Being an ethical music lover in the age of streaming can feel bewildering. We have almost all of the music ever recorded (though not necessarily the best-sounding versions of it) at our fingertips all of the time. But we have no idea how much, if at all, our clicking “play” will benefit the people who created it.
It’s a well-known fact that musicians, even seemingly popular ones, make very little from streaming. That’s not because there’s no money in streaming. It’s because that money is going to the platforms and (especially) the labels, not the artists.
This has made it difficult for even moderately popular artists to eke out a middle-class living. Without that, it’s hard to see how music as we know it persist. As David Byrne wrote in an insightful 2014 essay, “If consumers and corporation owners are benefiting from this technology — which seems to be the case — but artists, the people who actually create the stuff, are losing out — then the current model wouldn’t seem to be sustainable: the content will run out eventually.”
What should the ethical music fan do to forestall that dim fate?
Given that streaming is here to stay, a good first step is selecting the service that pays artists best. The biggest player in the streaming industry, Spotify, is among the worst offenders when it comes to underpaying artists. By most accounts, Qobuz pays artists the highest rates per stream. For audiophiles, it also has the added bonus of offering true — that is, non-MQA — lossless hi-resolution audio.
Beyond choosing the best service, fans can support artist-led organizations, like the Union of Musicians and Allied Workers, pushing for higher streaming royalty rates and more equitable models of divvying up streaming revenues.
At first blush, it might seem like buying music is the solution to the economics of streaming, but it’s not as simple as that. Today, only six percent of the average musician’s income comes from streams and sales of their recordings. “Consider, for example, U2, which made $54.4 million and was the highest-paid musical act of the year in 2017…,” Business Insider noted. “Of their total earnings, about 95%, or $52 million, came from touring, while less than 4% came from streaming and album sales.”
It’s tempting to blame that on the rise of streaming. However, history is full of examples of famous artists who got ripped off in the “good old days” before streaming. The reality is that most musicians have never made much from the sale of their music. According to The Root, “for every $1,000 [of physical media] sold, the average musician gets $23.40.” Even that’s somewhat misleading, since it’s decade-old data and an aggregation of the entire industry. Many artists end up with much less, or even in debt to their label.
For artists, the economics of physical media are bleak. As Bandzoogle’s Chris Vinson illustrated:
Let’s say your CD is for sale in stores at $16.00 and that you are a band of 4 that also writes their own material. Your deal is to receive a royalty rate of 11%, but your producer takes 3% of that. So in the end you make 8% net royalty. $16.00 – $8.32 (30% for retailers, 22% for distributors) = $7.68.
Let’s round this off to $8.00 (a very optimistic round up by the way) $8.00 - $2.00 (25% for packaging deducted by the label) = $6.00 X 8% = $0.48. So you make $0.50 per CD sold.
Now let’s say you sell 500,000 copies. So that means you have $250,000 coming to you, right? Nope. Let’s see what else is taken off. In many cases the record label will take another 15% is deducted for promotional and review copies for radio and magazines. $250,000 – $37,500 (15% for promo copies) = $212,500 In addition to that the record label has to take their royalties. That’s another 30% of $212,500. $212,500- $63,750 (30% for record label royalties) = $148,750.
Not as common anymore, but still in practice is the deduction of freebies and returns. What usually happens is that a retail store will [order] X amount of copies, but what happens when they don’t sell? They get returned. And who ends up paying for this? Yup, you guessed it, the artist. $148,750- $14,875 (10% for returns) = $133,875.
Then there are recording studio costs that include the engineer, equipment rentals, and studio costs. With the advancements in the digital recording world studio costs have decreased, but let’s just say you spent $75,000. $133,875- $75,000 = $58,875.
And who got you the deal? If a manager was involved, you can guarantee he will take 20% commission. If you are a multi-platinum selling artist, then maybe the rate drops to 15%. $58,875- $11,775 (20% to manager) = $47,100.
And now let’s say you split the band’s earning evenly. Since there are four members in the band, you’ll split the amount earned 4 ways. $47,100 / 4 = $11,775.
As Vinson notes, illustrations like the above understandably make music fans cynical about whether it really matters if they turn to streaming or even piracy instead of clicking “buy.” As I’ll discuss in the second part of this post, there are still plenty of good reasons (ethical and otherwise) to buy music in the age of streaming. (For starters, it’s important that producers, recording engineers, and mastering engineers get paid, and — especially for audiophiles — that high-quality reissue labels stay in business.)
When it comes to supporting artists, however, the reality is that fans need to find more direct ways than streaming or buying music through common retailers. One way is to purchase music through Bandcamp and other outlets that give much larger shares of sales to musicians. However, if the music on Bandcamp was put out by a label — as opposed to artists themselves — then the artist might not get much of that revenue, either.
