Streaming: Who Makes All the Money?

June 1, 2022

Ray Hair  -  AFM International President

In the early days of the music industry’s transition from a retail sales-based economy to online consumption through the explosion of noninteractive streaming services such as SiriusXM satellite radio, Pandora, and the later rise of interactive subscription/rental businesses such as Spotify, Apple Music, and Amazon, governmental statutory protection provided stability and fairness to labels and musicians through the regulated distribution of noninteractive digital revenue.

But the record labels, romanced by the unlimited revenue potential of interactive consumption and its lack of governmental regulation, sought to drive consumers away from free, advertiser-based, noninteractive streaming toward subscription-based interactive platforms, like Spotify, where labels could make a lot more money.

By 2021, label revenue in the US from paid (interactive) subscription services grew 21% over the previous year to $9.5 billion, accounting for nearly two thirds of total revenue. Here, in the interactive subscription-based world, featured and nonfeatured musicians do not have the statutory protection mandated for noninteractive webcasting. Featured artists are left to negotiate with labels for a share of proceeds. Session musicians receive nothing at all.

Last year, while musicians were struggling to restart performing careers that had been abruptly halted by the pandemic, Universal Music CEO Lucien Grainge earned $300 million. Let’s look at streaming media money worldwide.

In the most recently reported fiscal year, Google’s revenue rose to $257 billion, largely consisting of advertising revenue, which amounted to $209 billion in 2021. Google-owned YouTube experienced revenue of $28 billion in 2021, primarily from advertising but also from its premium subscription service.

YouTube is a prime beneficiary of a loophole in the US copyright act—the section 512 exemption—where there is no obligation whatsoever to pay artists and copyright owners for works streamed on user-generated content platforms. Amazon reported revenue of $31 billion from subscription streaming in 2021, up 28% year over year, while Netflix reported revenue of $28 billion in 2020. Spotify’s 2021 revenue was just shy of $10 billion, and Apple Music revenue was $4 billion in 2020.

You might recall that when the music industry was a retail sales-based business, you went to a music store, a record shop, or a store record rack and purchased your favorite hit single, album, cassette tape, compact disc, or DVD and a royalty of 12% to 20% from the sale of the physical product was paid to the featured artist.

Today, in the interactive world of Spotify (and other subscription-based digital providers), the per-stream payout to rights holders (labels) in 2021 was a paltry $.0033 to $.0054, shareable with the featured artist per the artist’s deal with the label.

So, as retail sales moved to digital consumption, the artist royalty payout dropped from up to 20% for a record/tape/CD to less than half of 1% per stream—an imbalance of epic proportions.

The Imbalance Should Be Addressed Through Legislation

In the US Congress, the AFM and its allies are campaigning for adoption of the American Music Fairness Act (AMFA), which would extend the same statutory protections for terrestrial radio that now exist for musicians in digital noninteractive streaming. Foreign collective management organizations refuse to pay US musicians when their recordings are broadcast on foreign radio because the US doesn’t have performance right coverage in radio. The adoption of AMFA would result in hundreds of millions of dollars—estimated at $700 million by some—in additional royalties payable to US musicians, including over $200 million in new money from foreign sources.

In addition, statutory regulations as applicable to noninteractive streaming, if applied worldwide to interactive services like Spotify, Apple, Google, and YouTube, would level the playing field for copyright owners, featured artists, session musicians, and vocalists when digital revenue is distributed.

It should be noted that the global entertainment industry is a $2 trillion industry. It has rebounded from the pandemic thanks to streaming and is expected to generate $2.6 trillion by 2025.

Professional musicians had zero income from live performances during the pandemic shutdown and saw consumers turn to streaming platforms to consume music and video content. Musicians and their families struggled to survive as the content they created was exploited by interactive streaming services and tech companies, which pocketed billions and paid CEO’s hundreds of millions with no obligation to share the money with those who made the music.

But does anyone really care? Are legislators and government officials concerned about this outrageous imbalance? Or are elected officials the lapdogs of unregulated business interests that stop at nothing to maintain and tighten monopolistic control of streamed entertainment?

Again, take terrestrial radio as an example. Musicians have subsidized the broadcasters for a century. We’ve received nothing for the broadcast use of our recorded performances, while the station owners have reaped billions in profits. And you can draw a direct line from the US terrestrial broadcasters to digital service providers like Spotify. The business model is fundamentally the same; keep the cost of raw materials (musicians and music) to little or nothing and control the method of distribution. We make the music, while everyone else makes all the money.

As I write this column, the American Music Fairness Act is scheduled for debate in the House Judiciary Committee. Will musicians finally find a helping hand from members of Congress, who have the power to make a difference? Resolving the century-old performance rights imbalance in terrestrial radio is a necessary next step if we are to eventually correct similar inequities in interactive streaming.

