It does come as a surprise that, despite being at the core of the music business, musicians get only 12% of the revenue.
A recent report from Citi bank which is an investment bank, published on Monday, brought to light a few key insights into how money actually travels through the U.S. music business in the current digital streaming era.
Like the film industry, music streaming platforms have seen a massive rise in recent times. CD’s are almost overshadowed, w.r.t sales along with Spotify being worth more than the entire music industry at one point. While online platforms are offering customers convenience and cheaper subscriptions models, they have without a doubt transformed the structure of the music industry’s revenue system in a way in which artists can make ends meet.
Hence apart from being present on music streaming platforms, touring has become one of the main sources of incomes for musicians. According to the Citigroup report, only 12% revenue actually went to musicians from the music industry’s total revenue of $43 billion. To break it down for you, that is just a little over $5 billion going to the people who are the core of the entire business.
Well, we are sure you want to know where does the rest of the money go? As per the report, a large chunk of the money is pocketed by middlemen, especially by those working in the distribution services like on radios, podcasts, record labels and other online distribution platforms.
12% sounds like a small amount, but, if you compared it to the revenue musicians got in the year 2000 which is 7%, this is an increase. The rise in this percentage could be owing to musicians jumping into the live music business. Perhaps, this approach is a great solution for the moment, however, it may not be the most viable option in the long run.
Very recently, James Blake openly discussed his personal history with depression and suicidal thoughts, which is now coming up even more from within the industry. Most of this stems from relentless touring.
Additionally, Passion Pit’s frontman Michael Angelakos also told Consequence of Sound in January – “The risks associated with being a commercialized artist and embarking on a typical album release, like endless promotion and touring, have nearly killed me”.
Apart from the insights on the revenue, the Citigroup report also included three possible solutions for the disparity in revenue:
- Vertical integration i.e. concert promoters like Live Nation teaming up with distribution platforms like Spotify
- Horizontal integration i.e. streaming platforms merging together
- ‘Organic vertical integration’, which entails services like Spotify moving into spaces traditionally handled by record labels.
It remains to be seen in the coming years how these type of consolidation strategies impacts the music industry, it’s musicians and its revenue. While we are waiting to see which one works best, which strategy do you think will work best? Tell us below!