Late last year, alternative rock back Sunsleeper packed a load of gear into their 10-passenger Ford E-350 XL and left Salt Lake City, Utah, heading east to Seventh Circle Music Collective in Denver, Colorado for the first of twenty shows of their December 2019 tour. Caught in a blizzard, they never made it to the venue in time for their set. They vowed to make it up to themselves by putting their all into the next night’s show in Lincoln, Nebraska. But on the way there, their van slid off of the road.
Standing in the middle of a dark, icy road, three of the band’s five members cheered as a pickup truck hauled their van out of a snow filled ditch. Luckily, they still had enough time to get to their next show. Taking to social media, the band explained the bad tour luck they’d been having and requested that anyone in the Lincoln area come out to the show that night. The gig must go on.
The same determination that got Sunsleeper back on the road in December is what they hoped would push them through their ten-date East Coast tour in March. Once again, Jeff Mudgett (vocals/guitar), Scott Schilling (drums), Jacob Lara (bass), Cody Capener (guitar), and Matt Mascarenas (guitar) had packed up their van and headed out. And once again, the tour kicked off at Seventh Circle Music Collective. This time they actually made it to the venue. But they were three shows in when COVID-19 related closings sent them back home to Salt Lake City.
“We’re living in a culture where artists are pretty much paying their bills with the touring aspect, whether it be selling merch or making door money,” Mudgett said. “The pandemic has caused us not only to not be able to make money playing shows, but our at home jobs that are connected to that world are also being pulled out from underneath us.”
With touring still off the table for the foreseeable future, bands who relied on tour income to help keep their creative projects alive are paying close attention to other sources of income, including streaming revenue, to hold them over until they can get back on the road. The need for higher streaming payment rates is more urgent than ever now that the pandemic’s financial impact on touring musicians has placed a spotlight on the inadequacy of streaming as a sufficient source of income. Meanwhile, a dispute between the digital streaming companies and the U.S. Copyright Royalty Board has left artists in limbo, uncertain of whether power structures in the music industry will be prioritized over the worth of their art.
In 2019, before the pandemic struck, the U.S. Copyright Royalty Board officially published a 43.8% increase in the streaming and sales royalty rate for songwriters and publishers, or mechanical royalties. With the new rate, credited songwriters would go from receiving 10.5% of the streaming revenue from a given song to 15.1% over a five year period. It was a win for the songwriting community, as well as publishers who receive a portion of their artist’s revenue. But a number of the streaming services responsible for making these payouts viewed the decision as more of a threat than a win.
Shortly after these rates took effect, Spotify, Amazon, Pandora, and Google each appealed the decision on the basis that “no party had a chance to present evidence on its likely impact on the music industry.” More money going to songwriters means less money goes to the services, and they worried that a decrease in revenue might lead record labels to create or acquire their own streaming services and create a more competitive market. Amazon and Google both have business sectors stretching far beyond music consumption. Meanwhile, Spotify is the self-proclaimed “largest driver of revenue to the music business today” with over 271 million users, 124 million of which are subscribed to their paid tier which drives more revenue to the platform. But their estimated streaming rate is $0.000437 per stream.
Prior to the Copyright Review Board’s establishment of these new royalty rates, the music industry rallied around the passing of the Music Modernization Act, a copyright law that made it easier for songwriters to license their work to streaming services and receive mechanical royalties. Spotify was among the streaming services that displayed constant support for the songwriting community throughout the legal process of the act becoming law, so their appeal of the rate increase was unexpected.
The Music Modernization Act and the implementation of the royalty rate increase were both huge moments for songwriters that received very different responses from streaming services. The former created a path for songwriters to get paid more easily which also allowed streaming services to collect revenue from the consumption of their work just as easily and was supported by those services. But, the latter reduced the amount of money that would be taken from the artists and is being appealed by the services.
“They’re fine with using these creators’ music to profit, but they’re not willing to share that profit with the musicians,” said Erin Jacobson, an attorney specializing in legal disputes in the music industry.
“It’s like, ‘Haha! I make $0.00005 cents a stream! That’s funny!’ But now there’s no alternative to makeup for that,” Mudgett said of the music industry’s open secret. This fraction of a penny rate has become a joke among musicians who can only chuckle at the $11 they make from streams. But in the industry’s current pandemic state, it’s no longer a laughing matter.
Sunsleeper’s debut album You Can Miss Something & Not Want It Back was released in July 2019, their first project release since their 2016 debut EP Stay The Same. The band’s Spotify data for that year revealed that their music had been streamed for 21,800 hours by 85,900 listeners in over 70 countries. The band shared their Spotify-generated graphic on Twitter with the note, “Seriously blown away by Spotify Wrapped this year. Thank you all for listening. It means the world.”
