more people to follow their artistic passions without having to seek the approval of a money-hungry corporate gatekeeper.

Technology has become a bigger threat to labels than they ever anticipated. Even now, it’s unlikely that they see their demise as a realistic probability, but it’s closer than ever. Labels keep pushing narratives that have backfired on them, and they’re playing an increasingly exploitative role in the industry as their desire to increase profits eclipses their stewardship of the art. Artists have not been ignorant to these developments, which have pushed even some of the most successful artists to turn on labels, calling out their predatory behaviours, if not completely cutting ties with them. Those artists are looking for a new way forward, and some trailblazers are setting examples for others who want another path.

How much longer the current dynamic can survive on its present trajectory is hard to predict, but artists need to look ahead at the possibilities technology is offering them, and help build a new industry that puts art before commerce.

The war against streaming is a distraction to try to stop people from seeing the real divide within the industry. It tries to portray streaming services as the enemy, and put labels and artists on the same side of the fight, but this isn’t where the lines are really drawn.

Artists have a choice. There are two paths they can fight for as we move forward. One retains the position of the labels as the dominant force in the industry. It allows their exploitative practices, like 360 deals and attempts to reduce the amount of revenue they have to share with other rightsholders, to continue, and possibly get worse. It allows them to continue signing small talents, then ignoring their potential until they’ve achieved success by their own work and initiative, allowing the label to take the majority of the profits from the artist’s hard work, while continuing to focus its attention and marketing budgets almost exclusively on celebrities who already have massive followings.

This what a world dominated by corporate labels and big name artists will become if their reign continues. Some artists may be too scared to move away from the old model, because at least it provides a predictable path and a faint hope of massive success one day in the future, but change is not only necessary, it’s more attainable than ever before.

The new industry we must fight for is one that dethrones labels and returns power to artists.

This dynamic is more unpredictable than the one offered by the corporate music industry, as there isn’t a primary route to success, but it allows artists to chart their own way to meet their unique goals. This could be scary, but it’s also incredibly liberating.

The independent path provides artists with more freedom than they’ve had in decades. It ensures they’re supported with programmes like universal health care and a basic income; and have access to the tools they need to improve their music, build their careers, and grow their followings. It does put a number of responsibilities on their shoulders, but labels are already doing this to artists, so artists may as well retain their rights if they have to manage their own brand and platform. There’s also the added bonus that if they do see any amount of success, they can choose to work with a company on their own terms for the tasks they don’t wish to handle themselves.

Artists have to choose: exploitation or freedom?

Will they continue being exploited by labels, or take their futures into their own hands? Independence will be daunting for some, but the proposed government supports are meant to provide a level of security to reduce their worries so they can focus on their careers. This is how a society really supports its artists: by granting them freedom and a degree of stability from which they can flourish. And artists respond by experimenting, creating, and ensuring what they produce is available to as many people as they can share it with.

Paris Marx writes about the growing divide within the capitalist system, the movements for alternative forms of economic organization, and ways of living that challenge traditional narratives. He occasionally makes videos on YouTube, and is very active in sharing news and opinions on Twitter.

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Information and statistics on global health care systems are from the Commonwealth Fund’s International Profiles of Health Care Systems, 2014.

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