The Dirty Little Secret Recording Artists Are Too Ignorant to Understand

Spotify Streaming Coin Money
Cheyne Gateley

Internet revenue could restore the balance of power between artist and distributor

Once upon a time recording was profitable.

Then MTV came along, and with the advent of the CD, revenues soared. But artists bitched that they were receiving half their usual royalties, as the labels invested in the new format. Their complaints went nowhere, and the CD made not only the companies rich, but those who ran them. That was the switch. The Beatles et al. stole power from the labels, but in the ’80s, the labels took it back, because there was just too much money involved. And the more money, the more risk.

Now, recording revenues have shrunk. But streaming, and Spotify, could bring them back. That’s the dirty little secret artists are too ignorant to understand — that if everybody’s paying, the overall pot grows.

But the problem with artists is they don’t see the big picture.

You think the label is making you famous.

Once upon a time, the label not only made you famous, you made a lot of money on recordings if you hit. The evisceration of this model is not the fault of either the labels or of Spotify. Those who think Spotify is ruining royalty payments believe 8-tracks and cassettes should have never replaced LPs. Change happens.

And the latest change is that without the money and power of the label behind you, you probably will go unnoticed.

So maybe, despite having such a low royalty payment, that’s what you’ve earned.

I know this is heretical. But the point is, no one is preventing you from going it alone. Now, more than at any time in modern recording history, you can do it yourself. You can record cheaply, distribute and get paid. But the truth is, most of the people complaining about their indie Spotify payments are known only for this model; they’re niche artists at best.

No one who’s a newly minted household name is complaining.

In other words, you give to get.

You give your rights to the label in order to get a chance at fame and riches. And this has nothing to do with Spotify, and nothing to do with the fact that the major labels have an interest in the company, along with Merlin indies.

There’s a high entry price. Just like you can make your own movie and make all the money, but you’d rather be in a blockbuster where you get a huge upfront payment and profit participation that doesn’t pay out.

So if the acts want any change at all, the target should be their labels.

As for indie labels, excepting giants like XL, most are worse than the majors. If they don’t go bankrupt, their accounting is horrifying. That’s why the majors exist to begin with.

Unlike athletes, however, artists, who are famously disunited, are not joining up to establish minimum payments. They’re not lobbying for free agency. They’re not improving their lot, just bitching.

If only every artist like Def Leppard — and they’re not the only one with this right — refused to let their label put their catalog on digital services. If only a case was litigated wherein streaming was seen as a license, and 50% went to the artist.

Instead, Spotify is the punching bag. Just like Ticketmaster is in the concert sphere. Ignorant people are attacking the wrong target.

Then again, the label seems to be the only one investing in you. Managers are not coughing up serious dough, and agents certainly aren’t. It’s kind of like taking venture capital money. He who puts down the cash takes the lion’s share, especially if the business/act has no traction.

Sell out theaters on your own, and you’ll get a better deal.

It’s called leverage.

Build your own and stop complaining.

Read more Bob Lefsetz columns at Lefsetz.com.

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    1. GKN says:

      Is Mr Lefsetz an owner /investor/ employee of Spotify, by any chance? Just wondering. His ‘webpage’ was not available.

      • johntshea says:

        Mr. Lefsetz’s website asks ‘Who is Bob Lefsetz?’ and its answer includes:-

        “Never boring, always entertaining, Bob’s insights are fueled by his stint as an entertainment business attorney, majordomo of Sanctuary Music’s American division and consultancies to major labels.”

    2. Marc Chenault says:

      My father owned rock n roll radio stations. I grew up in this business. I have witnessed the changes in the music business. Technology happens ! What artists and recording companies adapt to changes is what is paramount. It’s never been better for artists. Anyone can organize their own THING and become known if they have the chops (talent). Sometimes, lesser talents become well known because they work very hard and have corroborated with other hardworking, ambitious people. Complaining about the way it ought to be is counterproductive. Things are the way they are ! Figure it out and organize your own THING and if you have the talent and have created a smart hard working organization you will become known ! It’s never been better and it’s always been hard !

    3. Well, at least he’s always entertaining… but the chances of filling a theatre ‘on your own’ – and so getting interest from a label- aren’t that big even for artists for whom that kind of venue is appropriate. If the only entity willing to front you the cash to get there is the label, but the label won’t fund you till you do… Catch 22.

      The other by no means certain assumption is that because Spotify exists, ‘everyone will pay’, and all will be right in the world. I doubt that…

      But in pointing the finger at the need for 50% of what is paid from streaming going to the artist, rather than the more usual, rip off, 14% or so… there, he’s absolutely right. But even then, only those getting millions of streams every single month will earn enough to pay a modest rent…

    4. Your rant is sorely misguided. The labels continue to collect the money and do their best not to share the revenues they do derive, from whatever source. Why would it be any different with streaming service revenue. Spotify is not a punching bag. They are using copyrighted content and would never ever pay for it unless someone forced them. And the enforcers are not honest either.

    5. John Shea says:

      Mr. Lefsetz sure does bitch a lot himself. Did a recording artist frighten him when he was a kid or something?

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