¶ Make Streaming (Listeners) Pay · 12 March 2024 essay/listen
I like legislation as a tool for social change, so I'm positively predisposed towards the Living Wage for Musicians Act as a tactic, and I agree with its goal of making it possible for more people to make better livings as musicians.
But I don't think this proposed law, as written, will work.
Here's how it would operate:
Music-streaming subscriptions in the US would have a federal government fee of 50% added to them...
This ought to be in the headline of every article covering this story. "Make Streaming Pay", the UMAW slogan for this effort, sounds like a vendetta against streaming services, especially coming from the same people who brought us "Justice at Spotify" previously, but as a music listener you should understand that the people who would pay this time are you. The proposed bill would add fees to music subscriptions. Fees are a well-established tactic, but not exactly a well-loved one. It's at least faintly ironic that Congress is scrutinizing Ticketmaster's excessive fees at the same time that this bill is proposing to add one to music streaming.
And 50% is a lot. A $10.99/month subscription would get an added $5.50 government fee, raising the total to $16.49. The bill even specifies a minimum of $4, so a $5.99 student subscription would rise to $9.99. While I don't think either of those are unreasonable prices for all the music in the world, they're giant relative jumps. I would fully expect them to be publicly unpopular as a proposal, and thus hard to find support for in Congress. If enacted, they would probably cause many existing subscribers to downgrade to free (ad-supported) alternatives. Enough people doing so could cancel out the monetary benefit, so this should not be proposed without careful modeling of likely price flexibility. I doubt that has been done, and certainly no evidence of it has been presented by the bill's advocates. I would also expect most or all streaming services to lobby vigorously against this change because of these effects, even though the fee itself is not paid by them. Except...
and music-streaming services would have a 10% tax on their "non-subscription" (meaning mainly advertising) revenue in the US...
You can't add fees to free, so here's the other half of the plan. Most streaming services already pay ~70% of revenue to licensors, keeping ~30% for themselves. A 10% tax on revenue thus cuts gross advertising profit by a third. Since Spotify (whom I single out here only because as a public company they report music-specific financial results, which Apple/Amazon/YouTube Music as divisions of larger companies do not) has mostly not turned a net profit at all, this proposed tax will almost certainly be taken as intractably punitive, and I expect all the services with ad-supported tiers to resist it. Spotify probably cannot afford to threaten to pull out of the US like it threatened to pull out of Uruguay when a (different) version of this idea was proposed there, and would presumably not want to increase their own prices again having only recently raised them in most countries, making it hard to take the tactic they are taking in response to a 1.2% tax in France. So I would expect Spotify to lobby against this as if it is an existential threat.
There's also a very important question here about what constitutes a music service, and in particular whether YouTube (not YouTube Music) and TikTok count. The bill doesn't address this, although the UMAW advocacy for it strongly implies that YouTube, at least, is meant to be included. I do not expect Google to quietly accept a 10% tax on any meaningful subset of YouTube advertising revenue.
which would be collected into (and by) a new government fund/agency...
Streaming music royalties are already split into three different components: to licensors, to publishers (for songwriters), and to performing-rights agencies (also for songwriters; it's a long story). This bill would add a fourth. That seems to me like the wrong direction, and grounds for skepticism even before we get into how the new fund would work. As an example it also implies that every country would need to create a similar fund of their own, although the bill as written seems to ignore the fact that it applies to the flow of money in only one country, while the music itself is global.
which would also collect and tabulate monthly streams by unique master recording...
This detail is unexplicated in the bill, but introduces a very serious technical requirement. Music is delivered to streaming services by licensors in releases composed of tracks, and it's normal for there to end up being many different tracks that have the same original audio, e.g. a single and that same song on the subsequent album and the same song again later on a compilation, and all these again in many different countries. Reconciling these requires audio-analysis software that can correctly match two tracks of the same recording even if they've gone through slightly different processing, and correctly differentiate between two different pieces of music even if they contain substantial similarity (like a song and a remix of it that adds a guest verse). And even after you've correctly matched tracks by their audio, their credits might differ, so you have to figure out which credits you're going to use. I can testify from 12 years of involvement with the process at the Echo Nest and Spotify that this is all not a trivial problem, and can be error prone even in a long-running production system. The administrators of the new fund are going to have to hire more programmers than they probably realize.
impose a cap of 1 million streams/month on each such recording...
