10 steps to make the most of streaming

Streaming reform to maximise revenues for artists is one of IMPALA’s top priorities. Seeing music services as partners, IMPALA calls for increased subscription prices, fair digital royalty rates for artists, changes to how allocate revenues, bespoke deals for fans, and a higher share for master rights, among other proposals for a fairer, more dynamic market. We issued a new call to action (infographic here and below) on April 2023 titled It’s Time to Challenge the Flow #2 – Revisiting how to make the most of streaming. This followed a month-long review process launched on the two-year anniversary of our first plan launched in March 2021. Our plan was also featured in an op-ed for Billboard in September 2023. 

Since the release of our first plan, we saw a lot of proposals from different parts of the market, echoing IMPALA’s original analysis. Two years after, despite the dazzling figures, the European recorded market is only at 42% of what it was at its peak when adjusted to inflation, and many of the barriers and problems we identified remain in place. A lack of adaptation to economic realities, bad practices (ranging from streaming manipulation, value gaps which continue to exist to payola-like initiatives), or the monolithic “all you can eat” consumption model, whose price has simply never changed, all contribute to a very worrying paradox. Creativity is thriving. Never to this day, has so much music been available to fans. And yet, its value has never been lower.

Aiming to make streaming fairer and provide a dynamic, compelling and responsible future for artists, labels and for fans, our new recommendations all build on IMPALA’s initial plan, and are based on three key themes:

  • Getting more money into the market and making sure there is no dilution of revenues
  • Changing how revenue is shared
  • Boosting diversity, transparency and climate action

It is high time to grow revenues for all, and a key way to achieve that is by contesting the status quo set by the current subscription model. It has been ruling over the streaming ecosystem for the past decade, and this is where it belongs. Increased subscription prices and bespoke deals for fans are two of our new recommendations. It will need careful planning and support from the sector, but we believe it is essential.

With market studies showing an overall decline in the master right share for labels and artists in recent years, IMPALA’s plan questions whether this share is being undervalued. Addressing this question is crucial for investment in new talent to continue, which is even more important as back catalogue continues to dominate music consumption in general. 

This is also why we continue to oppose so-called “equitable remuneration” (for performers to negotiate with services for a parallel fee – for more on IMPALA’s position on this see here), which would reduce capital for investment in new artists and projects and would not result in greater pay-outs to artists. This also links to our work on equity, diversity and inclusion, which is flagged in the section on “cutting the digital pie – what is equitable” in IMPALA’s second annual report on this area. Ben Wynter – AIM Entrepreneur and Outreach Manager, co-founder of POWER UP and founder of Unstoppable Music Group sums up his views on streaming reform and equitable remuneration:  “We need to ask ourselves what the long term effect will be on business, investment, creativity and innovation. For example “equitable remuneration” would inevitably lead to smaller label advances and lower royalty rates, which disproportionately affects certain groups. We need more resources for investment in new artists and projects, not less. We also need to think about artists who prefer to own their rights. Exclusive rights are essential for artists and labels and trying to pour everyone into a single mould is simply not an inclusive approach.”

We continue to believe that modern revenue allocation models (such as Active Engagement, Artist Growth, Fan Participation and Pro-rata Temporis which we propose) are the answer, alongside fair contemporary digital rate to all artists, and industry-wide agreements (see French example here). 

Platforms also must play their part against the dilution of revenues within the sector, and work with distributors on solutions to combat streaming manipulation that are at least as sophisticated as the methods of the fraudsters. We also clearly ask for an end to reduction of royalties for plays, privileged treatment in algorithms or other payola-like initiatives. We must work as a sector to increase the value of music, not decrease it even further.

Our final points are dedicated to enhancing diversity and addressing the vital question of sustainability.  We have a whole host of recommendations for services to really boost local markets in Europe, and we understand more about the carbon footprint of our entire industry now. Our carbon calculator is a key part of the independent sector’s programme for their emissions and we urge all services to do as much as possible and account transparently on how they handle their emissions for digital music.

Our ten points are below and IMPALA’s full paper is available here: It’s Time to Challenge the Flow #2 – Revisiting how to make the most of streaming

Click here for the 10-point in infographic form.

IMPALA’s statement on the day of publication is here.

The IMPALA 10-Point Plan to Make the Most of Streaming 

GETTING MORE MONEY INTO THE MARKET AND MAKING SURE THERE IS NO DILUTION

1. Grow overall streaming revenues – unlock subscriptions (prices to follow inflation), promote differentiation and end revenue dilution.

2. No royalty reduction, pay-for-play, or other initiatives recreating elements of payola.

3. Apply revenue enhancement mechanisms in markets where services are failing to convert users to paid models.

4. Use sophisticated tools, including AI, to address unlawful activity that removes value from creators, such as       streaming manipulation, ad-blocking, stream-ripping and AI rip-offs.

CHANGING HOW REVENUE IS SHARED

5. Labels to pay artists a fair contemporary digital royalty rate. (Note, we don’t support “equitable remuneration” because it’s not equitable, see more here. We recommend industry agreements like in France instead.) 

6. Reform allocation of streaming revenue. 

a) Differentiation of rates – services may wish to explore any or all of the  following:

  • Active Engagement Model – Encourage artists to stimulate active fan engagement by attaching  a premium value to tracks which the listener has sought out or reached by artist, track or album name, or where she has saved, “liked”, or pre-ordered an album or track, for example.
  • Artist Growth Model – Enabling artists to accelerate revenues to a sustainable level, support a broader diversity of emerging, and credible niche talent. The top tier streams would generate a bit less and bottom ones a bit more to help emerging and niche artists.
  • Fan Participation Model – Facilitate spaces within services for rightsholders to develop incremental revenues through direct relationships with fans, e.g. by offering access to extra tracks, better audio, and special features. 
  • Pro Rata Temporis Model – To deal with the value imbalance for long-form music content. An example could be to have a rate for the first 30 seconds to 5 minutes of a song, then further payments  triggered at 5 minute intervals – but other options exist.

b) Revise master rights share for labels and artists upwards to cover risk and investment.

c) Thresholds to access monetisation mechanisms should not harm small labels or small markets.

BOOSTING DIVERSITY, TRANSPARENCY AND CLIMATE ACTION

7. Enable search by labels/performers/producers/composers/musicians/authors/publishers.

8. Boost local repertoire and languages – better profiling in playlisting, track titles in more than one language, specific and ringfenced funding mechanisms to invest in new, local recordings.

9. Work collaboratively with a spectrum of labels, across all markets (e.g. through Merlin for independents) to ensure editorial algorithm developments are transparent and don’t negatively affect diversity, local repertoire and opportunities for artist discovery.

10. Help our digital partners assess and reduce their carbon footprint for digital music.

The independent music community stands with artists, ready to help build better models for creators, consumers, services and the environment to make the most of the promise of streaming

IMPALA – Independent Music Companies Association

Rue des Deux Eglises 37-39, 1000, Brussels, BELGIUM

+32 2 503 31 38

info@impalamusic.org