The State of the Union (of Music)
Music is in crisis. This isn’t hyperbole, the last 12 months have been seismically bad for the music industry. Bands have seen a steady move from sales to streams to live events over the past few decades. This has been a worldwide phenomenom. But the Pandemic hasn’t helped, putting a stop to live music events for over 12 months. Worse still, the ongoing Pandemic and the rise of several new strains means we have the potential for a second summer without live music with some events already postponing their events for a second year in a row.
Physical media sales for music saw a deep decline in the 1990’s, the scare stories of cassette killing vinyl never came true in the 1980’s, but Compact Disc finally put the nail in vinyl’s coffin with the advent of the home computer boom. Everyone wanted CDs, but what they didn’t want was the price they had to pay for them. It was partly this high price of music that spawned the likes of Napster, and it’s effects are still felt today. In 2021 you can expect to pay £10 for a CD, maybe £15 for a double CD. In 1995 a CD would set you back £15. This was more than the price of the equivalent vinyl record, but it had the benefits of being digital, and small. No more scratched vinyl hiss, it reproduced the sound as it was recorded, without the limitations of a cheap record player. But everyone knew they cost less to manufacture than the vinyl equivalent. This in part fuelled resentment of the music industry that many music pirates would then use as their justification for music ripping. The result was a steady cost cutting exercise until CDs reached that magic price point where people would buy them again. And with CDs becoming cheaper to buy it meant vinyl sales declined. The problem is that in over 30 years the cost of a CD hasn’t moved much, still being cheaper today than at their peak 25 years ago. This is Crisis number one, a music industry hit by a perfect storm of stagnating prices and falling sales. It’s a pattern that hits home when you look at the rapid decline in sales of physical media since 2000 and the rise of digital sales. In recent years we’ve seen a revival of vinyl sales, but they’re still a niche market compared to how widespread they used to be, and today’s sales are dominated by digital and streaming.
The advent of streaming was seen as the saviour of music when it first started. Here was a way to listen to music legally, without the risk of the Copyright Police knocking on your door. For a handful of artists it has been a very lucrative time, with artists like Ed Sheeran breaking streaming records, and the top 10. But much like with physical CDs there is price inertia that has seen streaming revenue steadily decline. Part of this issue is how much is it worth to have access to a near infinite amount of music at your fingertips? Not much it seems as half of Spotify’s listeners still use their free service. For the rest it’s about the cost of a CD a month. No one can argue that Spotify isn’t good value for consumers, every album by all your favourite bands available at the touch of a button, a mouse-click, or even a voice command to your home streaming hub. There is more choice than anyone can listen to in a lifetime. The problem is that Spotify has become a victim of it’s own success, by being the largest streaming platform available it has drawn the ire of creators that don’t understand how the music industry really works. Peter Frampton famously claimed that Spotify only paid him $1700 for 55M plays. Or to put it another way, just 0.0031 cents per play. When you hear figures like this it stirs righteous anger, but Spotify’s payment system is actually fairly well known, at the time Peter Frampton was complaining about his royalty payments from Spotify they paid $0.004 per play, over 100x what Peter Frampton was paid. This is where how the music industry actually works comes into play. Spotify, like any business, pays the Rights Holder for the music. The same people getting paid for CD sales. That $0.004 is then split between Distributor, Publisher, and Record Label. In some cases these may all be the same company. The artist is then paid according to the contract they have with the record label. For CD sales this usually equates to about 13% of the cost of the CD. Or £1.30 per sale. There may well be other costs associated with the release of the CD, such as marketing that can reduce this by even more, but the average is still between 10% to 15% depending on the record deal, and whether rights have been sold for a lump sum. It’s not uncommon for an artist to sell their entire rights for a lump sum if they’re considered valuable enough. Who wouldn’t want $1M in the bank today rather than spread out over the next 20 years? What’s this got to do with Peter Frampton? Most record contracts were written before streaming existed, and don’t contain any clause for streaming royalties. Record labels have often interpreted this to mean that they get to keep all, or nearly all, of Spotify’s payments to them. Peter Frampton wasn’t paid $1700 by Spotify for 55M plays, his record label paid him that after keeping over 99% of the fee paid to them (minus publisher and distributor costs). For a modern musician they’ll most likely see closer to 10%, as streaming fees will be similar to their physical royalties, and for an independent musician they’ll keep the lot.
