Hypothesis:

Many streaming platforms promote the idea of a safe and fair platform that stimulates a creative environment for the artistic community. However, the widely used Pro-rata distribution model does not reflect this concept and often times has been found to grossly underpay the vast majority of hardworking artists. I propose that a hybridized user-centric model (Selectively picking the best aspects out of the pro-rata & user-centric models) would benefit musicians and content providers as a whole, rather than our current system which only rewards the top 1%, thereby promoting a more beneficial environment to support creative endeavors which would incentivize more artists to follow suit.

 Proposal Outline: 

Artists > Streaming Services > Content Views > Pro-Rata vs. User-Centered > Payout Total: Conclusion.

*Apologies,  my diagram isn’t the best quality. I’ll try to update this with an easier one to read.

Introduction:

The formation of the internet introduced a big shift in the way people consume content. A 3^rd revolution based around digital technology and the Internet of Things (IoT) has birthed the new idea of a shared economy along with it. Music has been in the forefront of this radical new concept by allowing content providers to upload their content with nearly zero marginal costs, in many instances. (Rifkin, 2014) This decentralization has allowed many independent artists to flourish by cutting out the middlemen in the equation and allowing artists to benefit more directly from the profits. However, many DSPs (Digital Service Providers) are still holding onto a centralized model of payment distributions that does not accurately reflect user interests (Dimont, 2018). From a moral and economical position, I propose that we modify the current models to compensate the artists more accurately for their viewer counts by reformulating subscription payments to those artists who individuals actually spent time listening to, rather than allocating the sum of all user subscriptions towards a small fraction of artists that amass the highest volume of streams.

Methodology:

Types of Streaming Royalties

• , S. (2020, April 4th). ROYALTIES FOR STREAMING & THE MUSIC MODERNIZATION ACT. Retrieved from https://gabriellaksmith.com/: https://gabriellaksmith.com/wp-content/uploads/2020/04/Music-Business-II-Final-Paper.pdf

The rise of music streaming services, claims about low streaming rates, & distribution of streams across the ‘artists’ or musicians

• Hesmondhalgh, D. (2021). Is music streaming bad for musicians? Problems of evidence and argument. New Media & Society, 23(12), 3593–3615. https://doi.org/10.1177/1461444820953541

Who earns the most income (Spotify)?

• https://edm.com/industry/spotify-highest-earning-artists

“Monthly subscription rates to individual users…number of subscribers to the leading music streaming services.”

“Variation in the rates payable to the major record labels in the streaming market…changes within each year.”

“The total plays needed to earn the US Minimum Monthly Wage in 2019.”

• Towse, R. (2020). Dealing with digital: the economic organisation of streamed music. Media, Culture & Society, 42(7–8), 1461–1478. https://doi.org/10.1177/0163443720919376

Average stream pay-out in 2013

• Dimont, J. (2018). Royalty Inequity: Why Music Streaming Services Should Switch to Per-Subscriber Model. Retrieved from Hasting Law Journal: file:///C:/Users/Nevin/Downloads/69HastingsLJ675%20(1).pdf

Market Distribution

• Im, H., Song, H., & Jung, J. (2020). The effect of streaming services on the concentration of digital music consumption.Information Technology & People, 33(1), 160-179. doi:http://dx.doi.org/10.1108/ITP-12-2017-0420

Discussion:

The strength of the studies is valid and acceptable on a large, generalized, scale. However, more research will need to be conducted in order to understand smaller variables surrounding the study (such as uncommon habits and specific traits about groups of people). Furthermore, the amount of revenue from advertising was not accounted for in the studies.

Streaming services will need to show more transparency with their numbers in order to reform the current system. However, the evidence does show that there is a need for reform in the way artists are compensated for their work.

If a new model is ever adopted, then more research will be needed in order to thoroughly examine its effectiveness.

References:

C., S. (2021, March 9). SPOTIFY'S 10 HIGHEST-EARNING ARTISTS HAVE RAKED IN A COMBINED $337 MILLION. Retrieved from edm.com: https://edm.com/industry/spotify-highest-earning-artists

D., H. (2020, September 19). Is music streaming bad for musicians? Problems of evidence and argument. Retrieved from https://journals.sagepub.com/: https://journals.sagepub.com/doi/10.1177/1461444820953541

Dimont, J. (2018). Royalty Inequity: Why Music Streaming Services Should Switch to Per-Subscriber Model. Retrieved from Hasting Law Journal: file:///C:/Users/Nevin/Downloads/69HastingsLJ675%20(1).pdf

G., S. (2020, April 4th). ROYALTIES FOR STREAMING & THE MUSIC MODERNIZATION ACT. Retrieved from https://gabriellaksmith.com/: https://gabriellaksmith.com/wp-content/uploads/2020/04/Music-Business-II-Final-Paper.pdf

HELLEMANS, A. (2015, April 14th). Jeremy Rifkin on the Internet of Things and the Next Industrial Revolution Will the Internet of Things be a technological and economic panacea? Retrieved from https://spectrum.ieee.org: https://spectrum.ieee.org/jeremy-rifkin-on-the-internet-of-things-and-the-next-industrial-revolution

Im, H. S. (2020). The effect of streaming services on the concentration of digital music consumption. Retrieved from Information Technology & People: http://dx.doi.org/10.1108/ITP-12-2017-0420

Rifkin, J. (2014). The Internet of Things, the Collaborative Commons, and the Eclipse of Capitalism. In J. Rifkin, The Zero Marginal Cost Society (p. 368). United States: St. Martin's Publishing Group. Retrieved from https://www.google.com/books/edition/The_Zero_Marginal_Cost_Society/L6afAgAAQBAJ?hl=en&gbpv=1&dq=+jeremy+rifkin+shared+economy&pg=PR4&printsec=frontcover

Towse, R. (2020, June 10). Dealing with digital: the economic organisation of streamed music. Retrieved from https://journals-sagepub-com.ezproxy.fhsu.edu/: https://doi-org.ezproxy.fhsu.edu/10.1177/0163443720919376