This is arguably the most critical, progressive and interesting detail in the bill. Rather than just increasing all artists' current income by a small proportional amount, the bill attempts to specifically support artists who might not currently be making a living from their music, by effectively redirecting some or most of the money from songs with >1m streams back into the payment pool. This is why the recording-matching has to be accurate, but sadly is also the key to trivial manipulation of this scheme to evade its intent. Each detected "unique recording" is subject to a 1m cap, but it's not hard to produce multiple tracks that sound the same to listeners, but intentionally defeat the usual methods for automatic matching. Were this bill to be passed, I expect it would become normal practice to do this across releases and services, to make every track of the same recording register uniquely, so that each one gets its own 1m cap. The producers of very popular songs would have a strong incentive to also try to do it over time for each song during a given month, hoping to accumulate N million streams 1m at a time across N variations of the same song.
The 1-million-stream threshold here is arbitrary. The bill itself doesn't justify or explain it. Rep. Tlaib has mentioned in speaking about this bill that it takes 800,000 streams/month at a current average rate of $.003/stream to make the equivalent of minimum wage, which is correct math, but that's per artist, not per track. The unavoidable market truth about music (like most non-commissioned art) is that financial reward is not a function of quantity of labor. You can spend any amount of time making a song, and maybe nobody will play it. If we really want, as a society, to give people a living wage for the labor of making music, as opposed to lucking into popularity, then we need to spend our government energies on grants or Universal Basic Income, not on streaming taxes and fees.
and then divide payments proportionally by capped streams...
This sounds like just unremarkable process, but is sneakily the most serious flaw of the whole bill as written. The fund combines all streams from all services, and all money from all services, and distributes that combined money according to those combined streams. This sounds like the pro rata royalty-allocation method already in use by all major streaming services. The crucial difference, though, is that services do not do this with one big pool of money and streams, they do it with an individual pool of money and streams for each payment plan (in each country). This is essential, because the revenue per listener varies widely across countries and plans. A stream from a Spotify Premium subscriber in Iceland is worth considerably more than a stream from an ad-supported listener in India.
By combining all the streams and all the money, this plan would make it possible to use the cheapest form of artificial streaming to accumulate fraudulent streams that would share money from the most expensive ones, thus inaugurating a golden age of streaming fraud.
This is not only a fatal flaw of the bill as written, it's one that reveals that the writers of the bill do not know how the existing royalty methods work, and didn't consult with anybody who does.
90% to "featured" artists and 10% to "non-featured" artists...
It's a minor selling point of this bill that it would result in some royalties being paid to "non-featured" artists, like session musicians and backing vocalists, who do not (usually) get royalties at all from the current system. The amount is small, though, and administering it would be a procedural headache. Because those people don't currently get paid royalties, their participation isn't necessarily included in the licensors' metadata. And, conversely, because those people don't get royalties, they're currently mostly paid for their work in old-fashioned wages. Give them a share of the royalties and we might find that that becomes an excuse to pay them less up front, in the same way that tip workers are often given lower base wages.
The bill does not say how royalties would be split between multiple featured or non-featured artists. I guess it's loosely implied that it would automatically be equal shares to each, since there's no mention of any mechanism to specify otherwise. The bill does specify that "artists" means individual humans, not corporations or generative AIs (!), which seems to mean that bands are not part of this scheme, only each person one at a time.
And, notably, the bill as written specifically does not include songwriters. This is a little surprising to me, since I think of advocacy for higher royalty rates for songwriters as part of the same family of social-justice causes as higher royalty rates for performers, and songwriters get the smallest share of royalties in the current system. I'm not looking forward to the antagonism between "performers" and "songwriters" that this omission might provoke.
who sign up with the fund and provide payment information.
