music - who pays for what

Music: What do I pay for and who gets it?

When you listen to a song it’s sometimes a wonder how the artist actually benefits when it doesn’t feel like you pay much to listen, if anything at all. However, take a whistle stop tour of the music industry and make up your own mind…

A very basic breakdown

Firstly lets assume all the costs of 10 years of guitar lessons, the painful years of practice and hours of late night rehearsals and the hire of a studio to make a record has been covered. A typical band or artist then signs up to a publisher or music label that will publish and promote their music.

If they make a CD or Vinyl record and say it retails for $10 then the split is roughly 30% manufacturing, production and distribution costs, 20% for the retailer, 15-20% government tax, which leaves about 20-30% for the Publisher (or record label) to split with the artist, which they will often do on a 50/50 basis depending how popular the artist already is and therefore how much of a risk the publisher is taking or how much additional promotion work they may need to give to get the album out there.

So if the Chigwell Brass Bands’ first album sells 1000 CDs the band may receive about $100.

In the pre-online streaming days:

In those days, recording artists might get revenue from four different sources.

1, Royalties from the mechanical production of a device, like a CD or a Vinyl Disc (as described above)

2, Credit Royalties – when a song or piece of music is used in an advert or film, normally this is pre-determined price agreed with the publisher and the artist.

3, Broadcast Royalties – when a song is played for public broadcast like on the radio or some large venues. The publisher/artist normally gets a small micropayment every time the song is played, either in license fees or advertising fees.

4, Self publishing – where normally an online platform has been established and an artist can promote their own song and make it available on the sharing platform and people can subscribe and download directly with the majority of the subscription (per song) going directly to the artist.

Post–online streaming days:

Artists or more accurately publishers and record labels still produce music on devices, but now almost as common is to just download or access what you need when you need it.

There are still publishers or music agents involved but they needn’t be and music makers can put music up directly onto a host platform (Spotify, YouTube, Apple Music etc) to allow others to access their sounds. What they pay to the artist or the agency managing the artist varies, but if you think of it as an average of about $2.50 for an album or about 25cents per download of a single song, then you will get a general idea. The music industry in general was against this for several reasons;

  1. It’s difficult to police, i.e who has downloaded what.
  2. It’s a much smaller royalty
  3. It allows people just to pick the one track they like from an album containing 10 songs, for example.

The quick background of downloading music:

In the early days companies like Napster and Limewire (and again lots of others) came up with the idea, that you could share your digital music library with others and created a free peer to peer sharing service. Not only for music, but film and software and anything else digital. It took the governments and recoding artists companies about ten years to outlaw these activities and close this activity down and now in western countries they are largely reduced to illegal pirate sites, which you use at your peril, as not only are you breaking the local country law, but these sites are also peppered with viruses which can ruin you computer and any details you might have on it.

The present day (2020) music services are now streamed, this is a variation of the download services, but instead of the price per song, you purchase the license for the service and then get access to a library of 30-50 million songs. Currently this service costs about $10 for a month or usually half that for a student subscription. This means that the amount of revenue that goes to the artist becomes a calculation based on the amount of subscription money coming in, divided by the number of downloaded songs in that month and then multiplied by the number of plays that particular artist had that month. In general terms it amounts to about 0.5 cents per song, per streamed download, so when you listen to more than 1000 songs per month you are getting it cheaper! It does mean though for the Chigwell Brass Band they need to be getting at least 10,000 streamed songs per month to be making even $50. This is why so many bands now do big tours, sponsor products and headline festivals as it allows them to generate a much bigger revenue.

Many of yesterday’s rock gods made their millions through spending countless hours in the studio producing albums that in turn made agents and artists conspicuously rich, but today’s artists have to be far more creative when it comes to selling songs in order to receive the same $.

Brief comparison between the top music streaming services:

They are relatively all the same price for a monthly subscription (approx $10 per month), 50% off for students typically speaking. Most sites offer a limited free solution, being cross-subsidised by other subscriptions (Apple and Amazon) or adverts (Spotify). The free solutions don’t typically let you download songs to play offline/without internet.

  • Spotify, more or less the independent market leader, works on most platforms, i.e smart phones, laptop’s tablets etc, integrates with Google cast and Alexa, has a library of more than 30 million songs
  • Apple Music, integrated with itunes, plays on any modern apple based device. Integrated with Siri and Apple TV and has a library of 50 million + songs
  • Amazon Music,plays on most platforms and integrated with Alexa and Fire TV. 50 million + songs + radio stations.