There’s Gotta Be A Better Way To Pay Musicians!
Here’s a crazy stat for you. According to a music industry research project commissioned by Citi, only 12% of music revenue makes it back to the performers. And . . . wait for it . . . that’s actually an improvement over the percentages paid in previous years. How is it that the creators and performers of music are only paid 12 cents of every dollar they’re generating? The answer lines in the endless layers of middlemen who’ve burrowed into the music biz over the decades.
In the image below the “music industry” is an assortment of record labels, artist managers, concert promoters and trade groups like ASCAP and BMI. Each of these guys play some role in discovery new artists, producing music, distributing it and collecting revenue. But their business models were built to accommodate the physical music sales of yesteryear. Thanks to tech innovations artists are now able to produce studio-quality music on a laptop and use social media to grow an audience. According to Citi the last thing needed to directly link artists to their fans is streaming distribution and the resulting royalty payments.
Right now very few artists can thread the needle on all three of these business aspects. Once this starts to become more commonplace we’ll see the music industry’s middlemen become disintermediated. Then the 12% of revenue going back to musicians today will be a distant bad memory.