Impact of Cost of Living Crisis on Working Musicians | The Student
This story was originally published in October 2022 for The Student at the University of Edinburgh.
Still in recovery from the previous two years of COVID, the live music industry is now facing another threat to its way of life — the cost of living crisis.
Even though the pandemic is far from being through, many musicians and bands were looking forward to this year as a time where live music would make its triumphant return. Instead it’s on the verge of collapse.
Inflation, high energy costs, mental and emotional burnout, along with complications lingering from Brexit are just a few reasons being given by acts such as Little Simz and Sam Fender for canceling their upcoming tours.
Without live shows, venues are facing the possibility of closing their doors once again despite many venue operators remaining in debt from costs accumulated during the pandemic.
LIVE, the federation of fourteen music industry associations representing businesses, artists and backstage workers, was started in October 2020 specifically to communicate the needs of the industry to policymakers and the public. In September of this year, they again called on the government to reintroduce the 5% VAT tax on ticket sales among other interventions.
Not able to tour for two years, artists were forced to rely on revenue from streaming, and may have to rely on digital platforms once again. But as the cost of living crisis forces consumers to make tough choices, more and more are cancelling their streaming subscriptions.
In June of this year, BBC reported that 600,000 more people in the under 35 category dropped a music streaming subscription than in the previous year. 41% of users cancelling Spotify accounts cited a desire to save money as their reason for canceling. At £9.99 a month per user, this drop has the potential to greatly impact the income of artists who have music on the platform. Or it would have a great impact on these artists, if they made any money from being on Spotify in the first place.
Spotify operates on a service-centric licensing model, meaning that 90% of the revenue from paying users goes to the top 10% of artists. Instead of being paid by Spotify directly, artists are paid through their rights holders, typically their record label or distributor hired to represent them. After Spotify takes their cut from the total revenue earned from paid subscriptions, the money is then divided amongst rights holders. The rights holders split the revenue between recording royalties, which goes to the artist, and publishing royalties, which goes to the songwriter. The exact breakdown of how much each artist and songwriter make is specific to their contract with the rights holder.
In a user-centric licensing model, the revenue from an individual user would be divided amongst the artists listened to by that user during that month. By operating within this model, the platform would live up to their mission “to unlock the potential of human creativity — by giving a million creative artists the opportunity to live off their art…” as defined in their mission statement. However, the revenue would still likely be paid to the artists through their rights holder, which may lead to little improvement depending on the royalty breakdown listed in the contract signed.
In 2018, the Union of Musicians and Allied Workers reported that artists earn a half-cent per stream. But a Business Insider report from 2020 had found that rate had gone down to as little as $0.0033 per stream, where it appears to remain.
Seeming to address the low-pay for musicians, in 2021 musician Ashley Jana released audio of a 2019 interaction she had with Jim Anderson, who has been labeled the “Solutions Architect” of Spotify. In this interaction, Jana asked Anderson to consider paying artists a whole cent per stream, to which he said “Spotify was created to solve a problem. The problem was this: piracy and music distribution. The problem was to get artists’ music out there. The problem was not to pay people money.” After Jana released the audio and published an article on Medium calling for a “revamping of the infrastructure,” outlets such as Insider and Clash Magazine picked up the story. As of October 2022, Spotify has yet to change its pay rate for artists on the platform. According to an August 2022 resolution introduced by United States congresswoman Rashida Tlaib, she calculates that, at the current pay rate, it would take more than 800,000 monthly streams for an artist to make a liveable wage of $15 an hour on the platform.
Looking forward to the new year, many in the industry are concerned that there may not be an industry to return to. Jamie Njoku-Goodwin, CEO of UK Music says, “People have got less money to spend and there are lots of people worried about what impact that will have on the demand…2023 is going to be more difficult than 2022.”