This, too, is both a distinguishing characteristic of this plan and a drawback. The whole point of this fourth royalty scheme is to route it around the first three, although in practice it's mainly the payment of recording royalties to licensors (and thus to labels) that the writers are trying to avoid. Labels, particularly major ones, often write artist contracts in which advances are paid up front, and artists not only get a small percentage of the royalties later, but even that small percentage is accounted for as repaying the advance as a loan. So an artist might, in practice, get no royalties for a while, or ever. (Although, again, they were paid an advance, and if their royalties don't earn back the advance, they don't have to repay it any other way.)
But, of course, you don't have to sign a label contract in order to release music on streaming services. DIY distributors either charge small flat fees, or take very small shares of your royalties. But labels provide services in addition to taking royalties (and paying advances), and maybe you want those. I suspect that musicians signed to major labels are mostly doing OK, at least temporarily during their maybe-short label tenure. And if they aren't, and their label contracts are why, maybe that's where the laws should be pointed.
But that means this fund is yet another thing an artist has to sign up for and manage, and which in turn has to manage and verify them. I have not found any good estimates of how many artists currently do not do the work to register their songs to collect performance and mechanical rights, and how often there are contradictions between ownership claims, but I'm sure both are common. There's precedent in performance-rights organizations for international cooperation, but I don't know if any of those operate on this scale, and even if they do, this bill doesn't propose to use them, so this new fund (and its equivalents in other countries, if they exist) would have to reinvent all of that process.
The stipulation about individuals, not companies, seems obviously like a preemptive attempt to keep labels from registering on their artists' "behalf" and collecting this new windfall too, but I'm not immediately convinced that won't happen somehow anyway. And indeed it might have to for the scheme to accommodate the estates of dead artists, whom I assume it doesn't intend to exclude.
Even if we imagine that nobody attempts to evade this rule, though, the existence of a fourth royalty that bypasses labels is likely to push labels, and the three major-label companies in particular, to object to this bill too. And were it enacted, I would expect to see labels begin to change the terms of their contracts to reduce or eliminate artist shares of the recording royalties since they're now supposedly getting this new Living Wage paid separately.
The notable thing this bill does not include is any mechanism or support for this claim that the UMAW, who collaborated on it, continue to make here:
Nor have I seen any explanation of why the suspiciously round penny is coincidentally the magic living-wage level, and I'm willing to bet a large number of pennies that no such explanation exists. There are many very-good bands who do not have 1 million streams total, all time, across all their songs on Spotify. That's not a multi-year living wage for a group of people even at a dime per stream.
But OK, it's easy to criticize. If I'm in favor of laws, and I share the goal of improving the lives of musicians, what should we do instead?
When in doubt, try to remove imbalances of power. Reduce complexity, reduce secrecy. Personally, I would start by trying to simplify and improve the existing royalty process, rather than adding another incompletely-thought out layer with uncertain consequences.
We got a good idea about how to do this, by accident, recently, when Spotify and Deezer and UMG collaborated to change their contractual rules for recording royalties to pay nothing to tracks that don't reach 1,000 streams over the course of the last year. This is a regressive measure I personally despise, but the interesting part is that they actually couldn't pay those songs nothing, because the performance and mechanical rates are set by law (at least in the US). If the recording rates were also set by law, those wouldn't have been subject to secret contract negotiations either. Moving all the rates into law would also allow them to be determined (and debated in public) as a coherent set, which would make a lot more sense. And while we're at it, we could eliminate the spurious performance royalties, reducing the number of royalty components to two, one for the performers and one for the songwriters. And, in fact, if we allowed artists to designate original songs, so that this information was passed on by licensors to streaming services, then both royalties could be paid at once for those tracks, reducing the reporting overhead for artists and services both, and recovering some of the money currently lost on the way to artists who never took the time to sign up for BMI or ASCAP.
Those simplifications would not, in themselves, provide a predictable living wage for all working musicians, either. But they would make the current streaming model less mysterious, and less beholden to secret agreements between a few giant corporations. Plenty more work would remain to be done. But that work would be easier think about, and easier to do. And less likely to produce earnest laws that probably have no chance of living up to their authors' hopes for them, or ours.
But I don't think this proposed law, as written, will work.
Here's how it would operate:
Music-streaming subscriptions in the US would have a federal government fee of 50% added to them...
