The music business is thriving. In 2024, Spotify paid out over $10 billion to the music industry. This number sounds huge, but the reality for songwriters is not as bright. The music industry's revenue has skyrocketed in the past decade. In 2024, nearly 1, 500 artists made over $1 million in royalties from Spotify alone. Independent artists and labels collected more than $5 billion from the service. However, the money doesn't always reach the artists and songwriters directly. Instead, it goes to rights-holders, who then distribute the money to artists and songwriters after taking their cut.

    The way royalties are divided is complex. The money is split among labels, publishers, performing rights organizations, and other parties. Songwriters, who are at the bottom of the streaming economy, get only a small part of the total revenue. According to a 2024 report, the approximately $0. 004 generated per stream is divided thus: the recording side (including the label, distributor, and artist) gets 56%; the streaming service gets 30%; and the publishing side (including the publisher, the performing rights organization — such as ASCAP or BMI — and the songwriter) gets just 14%. Of that 14%, the songwriter gets 68%, the publisher 17% and the PRO 15%.

    The issue of unfair royalties is not new. The way publishing rates are set is outdated and has been criticized for years. The Copyright Royalty Board, which sets these rates, has been under fire for its old-fashioned process. In recent years, songwriting and publishing streaming rates have been rising, but the increase is not enough to make a big difference for songwriters. The payment system, which was created when streaming generated so little money, is in dire need of revision. There are plenty of ideas and proposals for a new system, but those in charge need to prioritize the people who create the music that this entire business is built upon.

    The music industry is a big business, but it's not always fair to those who create the music. Songwriters are often left with the smallest share of the pie. This is a problem that needs to be fixed. The music industry needs to find a way to ensure that songwriters are fairly compensated for their work. This is not just about money, but about recognizing the value of creativity and the importance of songwriters in the music industry.

    Spotify has faced criticism for its recent music-audiobooks bundle, which Billboard estimated will decrease the amount of royalties paid to music companies by $150 million over the next year. This move may have pleased shareholders, but it was a big loss for music creators. Streaming has saved the music industry after a 15-year decline that literally cut its total value in half. But the payment system needs to be updated to ensure that songwriters are fairly paid for their work. The focus should be on the creators, not just the shareholders who profit from their music.

The Music Money Maze

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