Everything is positive – the German music industry is doing well. Labels in Germany earned 2.21 billion euros last year, a sales increase of 6.3 percent. And what do artists get out of it? They are getting an ever-increasing share of it – at least that’s what a new study shows.
For the study commissioned by the Federal Association of the Music Industry, the financially strongest German music labels presented their investment, licensing and distribution figures – the largest chunk of course falls on the big three, i.e. Universal, Warner and Sony Music. From their data, the analysts at Oxford Economics calculated a fireworks display of beautiful figures: 33 percent of the total income is reinvested by the labels, 43 percent is passed on to the artists through payments, which have increased by 132 percent in the past ten years.
“Every year,” says Florian Drücke, head of the Federal Music Industry Association, “the labels invest a third of their income in the development and marketing of new talent and new music.”
How the money will be distributed is unclear
These figures, which have now been published for the first time by the Federal Association, are also a kind of counter-speech to the growing criticism of the labels’ less transparent distribution model, i.e. the system by which the streaming income is paid out to the individual artists. The most prominent face of this criticism of the system is Herbert Grönemeyer.
Just two weeks before the music industry figures were presented, the still relatively young “Academy for Popular Music”, founded by around 50 musicians, invited people to a panel discussion in which Grönemeyer and Spotify European boss Michael Krause took part Green MEP Niklas Nienass and songwriter Balbina took part. It was about the distributive justice, about the opaque algorithms and lack of transparency in the streaming revenues that flow to the labels and are then distributed by them to the artists. And things got hot.
The profits of the major labels have been rising again for several years – mainly thanks to increasing income from streaming. Initially, digitalization led to a massive decline in income due to the shrinking recording market. It’s only been going up in big steps since 2018. But the oft-quoted micro-amounts that lesser-known acts in particular receive through streaming are contrasted with the 9 billion euros that market leader Spotify alone earns per year. Spotify, in turn, has no influence on how the profits are distributed; the money goes to the labels. And how they distribute, the accusation goes, is not very transparent.
Florian Drücke, a generally friendly and patient person, at best rolls his eyes internally when confronted with this accusation. And holds up his new study. He would like to see “objectification, transparency and de-anecdotalization” in the heated debate. “But it’s clear that as income increases, desires grow and we have to discuss it.”
Streaming is driving growth
The music industry wants to prove that the streaming millions don’t just end up in their accounts, but that artists benefit significantly more from the income today than they did ten years ago – and even disproportionately: the label’s total income has increased by 17 percent since 2010 increased, but payments to female artists more than doubled in the same period and advances even tripled.
“The streaming business,” says Drücke, “is a key driver of the industry’s growth. And not only the labels benefit from this, but also the artists.”
What the numbers and percentages don’t reveal, however, is who actually benefits from the streaming millions and how much: Does Taylor Swift get 90 percent and 14,743 smaller acts get the rest? So are the big ones getting richer and the little ones getting the pennies? How can distributive justice look like between a 70-minute album versus a 2-minute track that has been clicked 14 billion times?
These remain questions for critics. And it doesn’t answer the first comprehensive investigation into music industry investments and payments.