For more on how musicians get paid on streaming, see the May IM column at

Streaming: Who Makes All the Money?

by Ray Hair, AFM International President

In the early days of the music industry’s transition from a retail sales-based economy to online consumption through the explosion of noninteractive streaming services such as SiriusXM satellite radio, Pandora, and the later rise of interactive subscription/rental businesses such as Spotify, Apple Music, and Amazon, governmental statutory protection provided stability and fairness to labels and musicians through the regulated distribution of noninteractive digital revenue.

But the record labels, romanced by the unlimited revenue potential of interactive consumption and its lack of governmental regulation, sought to drive consumers away from free, advertiser-based, noninteractive streaming toward subscription-based interactive platforms, like Spotify, where labels could make a lot more money.

By 2021, label revenue in the US from paid (interactive) subscription services grew 21% over the previous year to $9.5 billion, accounting for nearly two thirds of total revenue. Here, in the interactive subscription-based world, featured and nonfeatured musicians do not have the statutory protection mandated for noninteractive webcasting. Featured artists are left to negotiate with labels for a share of proceeds. Session musicians receive nothing at all.

Last year, while musicians were struggling to restart performing careers that had been abruptly halted by the pandemic, Universal Music CEO Lucien Grainge earned $300 million. Let’s look at streaming media money worldwide.

In the most recently reported fiscal year, Google’s revenue rose to $257 billion, largely consisting of advertising revenue, which amounted to $209 billion in 2021. Google-owned YouTube experienced revenue of $28 billion in 2021, primarily from advertising but also from its premium subscription service.

YouTube is a prime beneficiary of a loophole in the US copyright act—the section 512 exemption—where there is no obligation whatsoever to pay artists and copyright owners for works streamed on user-generated content platforms. Amazon reported revenue of $31 billion from subscription streaming in 2021, up 28% year over year, while Netflix reported revenue of $28 billion in 2020. Spotify’s 2021 revenue was just shy of $10 billion, and Apple Music revenue was $4 billion in 2020.

You might recall that when the music industry was a retail sales-based business, you went to a music store, a record shop, or a store record rack and purchased your favorite hit single, album, cassette tape, compact disc, or DVD and a royalty of 12% to 20% from the sale of the physical product was paid to the featured artist.

Today, in the interactive world of Spotify (and other subscription-based digital providers), the per-stream payout to rights holders (labels) in 2021 was a paltry $.0033 to $.0054, shareable with the featured artist per the artist’s deal with the label.

So, as retail sales moved to digital consumption, the artist royalty payout dropped from up to 20% for a record/tape/CD to less than half of 1% per stream—an imbalance of epic proportions.

The Imbalance Should Be Addressed Through Legislation

In the US Congress, the AFM and its allies are campaigning for adoption of the American Music Fairness Act (AMFA), which would extend the same statutory protections for terrestrial radio that now exist for musicians in digital noninteractive streaming. Foreign collective management organizations refuse to pay US musicians when their recordings are broadcast on foreign radio because the US doesn’t have performance right coverage in radio. The adoption of AMFA would result in hundreds of millions of dollars—estimated at $700 million by some—in additional royalties payable to US musicians, including over $200 million in new money from foreign sources.

In addition, statutory regulations as applicable to noninteractive streaming, if applied worldwide to interactive services like Spotify, Apple, Google, and YouTube, would level the playing field for copyright owners, featured artists, session musicians, and vocalists when digital revenue is distributed.

It should be noted that the global entertainment industry is a $2 trillion industry. It has rebounded from the pandemic thanks to streaming and is expected to generate $2.6 trillion by 2025.

Professional musicians had zero income from live performances during the pandemic shutdown and saw consumers turn to streaming platforms to consume music and video content. Musicians and their families struggled to survive as the content they created was exploited by interactive streaming services and tech companies, which pocketed billions and paid CEO’s hundreds of millions with no obligation to share the money with those who made the music.

But does anyone really care? Are legislators and government officials concerned about this outrageous imbalance? Or are elected officials the lapdogs of unregulated business interests that stop at nothing to maintain and tighten monopolistic control of streamed entertainment?

Again, take terrestrial radio as an example. Musicians have subsidized the broadcasters for a century. We’ve received nothing for the broadcast use of our recorded performances, while the station owners have reaped billions in profits. And you can draw a direct line from the US terrestrial broadcasters to digital service providers like Spotify. The business model is fundamentally the same; keep the cost of raw materials (musicians and music) to little or nothing and control the method of distribution. We make the music, while everyone else makes all the money.

As I write this column, the American Music Fairness Act is scheduled for debate in the House Judiciary Committee. Will musicians finally find a helping hand from members of Congress, who have the power to make a difference? Resolving the century-old performance rights imbalance in terrestrial radio is a necessary next step if we are to eventually correct similar inequities in interactive streaming.

For more on how musicians get paid on streaming, see the May IM column at www.internationalmusician.org/how-do-musicians-get-paid-on-streaming/

---