Music streaming in Germany – How fair is the remuneration of music creators?

In September 2022, Goldmedia GmbH presented a study on music streaming in Germany. The study was originally commissioned by GEMA (the German copyright collecting association).

The turnover of music streaming services, also known as Digital Service Providers (DSP), continues to grow rapidly and the music industry hopes to be able to operate profitably even in the digital age. 45 percent of Germans now use services such as Spotify, Deezer, Apple Music, Tidal and Co.

Overall, the share of audio streaming of music listening is now over 33 percent, and if you add video streaming services like YouTube, it’s even more than 50 %. In terms of total sales for recorded music, the share of streaming services in Germany was already 68 % in 2021. In Sweden, Spotify’s home market, it was already 91 % in 2021.

The market offers a lot of potential as the study illustrates. However, it also confirms the impression of many artists that only a small part of the revenue generated remains with the creators of music. Less than a quarter, i.e. only 22.4 %, of the net revenue from a standard streaming subscription remains with the music creators. Of this, 43.3% goes to the creators themselves and the rest (56.7%) to the performers. The share of creators and performers has often to be distributed among a large number of people who have contributed to the work as authors or performers.

The music labels, on the other hand, with 42.4 % of the net revenues, profit significantly more than the creators. Compared to the distribution of revenues from classical sound carriers such as CDs and vinyl, the labels benefit significantly more from the revenues from streaming services compared to the creators. However, there are considerable differences between indie labels and major labels as well as between artists.

While the number of music streams in Germany has increased continuously in recent years, the revenue per stream has fallen significantly, even if one leaves out losses in purchasing power. This can be explained by several factors. For one thing, the standard price for streaming subscriptions has remained almost unchanged since the market launch about 10 years ago and is currently about EUR 10 per month in most cases. In addition, shorter pieces of music are increasingly being produced, since payment is made per stream and not per duration of the song. Overall, the number of streams increased disproportionately to the revenues generated.

A price adjustment by the streaming providers seems long overdue, but it seems as if none of the providers wants to take the first step. Deezer moderately increased the price of its standard subscription by 1.00 EUR last year, but many music creators are demanding a much more significant increase. It is therefore not surprising that, in the study, almost 90 % of the music creators surveyed stated that they do not consider the remuneration received from music streaming to be adequate.

A move away from the classic pro rata model, in which the total revenue of the streaming provider is divided by the number of total streams, is also widely discussed. A user-based remuneration model, in which only the artists listened to by the user are taken into account, could provide a remedy and is already being tested by individual streaming providers.

Overall, it is clear that, especially from the artists’ point of view, there is still a great need for negotiation in order to be able to achieve adequate remuneration. The current situation, in which only a very small proportion of artists can live off streaming income (on Spotify, only 0.2% of artists earn more than 50,000 euros a year) is unsatisfactory for artists. It is also in the interest of the labels that a sustainable model is created from which all can benefit and which will also find the necessary acceptance from musicians and music consumers in the future.

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