Fair music transparency and money flows in the music industry is more than an up-to-date topic. Therefore, highly important for so many stakeholders in the music industry.
One might ask, how do musicians make money? What is the exact breakdown of revenue streams? Are the payments fair and equal or is the monetization in music unbalanced?
Fair music transparency and money flows in the music industry
On July 14, 2015, the Berklee Institute for Creative Entrepreneurship (BerkleeICE) released an extensive study. It centres around promoting fairness and transparency within the music industry.
The BerkleeICE is a sub-division of the famous Berklee College of Music. One of the most rewarded educational platforms for music in the world. Famous artist like John Mayer or Diana Krall have studied there (and actually getting Grammy Awards).
The execution of the study about fair music transparency and money flows in the music industry was established by Rethink Music, created in 2010. For that, the Berklee College of Music connected with Midem and Berkman Center for Internet and Society at Harvard University.
The Name Midem stands for ‘Marché International du Disque et de l’Edition Musicale’ and is the most important international conference for the music industry. And the Berkman Center for Internet and Society is ‘exploring cyberspace, sharing in its study & pioneering in its development’.
Rethink Music is financed through a considerable grant by the Kobalt Music Group. Originally a music publisher who is also offering record label services as well as assistance with neighbouring rights.
We hope this initiative will make a difference, ensuring that the world continues to be able to enjoy beautiful music made by creators who are fairly compensated. In turn, music can be a positive example for all creative industries, leading the way forward in the digital age. We must continue to rethink music. Allen BargfredeExecutive Director, Rethink Music
How money flows in the music industry?
The music industry hadn’t changed much over centuries until the internet developed. Online services changed the way we search for information. Likewise, how we communicate and also how we consume.
The MP3 format changed music forever
Most importantly it offered the way of compressing data into small bits, so they can be exchanged easily. The invention of the MP3 file revolutionized the principles of the music industry like nothing before.
Because the file is so small it was possible to bring it onto a new container for music, the Compact Disc (CD).
What is more, it offered the opportunity to exchange the file over the internet. Soon an illegal market evolved and people shared content within a community with anonymity as a protection shield.
Streaming is changing everything again
Through the introduction of streaming platforms, a new change is happening. Now, the file is not saved on the computer anymore. It remains on the platform of the streaming host, like Spotify or Deezer. And is just simply streamed in order to be listened to.
This is on one hand site a good development for the industry. Above all the file is not illegally saved on numerous computers anymore. But on the other hand, it adds much complexity to an already complex industry.
Why is the music industry complex?
The musician/songwriter is writing a ‘song’ which is then pressed onto a CD or even Vinyl Record. Then it is delivered to a store where you can buy it.
To some extent this idea is right. But this process includes various stakeholders and intermediates. One must remember, the source of revenue is still the ‘song’ which has been written by the musician/songwriter.
Maybe the musician/songwriter had a lyricist who helped with the words for the lyrics. Then another person has a slide of the copyright cake connected with the ‘song’.
Similarly, the musician has a manager in order to help and promote the musician. The manager will be paid by a slice of the musicians’ income, eg. by the income generated by the ‘song’.
The musician will have record label which is manufacturing a CD or vinyl record containing the ‘song’. They will earn money over the selling of the product, containing the ‘song’ and then deliver a fixed amount of money to the musician.
If the record label has an agreement with a streaming platform, such as Spotify, it will receive a part of the income.
But how much is the musician getting from that income?
Here you can find a complete breakdown of the money streams of the song ‘Baby Boy’ by Beyoncé feat. Sean Paul.
At the latest, here most people are definitely confused. And this is the exact reason why the Rethink Music Initiative took a whole year to research the money flow in the music industry. As well as to observe revenue streams, the transparency behind the monetization of music and certain payment flows.
Here you can find an infographic how the global recording industry evolved.
Findings of the report:
Fair music transparency and money flows in the music industry
The report colourfully explains ways how revenue streams are lingering around the various stakeholders in the music industry.
A staggering sum of the total revenue of $6.85 billion in the USA alone. For a detailed view of the report about fair music transparency and money flows in the music industry, delve deeper into it.
— midem (@midem) August 23, 2015
In short, the report campaigns for:
- A certificate which labels “Fair Music” to boost transparency, the fair return of money streams and to protect creators and copyright holders;
- decentralized rights’ databases, guarded by a non-profit organization in order to ensure transparency and to decrease the figure of unclaimed royalty payments;
- a new way of organizing money flows through the usage of Blockchain technology (Bitcoin) and cryptocurrencies, in order to ensure direct communication between music creators and consumers;
- initiatives which advocate for a better education for all music creators, to inform them over their rights and the way the industry works. Already offered for example by the famous music manager Stevie Rennie or the Berklee College of Music;
Thank you very much for your attention and Rethink Music for providing me with the source. I hope that you’d like the information.