The other issue with streaming is that musicians see it as a poor return because they’ve gotten used to a physical sales based model. Whenever a physical CD is sold they see the whole of their share relatively quickly, or at least once the advance has paid out. A physical CD sale is near instant gratification, more so if you’re an independent musician selling your CD at a concert. Each CD sold is £10 in the back pocket. And that gives an artificially high value to the music when streamed. How many times do you hear “I need 2500 streams to make what I earn on a CD”? The problem is no one makes £10 on the sale of a CD, as mentioned above the average artist makes £1.30 on a £10 CD sale, after tax, distribution, publishing, vending… you get the point. At the most a band could make around £4 per CD sale if sold in a shop, if they publish through their own record label. And while they won’t be getting the wholesale price when selling at a concert they’ll still owe tax and production costs for anything sold. It’s not £10 profit. Even on digital sales artists only see two thirds of the sale price, and there aren’t any physical media costs to account for in digital sales. Digital sales have also revived music sales to the point where growth in sales has reached a higher point than at any time during the 1990s. The argument that streaming has cannibalised sales doesn’t hold true when you include digital sales from the likes of Amazon Music and iTunes. Sales are up, but Spotify is still seen as the bogeyman due to a concerted attack campaign against them, often using misleading figures such as “song writer” payments. This hasn’t been helped by some song writers complaining about how much their Spotify royalties have been, while neglecting to point out that they receive zero royalties from physical sales as they are not the Rights holder for the music. This is because some song writers were working on a flat fee basis for the record labels. Streaming royalties are also handled differently to physical media sale royalties as they are treated as a performance, the same way radio play is treated. This is because when you are streaming music you don’t own the music, unlike a physical CD or digital download.
It’s this disconnect between physical sale and streaming performance that most people don’t understand. While a physical sale is instant, streaming is the long game. When an artist publishes their music on a streaming site they are looking at a return over years, not weeks, but many artists are conflating streams with sales and expecting a return each month equivalent of a physical sale from each listener. As Noddy Holder says of Slade’s Christmas hit, “to you it’s a Christmas song, to me it’s my pension”. Streaming serves two main purposes for an artist, marketing and long term income. If it really was as unfair as everyone says it is then the likes of Ed Sheeran wouldn’t be able to earn £4M from one song. Musicians need to stop looking at the royalty rate and start looking at the underlying data that generates that royalty, the monthly listeners and the number of repeat plays that they generate. There are plenty of bands that aren’t considered as big as the likes of Ed Sheeran or Ariana Grande that do make a living from Spotify royalties alone. So when complaining that Spotify doesn’t pay enough start asking instead why people aren’t playing enough.
For those at the shallow end of the streaming pond there has always been live performances. It’s the bread and butter of any musician, you have to be something quite special to make a career in music without playing live. For any band starting out it can be a backbreaking exercise in masochism. Long drives, late nights, and very little pay. For some it will pay off, a support gig here, a demo played on radio there, and then that steady climb to making enough money from touring that the day job becomes a thing of the past. The live music scene was already in decline before the Pandemic, with venues closing around the country like clockwork to be replaced with identikit blocks of flats. And when each venue closes the country loses part of its culture forever. Charities like the Music Venue Trust exist to help preserve these grassroot venues, places like the Hairy Dog in Derby, and the Black Heart in Camden. The Pandemic has changed all that, with many venues that would previously have been viable now on the verge of collapse. The government has alleviated the issue somewhat by enabling venues to access funds, but with funds being fought for between rock and punk venues as well as traditional theatre and opera venues there has been a sense that the lion’s share has been towards classical entertainment venues and the rock scene has been left to primarily fend for itself. Some venues have been able to reopen in a manner of speaking and there’s been a boom in online shows, some of which have been more lucrative than the live shows would have been. With no physical cap on how many tickets can be sold to a virtual concert some venues have been able to sell far more tickets than would usually be possible. But even this income is now coming under threat as the government is looking at new licensing taxes to claw money out of music venues that are putting on virtual concerts. With no real end in sight it still remains to be seen when live music can restart without the limitations of social distancing.
Unlike the grassroots venues festivals aren’t tied to a physical location in quite the same way. While it’s unlikely that the big festivals will change their location, they could in theory be put on anywhere that has a field large enough. However the sheer scale of large music festivals does present them with their own risks. If a band has to cancel a show at your local pub someone might possibly lose a few hundred pounds. If a large festival cancels that can amount to millions. While fees are often a closely guarded secret it’s reported that headline fees can be in excess of £5M for some bands. That’s just for a single band, where it’s not unusual to be having over one hundreds acts appearing over a weekend. Glastonbury alone keeps a reserve fund of £10M in case of emergencies, and while they haven’t been forced to cancel due to the weather yet (they did cancel in 2012 due to a lack of toilets) it’s good to know they’re organised enough for any event that could put the festival at risk. In 2021 they have again cancelled due to the Pandemic, this time making the decision early to limit potential losses. With 2020 being a wipeout for the festival season those reserves can only stretch so far, and with no income coming in for 2 years running it’s important for festivals to take a more cautious approach. No festival could afford to have to shut in the middle of the festival due to an outbreak of Covid, and it would be irresponsible of any festival organiser to put the lives of so many at risk before a vaccine has been fully rolled out. Until festivals can be assured that their insurance can cover them for liability not only during the festival, but also for the risk of having to cancel at short notice it would seem more prudent to take the cautious approach. Expect more festivals to cancel before the summer.
