Individual Consumers direct purchase of music from the artist accounts for 17.6% of revenue.
Is that correct? That is huge for artists. The problem for artists has always been the record labels. Even before streaming income opportunities were very limited for all but the most commercially successful artists. With streaming, record labels still take the lion’s share even though they no longer provide value and are just taking advantage of the deals they made in the pre-streaming era. Spotify pays out 52% of its revenue to the label. The label then pays 15% of that 50% to the artist. Spotify just started turning a profit in the last half of 2018.
The problem has always been the labels. Before streaming this at least was fair. Labels had the capital to risk investing in artists to pay for studios, production, and marketing expenses. Now artists can do all that on their own. Look at Billie Eilish and her brother. Produced entirely in their home without a label, put the first song on soundcloud and the rest is history. There may always be a marketing role for labels with artists that are willing to give up freedom and income for a chance at making it big but they now have options.
Subscriber growth is finally getting to the point needed to make the model work. Record labels will eventually dry up and go away. Regulations need to ensure the streaming services can’t become the record labels of tomorrow by charging a fee just to be on the platform or reducing pay per stream to take the share that the labels were taking. Musicians unions should be all over that.
I should clarify that is direct purchase by individual consumer of artist music through the record label on digital formats on the internet, ordered from websites on the internet like Amazon and others, or purchased at stores like Walmart, Target, Barns&Noble, FYE etc.
This is not the consumer purchasing a CD from the trunk of the artist car or the website of the artist independent of record label or some other third party distribution.
The statement was made to emphasize that today, the public rarely purchases artist music. Most of the time, the public now simply streams music in some way, listens to it on the radio, or hears it through other media.
In 2004, over 95% of revenue for the recording industry came from the purchase of specific artist music, by consumers. Over 90% coming from compact disc purchases. Today, only a little over 17% of recording industry revenue comes from the actual purchase of music by consumers. The rest of the revenue comes from streaming, radio, and other media that plays music. In those formats, the listener is not actually purchasing specific music by a particular artist. In the long run, this weakens the link between the fan, especially the dedicated fan, and the artist. This will make it tougher for the artist to make money from their work as listeners have less incentive to invest money in specific artist.