Business

The Public Supports Independent Artists, According to a New Survey. What Does That Mean?

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An online survey of 2,200 U.S. adults in June 2021 found that 86% of respondents believe artists should control their music rights -- the responses are nearly the same across age groups -- and 70% believe music companies should treat and compensate the artists they represent fairly.

Downtown Music Holdings, a conglomerate of independent music companies that ranges from music publishing to digital distribution, commissioned the survey to shed light on the consumers’ opinions about changes in the global music business, CEO Justin Kalifowitz said in a statement. “Given these shifts occurring have a direct impact on consumers' own enjoyment of music -- from the type of music they engage with to when and how they access music -- we thought it made sense to gain a better understanding of consumer sentiments and habits around music consumption and prominent industry trends.”

It’s not that people generally have a dim view of major record labels. The survey found that 19% of people surveyed had an unfavorable view of major music companies compared to 8% for independent music companies. Favorable opinions were surprisingly close: 54% for majors versus 59% for independents. Each type of company had a “no opinion” response (28% for majors and 33% for independents). But the survey suggests the public doesn’t exactly trust the majors: 60% of respondents believe artists should determine what they are paid by streaming services compared to 32% for streaming services and 30% for major labels (respondents could choose more than one option).

Of course, the definition of fair compensation is elusive and varied. In one context, fair is used to describe the accuracy of payments -- the use of blockchain technology to track royalty splits would ensure proper payments to all parties, for example. In another context, fair means equitable -- an independent artist should receive the same royalty rate as an artist on a larger label that negotiated a better deal with a streaming service. Another use of the word fair means sustainable -- artists should receive royalty rates that provide something akin to a living wage. A user-centric royalty scheme -- artists are paid based on how many times a specific user streams their music -- fits this definition.

The report also revealed a paradox of public support for independent artists: even though seven out of 10 people want independent artists to make more money from music, 28% of music streamers use the free version of a service rather than subscribe to its paid tier. People certainly listen to music in high numbers: nine out of 10 respondents said they are frequent music listeners (surveys typically find that over 90% of Americans listen to the radio every week) and 54% of people listen to music multiple times per day. But given that free options pay artists far less than paid version, people could do more to help artists make more from their music. For those free listeners, music streaming services such as Spotify and Pandora provide free listening.

There’s also a disconnect between support for better compensation and understanding of how royalties are paid. When asked how much music streaming services should pay artists as a percentage of their revenue, only 12% of respondents replied 76% or greater, and 46% believe artists should receive 50% or less. Subscription services typically pay artists 70% of total revenues, whether from subscription fees or advertising sales. The average American cannot be faulted for not understanding the financial breakdown of streaming revenue. Instead, the survey suggests people can generally support fair compensation of musicians without needing to know the complexities of recording contracts and royalty schemes.

The larger question is how to convert public support for independent artists into more money in those artists’ pockets. Public support doesn’t affect how labels negotiate with artists. When music streaming services negotiate with record labels, distributors and rights groups such as Merlin, public sentiment doesn’t come into play. Music streaming services could take the survey information to heart, however. Playlists and radio stations dedicated to independent artists could find a welcoming audience.

Public sentiment might transfer into government action, however, and may have helped spur government intervention. From November 2020 to March 2021, the U.K. Parliament held seven hearings about the economics of streaming services’ payments to artists. Then on June 2, 2021, the head of the the House Judiciary Committee sent a letter to Spotify CEO Daniel Ek seeking information about its Discovery Mode, a program in which artists swap promotion for a lower royalty rate that “set in motion a ‘race to the bottom’ in royalty payments,” the letter stated.

Congress definitely listens to record labels and music publishers’ complaints about digital services, but they should be acting on behalf on their constituents. Then again, Downtown’s survey found just 12% of respondents believe the government should determine fair royalty rates.