This ought to be in the headline of every article covering this story. "Make Streaming Pay", the UMAW slogan for this effort, sounds like a vendetta against streaming services, especially coming from the same people who brought us "Justice at Spotify" previously, but as a music listener you should understand that the people who would pay this time are you. The proposed bill would add fees to music subscriptions. Fees are a well-established tactic, but not exactly a well-loved one. It's at least faintly ironic that Congress is scrutinizing Ticketmaster's excessive fees at the same time that this bill is proposing to add one to music streaming.
And 50% is a lot. A $10.99/month subscription would get an added $5.50 government fee, raising the total to $16.49. The bill even specifies a minimum of $4, so a $5.99 student subscription would rise to $9.99. While I don't think either of those are unreasonable prices for all the music in the world, they're giant relative jumps. I would fully expect them to be publicly unpopular as a proposal, and thus hard to find support for in Congress. If enacted, they would probably cause many existing subscribers to downgrade to free (ad-supported) alternatives. Enough people doing so could cancel out the monetary benefit, so this should not be proposed without careful modeling of likely price flexibility. I doubt that has been done, and certainly no evidence of it has been presented by the bill's advocates. I would also expect most or all streaming services to lobby vigorously against this change because of these effects, even though the fee itself is not paid by them. Except...
and music-streaming services would have a 10% tax on their "non-subscription" (meaning mainly advertising) revenue in the US...
You can't add fees to free, so here's the other half of the plan. Most streaming services already pay ~70% of revenue to licensors, keeping ~30% for themselves. A 10% tax on revenue thus cuts gross advertising profit by a third. Since Spotify (whom I single out here only because as a public company they report music-specific financial results, which Apple/Amazon/YouTube Music as divisions of larger companies do not) has mostly not turned a net profit at all, this proposed tax will almost certainly be taken as intractably punitive, and I expect all the services with ad-supported tiers to resist it. Spotify probably cannot afford to threaten to pull out of the US like it threatened to pull out of Uruguay when a (different) version of this idea was proposed there, and would presumably not want to increase their own prices again having only recently raised them in most countries, making it hard to take the tactic they are taking in response to a 1.2% tax in France. So I would expect Spotify to lobby against this as if it is an existential threat.
There's also a very important question here about what constitutes a music service, and in particular whether YouTube (not YouTube Music) and TikTok count. The bill doesn't address this, although the UMAW advocacy for it strongly implies that YouTube, at least, is meant to be included. I do not expect Google to quietly accept a 10% tax on any meaningful subset of YouTube advertising revenue.
which would be collected into (and by) a new government fund/agency...
Streaming music royalties are already split into three different components: to licensors, to publishers (for songwriters), and to performing-rights agencies (also for songwriters; it's a long story). This bill would add a fourth. That seems to me like the wrong direction, and grounds for skepticism even before we get into how the new fund would work. As an example it also implies that every country would need to create a similar fund of their own, although the bill as written seems to ignore the fact that it applies to the flow of money in only one country, while the music itself is global.
which would also collect and tabulate monthly streams by unique master recording...
This detail is unexplicated in the bill, but introduces a very serious technical requirement. Music is delivered to streaming services by licensors in releases composed of tracks, and it's normal for there to end up being many different tracks that have the same original audio, e.g. a single and that same song on the subsequent album and the same song again later on a compilation, and all these again in many different countries. Reconciling these requires audio-analysis software that can correctly match two tracks of the same recording even if they've gone through slightly different processing, and correctly differentiate between two different pieces of music even if they contain substantial similarity (like a song and a remix of it that adds a guest verse). And even after you've correctly matched tracks by their audio, their credits might differ, so you have to figure out which credits you're going to use. I can testify from 12 years of involvement with the process at the Echo Nest and Spotify that this is all not a trivial problem, and can be error prone even in a long-running production system. The administrators of the new fund are going to have to hire more programmers than they probably realize.
impose a cap of 1 million streams/month on each such recording...