In recent decades, touring has been the most dependable source of revenue for artists. According to a 2018 Citigroup report, total “consumer outlays” on music reached an all-time high of $20 billion in 2017. Artists made just one-fourth of that total, and the “bulk” of that came from touring. According to Future of Music Coalition data, live performance composes 27 percent of musicians’ income, the largest single share.
Like much of the music industry’s economics, it’s almost impossible to cite firm, generalizable figures. While it seems clear that artists get a far larger share (perhaps even a majority) of gross ticket sales than gross album sales, the profitability of touring varies widely by the type and size of artists. While superstars and some legacy acts can sell out arenas with three- and four-figure ticket prices, netting millions, smaller musicians may struggle to break even at the end of a tour once food, lodging, transportation, and other expenses are subtracted. As Dawn Barger, the manager of The National — a band I once saw with my dad and 50 other people in a Cleveland bar — explained to NPR, “If you look at the finances of having a band on the road at the small club level...you're barely covering costs in a lot of cases…. I mean, if you're selling out every night, you're probably supporting yourself and you're able to quit your job, but you certainly have roommates, you're barely getting by, you're watching how many hotel rooms you get each night.”
So, while you can be confident that (most of the time) the artist is getting a larger percentage of your ticket purchase than your album purchase or stream, live performance isn’t a certain moneymaker for every artist. The COVID-19 pandemic only exacerbated this.
That leaves one more big way to support artists you love: merchandise. Merch tables at concerts have always had the potential to make or break the profitability of a tour for an artist. But, particularly during COVID, online merch sales have become an even more central revenue stream for artists.
Today, an artist’s record may, in economic terms, become a money-losing vehicle for selling money-making merch. As Fader magazine’s Shaad D’Souza quipped, “The fact that the sale of t-shirts has become as (if not more) important than the sale of digital downloads or CDs is a bizarre and unlikely reality.”
That’s because, even though it may involve some risk due to up-front costs, merchandise offers a relatively stable and controllable profit margin per item to artists. As Vanessa Ferrer, a former artist manager and founder of Merch Cat, told Mel magazine, “It takes around 3,400 streams on Spotify to make $15. You can make $15 selling one shirt.” According to Ferrer, t-shirts and tote bags tend to have the best return on investment for an artist, because they cost less to produce than hoodies and other items. In most cases, then, hopping onto your favorite artist’s website and buying a t-shirt might be the best way to support them in the streaming era.
Artists are also finding new ways to use technology to connect with fans and make a living, like pay-per-view performance streams or Patreon and Substack subscriptions. Like buying merch, those can be great ways to give money directly to artists you love.
Finally, fans can also become more understanding of artists’ accepting endorsement deals or allowing the use of their songs in commercials. As someone who came of age with the pejorative “sellout” entrenched firmly in his mind, I still cringe when I hear a beloved artists’ music in a commercial. Back in 2007, one of my favorite artists, Wilco, had to release this frank statement explaining their decision to license their music to Volkswagen:
As many of you are aware, Volkswagen has recently begun running a series of TV commercials featuring Wilco music. Why? This is a subject we've discussed internally many times over the years regarding movies, TV shows and even the odd advertisement. With the commercial radio airplay route getting more difficult for many bands (including Wilco); we see this as another way to get the music out there. As with most of the above (with the debatable exception of radio) the band gets paid for this.
To a certain extent, Wilco’s need to defend itself seems quaint 15 years later. When Bob Dylan — who clearly doesn’t need the money — is appearing in commercials left and right, it’s hard to fault struggling smaller artists with grabbing whatever income they can. Meanwhile, the constant slurry of sponsored content and targeted ads populating our social media timelines has made the once-clear distinction between art and commerce seem ever-more-blurry.
So, where does that leave the ethical music fan?
They should be mindful of the real economic struggles facing most artists and work to contribute what they can, when they can, by the most direct means possible. That might be subscribing to a newsletter, buying a t-shirt, or purchasing a Bandcamp download, depending on the particular artist. (But buying merch directly from an artist’s site is usually a safe bet across-the-board.)
This might seem like it’s a bleak conclusion for audiophiles who prize owning media. But in the second part of this post, I’ll lay out why buying music is still important and how I think about piracy and used sales in the era of streaming. In the process, I’ll go over the ethical and practical considerations that go into tracking down all of the various digital copies of albums for my TBVO columns, how the cost of that contributed to my creating the donation-supported Club TBVO, and why (despite that) I’d still rather you buy something from your favorite artist than donate to Club TBVO (though I won't argue if you do both!).