Sunsleeper’s yearly streams totaled 417,800 plays, a proud feat for any artist with only a debut album and EP under their belt. So what monetary compensation comes with having your songs played nearly half a million times? Around $182.58, or $36.51 for each member of the band. The band’s streaming income wasn’t crucial at the time because they could make up for the shortcomings of streaming with tour and merchandise revenue, but now that’s out, too.
When Sunsleeper’s tour was cancelled, Mudgett let the supervisor of the warehouse where he works as a customer service manager know that he no longer needed three weeks off. His supervisor asked him to come in as soon as possible because they needed to talk. Then the hammer came down. “We fired three quarters of the staff,” his supervisor told him. “We want to keep you because you’ve worked for us for eleven years, but we need you to do five people’s jobs at once and take a pay cut.” Mudgett agreed.
He considered himself lucky. Three of his band members––Schilling, Lara, and Mascarenas––were all laid off within days of coming home.
“Coming home from tour to pretty much a thousand shows cancelled in the year is crazy,” said Schilling, who would have worked as an audio engineer for those shows at music venues throughout Utah. “My whole world pretty much got turned upside down from this.”
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Just days before their March tour began and ended, Sunsleeper shared the marquee at Salt Lake City venue Urban Lounge with Lord Vox and Mortigi Tempo, two bands that they came to be good friends with through working the city’s alternative rock circuit. With friends both on stage and in the audience at one of their favorite venues, the show felt like a party. Ranking the show at the top of their list of all-time favorites, Sunsleeper couldn’t have asked for a better final hometown show.
“Even now, I haven’t been able to play a lousy show––let alone having a send off like that. I miss it so much,” Mudgett said.
Before the live music industry was indefinitely shut down by the COVID-19 pandemic, it was expected to be worth $31 billion by 2022 between ticket sales and sponsorships, according to professional service provider PricewaterhouseCoopers. But streaming is what drove the success of the live sector in the first place. At its peak in 2008, the music industry had sold 1.92 billion physical copies. In 2019, it sold 453 million copies valued at $1.1 billion, while streaming brought in $8.8 billion in revenue, according to the Recording Industry Association of America’s year-end revenue report. The availability of music on-demand via streaming services for an average of $10 a month has proven to appeal to fans more than paying that same amount, or usually more, for a CD or vinyl record.
“These shifts in music consumption patterns have led to corresponding changes in the magnitude and relative mix of income streams to copyright owners,” said David Isrealite, National Music Publishers Association President, in a witness statement against the streaming service appeal. To make up for the loss of revenue from the sale of digital downloads and physical copies, artists had pivoted to heavy touring and merchandise bundling tactics, where fans can receive a copy of the album with the purchase of a concert ticket.
Musicians are also more reliant on performance royalties, Isrealite said. These are royalties paid when a song is performed publicly, like on the radio or in restaurants, bars, and clubs. Many of these outlets are temporarily shuttered due to the COVID-19 pandemic and radio airplay is down as people spend more time at home than in their cars. Even beyond touring, artists are also facing a loss of performance revenues.
“In the 90s, bands made a good portion of their income from CD sales and getting played on the radio and now that is such a foreign concept,” Mudgett said. “Streaming services haven’t really reconciled that shift and have only capitalized on it.”
Spotify in particular, launched in the US in 2011, spent most of the decade not turning a profit, consistently losing more than they were bringing in, according to financial results reported by the service. As the streaming giant grew in popularity, the balance between it’s paid-tier users and it’s free-tier users leveled out in a way that allowed them to finally be profitable in 2019. The total number of streams across the 2010s totaled over 17 million years worth of listening as their subscriber and user pool continued to grow each year, according to Spotify’s 2018 Decade of Discovery report.
“Even though there’s so much streaming happening, it’s not the same as sales because you need so many more streams to yield an equivalent amount of money to what one sale would have yielded,” Jacobson said. According to the algorithm that Billboard uses to determine album charting positions, an artist would need to receive 1250 streams from a subscription-based user to reach the equivalent of one single album sale. “It also started the process of pushing for higher rates with streaming, because the rates are so low and nobody is going to be able to make a living off of them unless you’re in the millions and millions of streams,” she said.
To maintain their profitability status, Spotify struck up licensing deals with Sony Music, Universal Music Group, and Warner Music Group, the industry’s leading record label conglomerates, that allowed them to keep more of their overall revenues at the expense of paying less money to artists, labels, and publishers. Presenting on this deal, Spotify Chief Financial Officer Barry McCarthy expressed that the service was able to push for this agreement because of “the growing importance of a healthy Spotify to the entire music industry ecosystem.”
