Declaring Independence: New Streaming Royalty Rate Will Encourage Growth of Indie Artists
Earlier this year, the Copyright Royalty Board (“CRB”) raised the royalty rate for songwriters on streaming platforms such as Apple Music and Spotify from 10.5% to 15.1%.[1] The 43.8% increase, imposed after a four-month trial between songwriters and streaming services, was the greatest royalty jump in CRB history.[2]
Songwriters everywhere will appreciate greater revenue from streaming services, but the CRB’s decision will have a profound impact on independent artists, which are artists not affiliated with a major record label.
The popularity of streaming services has been surrounded by the narrative that streams were paying out significantly less royalties than digital downloads or radio plays.[3] Because independent artists receive most of their income through music sales, many were reluctant to jump into deals with streaming services.[4] On the other hand, independent artists saw streaming as an opportunity to expand their fan base and increase their revenue via performances and merchandise.[5] The most recent CRB decision to increase revenues helps hedge that bet for independent artists.
Independent labels and artists have performed extremely well on streaming platforms because artists no longer need to be affiliated with a major label to negotiate a distribution deal.[6] Streaming services are an open door for independent artists, and the services’ data-driven playlists, like Spotify’s Discover Weekly, work favorably for independent music.[7] Analytics have helped listeners reach lesser known artists based on their music preferences.[8]
Analytic-driven services help independent artists collect data about their audiences as well.[9] New applications like AWAL Insights have paired with streaming services to provide independent artists with listeners’ locations, genders, ages, and time of listening across multiple streaming services.[10] The application can also provide benchmarks against similar artists and recommendations for driving engagement.[11]
Chance the Rapper, Macklemore, and The Lumineers are among many artists who have found various ways to gain a large following without help from a major record label. Social media helped launch The Lumineers when people shared “Ho Hey” after it debuted at the end of a CW TV show. Streaming catapulted the folk band to a triple platinum debut album and made “Ho Hey” a number one hit.[12] Macklemore and producer Ryan Lewis used online buzz through YouTube views to propel themselves to six million downloads for their eventual lead single, “Thrift Shop.”[13] ’
Chance the Rapper prominently used all the above tactics to become the first streaming-only artist to take home a Grammy.[14] Chance released free music via SoundCloud as a promotional tool to attract an audience toward his social media and build his brand.[15] After performing frequent open mic nights, Chance received a high-profile co-sign from Childish Gambino, and later, Kanye West.[16]
Although record labels are still considered imperative for artists to achieve mainstream commercial success, streaming services have paved a way for independent artists to reach broader audiences. Artists and their management teams are using business savvy techniques to gain popularity in the music world without having to fear that a major label will usurp creative control of their music.
With some artists utilizing a streaming platform as their primary means of fan outreach and distribution, members of the music industry have pondered the possibility of Spotify and Apple Music becoming major labels of their own.[17] If economically feasible, the dynamics of the music industry would surely shift, and the term “independent artist” will most likely be redefined.[18] No matter the trajectory of streaming and the music industry, now that the CRB has provided improved royalties for songwriters, the era of popular independent artists will continue.
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