As Roger Daltrey said, “what’s Brexit got to do with rock music?” With Roger Daltrey now signing the open letter demanding touring visas for musicians it would seem that even the legendary Who singer has realised that it actually has quite a lot to do with music. The old guard of touring bands, such as The Who and Iron Maiden, were very dismisssive of the touring hurdles thrown up by Brexit. Many of them pointed out that they were perfectly able to tour before the EU, but conveniently forgot that the rules for touring a foreign country 40 or 50 years ago are not the same as they are today. To better understand the issue it’s important to realise what difference a year makes to a musician wanting to play shows in Europe. It’s a different experience depending on who is touring, for a small band touring Europe for the first time the chances are they would be signed onto an existing tour as a support band. In 2019 this meant making sure they had a van that wouldn’t break down in the middle of Germany and a sat nav programmed with maps of the European countries they were playing in. If they’re lucky hotels would be provided for them as part of the touring deal. While that bit hasn’t changed today they also have the added burdens of visas, carnets, VAT, and custom duties. All of these add costs to tours that are already a costly business, with many bands that toured Europe in 2019 being unable to afford to do the same in the future. For your big bands the process is a bit simpler, they’ll have teams of people whose job it is to book tours in multiple countries, many of which, like the USA, are outside the EU. For them touring Europe becomes a little bit more burdensome, but nothing they haven’t handled before, but with one big difference. If you want to tour 48 States of the USA you can, you simply apply for your visa, pay your fees, fly over and start your tour. It’s a little different for the EU as there are rules for driving through multiple countries, and not all countries have the same rules.
It’s important as well to understand both sides of the argument between the EU and the UK. Ireland is a special case due to the common travel arrangement it has with Northern Ireland. The UK proposal would have EU musicians able to come over as a short term business visitor. However, the problem with this is it’s designed for employers. It would mean that a band travelling by themselves would be unable to apply to travel under this scheme. There are other clauses that would come into effect as well. To get around the self employed nature of most musicians there is a class of independent professional, but these are limited to individuals with 6 years experience and a university degree. Hardly rock and roll. It also doesn’t resolve other issues such as carnets and duty on merchandise and there are limitations still on the length of time people can stay. The way the UK’s position has been laid out is one of limiting access and what visitors can and can’t do.
The EU offer on the other hand goes much further, and would allow artists to stay within the EU for 3 months at a time, so in theory allowing an artist to plan 2 EU tours a year with the only provision being that there had to be at least a 3 month gap between tours. For many musicians this actually mirrors how they plan European tours anyway, with a band doing a short European tour, followed by a UK tour, and then back to Europe for a few more shows before the end of the year. There aren’t many bands that would tour Europe for a longer period than 3 months, bands with touring schedules that busy are usually on a world tour, of which only part of the tour would be European based. The EU proposal didn’t just cover musicians either, it would also enable UK citizens to travel and work in the EU in a variety of industries without a visa, including bar work in tourist resorts and working as travel reps. It seems this is why the UK rejected the EU proposals, wanting to limit seasonal workers access to the UK. Given how much seasonal work is actually done by EU citizens in agriculture this seems like a win-win situation, both allowing seasonal workers access to UK and EU markets and allowing musicians to tour without the extra burden of visas. The EU proposal would also protect musicians from the cancellation of events. Many musicians will plan tours around a festival. Under the current rules if the festival cancels that removes the invitation requirement for the visa putting the entire tour at risk. It would disastrous to arrive in the country, play your first show and then be deported because the festival that your visa depends on cancels.
While there are still many issues to be overcome it’s clear that the EU’s starting point of allowing musicians to plan up to 3 months of tours is a much better starting point. It’s also clear that in order to say that we are “controlling our borders” the UK government has thrown musicians to the wolves. It’s a far cry from Boris’s original claim made the day after the Referendum that we would still be able to live and work in the EU. The idea that we would be able to still have the same rights as EU citizens while denying those same rights to EU citizens here in the UK was always going to go down like a Led Zeppelin.
It’s clear that any one of these issues would be seen as a crisis on its own. But to have all of them in play at the same time seems like a particularly cruel joke to play on some of our most important creative professionals. Not only is music a multi-billion pound industry it’s one that can be seen as essential for the emotional wellbeing of the nation. Music is necessary for our mental health, and live music especially is an emotional outlet like no other. We must support our musicians and find a way to ensure that once the world returns to normal musicians and live music venues ae allowed not just to survive, but to thrive. One hundred years ago the Influenza Pandemic of 1918 led to an explosion of creativity the likes of which had not been seen before. Within a few short years the world went from lockdown and entered the roaring 20’s with a newly prosperous youth discovering Jazz and dance. With the right support we could see a new roaring 20’s, but this time in the 2020’s. It will be sorely needed after the last year, but to see it happen will need support from both government and the public. It won’t happen if we lose grassroots venues and musicians quit the industry due to being unable to make a living wage from what as always been a financially unstable job.