“What the coronavirus pandemic is currently doing is shoving these issues that [music licensers] have been trying to cover up for years to the spotlight,” said Jake P. Noch, CEO of Pro Music Rights, a performance rights organization that enforces intellectual property rights on artists’ behalf. “They could say [artists] make the majority of their revenue from touring, merchandise, and other means, rather than actually having to say that music, which is the backbone of the majority of our product lines and services, is not worth enough for us to have enough to pay fractions of a cent per use.”
As a streaming giant, Spotify is responsible for a large portion of the record industry’s income––but there’s no money to be made without the musicians and their art.
“In an idealistic sense, I would hope that this would be a wakeup call for some of the greedier people in the top tiers. When we look at percentages, artists are making this much compared to streaming services making the majority,” Mudgett said of the pandemic. “I would love for this to show that the art is as important as the service and without the artist they wouldn’t have what they have.”
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Sunsleeper’s artist profile on the Spotify app has looked the same for quite some time. A picture of the band dressed in all black in front of their sometimes trusty white touring van, named Phil, serves as a header. Their number of monthly listeners is displayed over a follow button available for fans who want to keep up with the band’s latest releases. Directly below this is usually a mini-playlist of the band’s five most popular tracks, but now a round, purple icon with “COVID-19 SUPPORT” typed in bold appears in its place.
“Make a contribution, visit the artist’s fundraising choice,” urges Spotify on the button’s subtext. Clicking on the arrow next to this prompt opens the money exchange service Cash App to the band’s profile, or $cashtag, $Sunsleeper, with the option to send the band money directly.
“Though streaming continues to play a key role in connecting creators with their fans, numerous other sources of revenue have been interrupted or stopped altogether by this crisis,” read a Spotify press release about the new option released on April 22. “This feature enables artists who are interested in raising money to support themselves, their bands, or their crews, to get the word out to their fans on their Spotify artist profiles.”
The idea of digital music services providing a tipping option that would circumvent the royalty rate from the streaming process had been talked about before amongst musicians and fans alike for some time, long before the pandemic. Online music company Bandcamp has utilized a form of this model by allowing artists to upload their music for free and include a pay as you wish option, or the option to pay more for a merchandise purchase. In response to the pandemic, they have been hosting “Bandcamp Days” during which 100% of purchase proceeds would go directly to the artist.
Spectators have questioned whether music fans in the age of streaming, with instant access and relatively cheap prices, will pay to consume music if they don’t legally have to. “We’ll have a set price, and then I’ve noticed people putting in an extra five bucks on a t-shirt or something with a note that says ‘Love you guys,’ so stuff like that is really cool,” Mudgett said of Sunsleeper’s personal experience with Bandcamp.
Spotify is the first major streaming service to adopt a direct-to-artist tipping model and has a large enough platform to influence others to do the same. It seems like a well-intentioned development, especially in the current climate of the music industry. Sending $10 to a band via Cash App financially evens out to streaming one of their songs 22,883 times. While legal disputes continue to ensue between the artist side of the music industry and the business side, tipping gives fans an opportunity to swoop in and fund their favorite acts themselves.
“I love the idea of directly being able to show your appreciation for an artist, but my mind goes to industry stuff,” Lara said. Seeing the ways in which the music industry has reacted to seemingly positive artist developments in the past has some musicians approaching the concept of tipping via streaming with skepticism. Mudgett compares the idea to potentially becoming similar to the service industry’s dependency on tipped wages, not putting it past music industry executives to do the same. “When the people in power start taking advantage of the system, they’ll pay you less for streaming because you’re getting such and such income from tips,” he said.
Some musicians are also finding the marketing of the feature to be insulting in a way.
Singer/songwriter Amber Coffman recently tweeted that the use of the word fundraiser in the feature’s title is shameful to musicians. “Did tying it directly to the crisis shield them from the larger conversation about music revenue?” she asked.
Information about the financial sector of being a musician is hard to find. “Part of it is pure purposeful misinformation. If you look into it more deeply a lot of the rights holders and even their senior level executives, like other rights organizations, if you ask them to explain their licensing model they do not know the model themselves nor the rates under that model,” said Noch, whose performance rights organization PRO Music Rights markets itself on complete transparency of rate percentages.
Streaming services and record labels have long kept their exact financial breakdowns regarding payments to artists either completely underwraps or have released information far too technical for the average musician to understand. Even artists tend to keep their experiences with making money in the industry to themselves. But if there’s any hope of musicians having a more stable income stream from their music without having to rely solely on touring, they might have to be more transparent about what they’re earning.
“People don’t talk about it because the people that are making a lot of money don’t want you to know how badly they’re ripping off the people at the bottom, and the people at the bottom may or may not feel embarrassed about how little they’re getting paid and don’t want you to know,” Mudgett said. “Normalizing it and making it a conversation for the general public is really important.”
Larisha Paul 