This is arguably the most critical, progressive and interesting detail in the bill. Rather than just increasing all artists' current income by a small proportional amount, the bill attempts to specifically support artists who might not currently be making a living from their music, by effectively redirecting some or most of the money from songs with >1m streams back into the payment pool. This is why the recording-matching has to be accurate, but sadly is also the key to trivial manipulation of this scheme to evade its intent. Each detected "unique recording" is subject to a 1m cap, but it's not hard to produce multiple tracks that sound the same to listeners, but intentionally defeat the usual methods for automatic matching. Were this bill to be passed, I expect it would become normal practice to do this across releases and services, to make every track of the same recording register uniquely, so that each one gets its own 1m cap. The producers of very popular songs would have a strong incentive to also try to do it over time for each song during a given month, hoping to accumulate N million streams 1m at a time across N variations of the same song.
The 1-million-stream threshold here is arbitrary. The bill itself doesn't justify or explain it. Rep. Tlaib has mentioned in speaking about this bill that it takes 800,000 streams/month at a current average rate of $.003/stream to make the equivalent of minimum wage, which is correct math, but that's per artist, not per track. The unavoidable market truth about music (like most non-commissioned art) is that financial reward is not a function of quantity of labor. You can spend any amount of time making a song, and maybe nobody will play it. If we really want, as a society, to give people a living wage for the labor of making music, as opposed to lucking into popularity, then we need to spend our government energies on grants or Universal Basic Income, not on streaming taxes and fees.
and then divide payments proportionally by capped streams...
This sounds like just unremarkable process, but is sneakily the most serious flaw of the whole bill as written. The fund combines all streams from all services, and all money from all services, and distributes that combined money according to those combined streams. This sounds like the pro rata royalty-allocation method already in use by all major streaming services. The crucial difference, though, is that services do not do this with one big pool of money and streams, they do it with an individual pool of money and streams for each payment plan (in each country). This is essential, because the revenue per listener varies widely across countries and plans. A stream from a Spotify Premium subscriber in Iceland is worth considerably more than a stream from an ad-supported listener in India.
By combining all the streams and all the money, this plan would make it possible to use the cheapest form of artificial streaming to accumulate fraudulent streams that would share money from the most expensive ones, thus inaugurating a golden age of streaming fraud.
This is not only a fatal flaw of the bill as written, it's one that reveals that the writers of the bill do not know how the existing royalty methods work, and didn't consult with anybody who does.
90% to "featured" artists and 10% to "non-featured" artists...
It's a minor selling point of this bill that it would result in some royalties being paid to "non-featured" artists, like session musicians and backing vocalists, who do not (usually) get royalties at all from the current system. The amount is small, though, and administering it would be a procedural headache. Because those people don't currently get paid royalties, their participation isn't necessarily included in the licensors' metadata. And, conversely, because those people don't get royalties, they're currently mostly paid for their work in old-fashioned wages. Give them a share of the royalties and we might find that that becomes an excuse to pay them less up front, in the same way that tip workers are often given lower base wages.
The bill does not say how royalties would be split between multiple featured or non-featured artists. I guess it's loosely implied that it would automatically be equal shares to each, since there's no mention of any mechanism to specify otherwise. The bill does specify that "artists" means individual humans, not corporations or generative AIs (!), which seems to mean that bands are not part of this scheme, only each person one at a time.
And, notably, the bill as written specifically does not include songwriters. This is a little surprising to me, since I think of advocacy for higher royalty rates for songwriters as part of the same family of social-justice causes as higher royalty rates for performers, and songwriters get the smallest share of royalties in the current system. I'm not looking forward to the antagonism between "performers" and "songwriters" that this omission might provoke.
who sign up with the fund and provide payment information.
This, too, is both a distinguishing characteristic of this plan and a drawback. The whole point of this fourth royalty scheme is to route it around the first three, although in practice it's mainly the payment of recording royalties to licensors (and thus to labels) that the writers are trying to avoid. Labels, particularly major ones, often write artist contracts in which advances are paid up front, and artists not only get a small percentage of the royalties later, but even that small percentage is accounted for as repaying the advance as a loan. So an artist might, in practice, get no royalties for a while, or ever. (Although, again, they were paid an advance, and if their royalties don't earn back the advance, they don't have to repay it any other way.)
