How Streaming Changed the Financial Lives of Songwriters.
Pre-Digital Era Revenue for Songwriters
In the era before digital dominance, songwriters negotiated contracts with publishing companies, generating hefty advances with post-recoupment earnings on performance and mechanical royalties as well as sync fees. Radio was a major economic engines for writers scoring hits, but because physical copies were sold so widely, even writers who nabbed the 12th song on a successful record were living comfortably.
Let’s examine one examples.Diane Warren is a prolific songwriter known for her hit "Un-Break My Heart" performed by Toni Braxton. With 10 million copies sold worldwide and Warren being the sole writer of the track, we can assume Warren has generated a jaw dropping amount of revenue from this song alone. Hits have financial implications.
Counting Pennies: Songwriter Revenue in the Streaming Era
Fast forward to the streaming era and the economics have drastically shifted. Songwriters now contend with fractions of a cent per stream, as well as a significant reduction in the sale of physicals, significantly impacting their income. A song accumulating one million streams on a major streaming platform might translate to approximately $3,000 in earnings for the songwriter, and that’s if they don’t share the publishing or master rights with any other collaborators!
Like other industries in the wake of the 2008 recession, the middle class in the music industry has been carved out. Now, you must be operating at the level of hitmaker in order to make a livable wage.
To understand the granularity of streaming revenue, let's break it down further. On Spotify, a leading streaming platform, the average per-stream payout hovers around $0.0035. This implies that a songwriter would need approximately 286,000 streams to earn a modest $1,000. This microscopic per-stream rate underscores the challenge songwriters face in monetizing their art in the current streaming paradigm.
David vs. Goliath: Songwriters Battling Tech Giants
Examining the power dynamics reveals a significant imbalance between streaming platforms and songwriters. Despite platforms like Spotify reporting revenues of $9.5 billion in 2021, the earnings per stream remain disproportionately low for songwriters. This underscores the uphill battle songwriters face when negotiating for fair compensation, with tech giants often holding the upper hand. The need for advocacy and renegotiation of terms becomes evident as songwriters navigate this uneven terrain.
Luckily, in 2023, The Copyright Royalty Board, the federal body in the U.S. in charge of establishing statutory rates, ruled in favor of a pay raise for songwriters going as far back as 2018. The CRB decided to move that percentage figure up from 10.5% to 15.1% of total revenue across the five years between 2018 and 2022. It was the largest rate increase in the history of the CRB.
Hopefully, the federal government continues to establish raises in songwriter revenues and the songwriter community can unionize to leverage collective bargaining in order to set better rates themselves.