But, of course, you don't have to sign a label contract in order to release music on streaming services. DIY distributors either charge small flat fees, or take very small shares of your royalties. But labels provide services in addition to taking royalties (and paying advances), and maybe you want those. I suspect that musicians signed to major labels are mostly doing OK, at least temporarily during their maybe-short label tenure. And if they aren't, and their label contracts are why, maybe that's where the laws should be pointed.
But that means this fund is yet another thing an artist has to sign up for and manage, and which in turn has to manage and verify them. I have not found any good estimates of how many artists currently do not do the work to register their songs to collect performance and mechanical rights, and how often there are contradictions between ownership claims, but I'm sure both are common. There's precedent in performance-rights organizations for international cooperation, but I don't know if any of those operate on this scale, and even if they do, this bill doesn't propose to use them, so this new fund (and its equivalents in other countries, if they exist) would have to reinvent all of that process.
The stipulation about individuals, not companies, seems obviously like a preemptive attempt to keep labels from registering on their artists' "behalf" and collecting this new windfall too, but I'm not immediately convinced that won't happen somehow anyway. And indeed it might have to for the scheme to accommodate the estates of dead artists, whom I assume it doesn't intend to exclude.
Even if we imagine that nobody attempts to evade this rule, though, the existence of a fourth royalty that bypasses labels is likely to push labels, and the three major-label companies in particular, to object to this bill too. And were it enacted, I would expect to see labels begin to change the terms of their contracts to reduce or eliminate artist shares of the recording royalties since they're now supposedly getting this new Living Wage paid separately.
The notable thing this bill does not include is any mechanism or support for this claim that the UMAW, who collaborated on it, continue to make here:
The Living Wage for Musicians Act is built to pay artists a minimum penny per stream, an amount calculated specifically to provide a working class artist a living wage from streaming.The bill, as written, is very definitely not "built" to pay $.01/stream. UMAW's intro puts the current average stream rate at $0.00173 (including YouTube), and after an hour or so of spreadsheet noodling I could not see any way it would more than double this for the biggest beneficiaries (artists whose tracks all approach 1m streams without going over), even if nothing else in the industry changed in reaction. That would be $0.00346/stream, still a long way from $0.01. It doesn't help my confidence in UMAW's math diligence that their "calculator" to show the effects of this bill not only just multiplies streams by $0.01, but doesn't even bother to apply the 1m-stream cutoff.
Nor have I seen any explanation of why the suspiciously round penny is coincidentally the magic living-wage level, and I'm willing to bet a large number of pennies that no such explanation exists. There are many very-good bands who do not have 1 million streams total, all time, across all their songs on Spotify. That's not a multi-year living wage for a group of people even at a dime per stream.
But OK, it's easy to criticize. If I'm in favor of laws, and I share the goal of improving the lives of musicians, what should we do instead?
When in doubt, try to remove imbalances of power. Reduce complexity, reduce secrecy. Personally, I would start by trying to simplify and improve the existing royalty process, rather than adding another incompletely-thought out layer with uncertain consequences.
We got a good idea about how to do this, by accident, recently, when Spotify and Deezer and UMG collaborated to change their contractual rules for recording royalties to pay nothing to tracks that don't reach 1,000 streams over the course of the last year. This is a regressive measure I personally despise, but the interesting part is that they actually couldn't pay those songs nothing, because the performance and mechanical rates are set by law (at least in the US). If the recording rates were also set by law, those wouldn't have been subject to secret contract negotiations either. Moving all the rates into law would also allow them to be determined (and debated in public) as a coherent set, which would make a lot more sense. And while we're at it, we could eliminate the spurious performance royalties, reducing the number of royalty components to two, one for the performers and one for the songwriters. And, in fact, if we allowed artists to designate original songs, so that this information was passed on by licensors to streaming services, then both royalties could be paid at once for those tracks, reducing the reporting overhead for artists and services both, and recovering some of the money currently lost on the way to artists who never took the time to sign up for BMI or ASCAP.
Those simplifications would not, in themselves, provide a predictable living wage for all working musicians, either. But they would make the current streaming model less mysterious, and less beholden to secret agreements between a few giant corporations. Plenty more work would remain to be done. But that work would be easier think about, and easier to do. And less likely to produce earnest laws that probably have no chance of living up to their authors' hopes for them, or ours.