Newly Proposed 'Living Wage for Musicians Act' Aims to Boost Artist Payouts to 1 Cent per Stream

At Spotify's current rate of $0.003 per stream, artists must chase a staggering number—over 800,000 monthly streams—to earn the equivalent of a full-time minimum-wage job!

Representatives Rashida Tlaib (D-MI) and Jamaal Bowman (D-NY) recently introduced a new bill in Congress with the goal of creating a more equitable royalty model for artists on streaming platforms. The aptly named "Living Wage for Musicians Act," created in collaboration with the United Musicians and Allied Workers Union (UMAW), proposes a complete overhaul of the current streaming royalty system.

Breaking Down the Living Wage for Musicians Act

• The Problem: Right now, music platforms like Spotify pay artists a small fraction of a cent per stream. At Spotify's current rate of $0.003 per stream, an artist would need a staggering 800,000 monthly streams to make the equivalent of a full-time minimum wage job!
• The Solution: The Living Wage for Musicians Act proposes a new royalty model that would guarantee artists a minimum of one cent per stream. This, combined with a potential monthly cap on payouts, would ensure fairer compensation and offer a more sustainable income for musicians who rely heavily on streaming services.
• Funding the Fix: To avoid placing the financial burden solely on listeners, the Act proposes a two-pronged approach: a tax on streaming services' non-subscription revenue (like advertising) and a slight increase in subscription fees. The proceeds would be directed to a non-profit collection and distribution fund that would pay artists based on their stream count.

How the Living Wage for Musicians Act Impacts Artists

This legislation has the potential to be a game-changer for many artists struggling to make ends meet. As Rep. Tlaib states, "Detroit's artists have revolutionized the music industry... It's only fair that the folks who create the music we groove to get their fair cut, so they can thrive, not just survive." Rep. Bowman echoes this sentiment, highlighting the current imbalance: "It's downright wrong that an artist needs over a thousand streams of their song just to buy a cup of coffee."

The Living Wage for Musicians Act sends a strong message: artists deserve fair compensation for their economic contributions, not just recognition for their art. By guaranteeing creators fair pay for their work, this bill could foster a more vibrant and diverse music scene where creativity is valued, and artists can focus on their craft without financial constraints.

Will the Act Stifle Hit-Making? What it Means for Top Artists

As we briefly noted, the act includes a cap on artists’ monthly streaming revenue for each song. Here’s what the United Musicians and Allied Workers Union (UMAW) website has to say about the cap: “...the Living Wage for Musicians act includes a maximum payout per track, per month… Money exceeding this cap (as it stands, 1,000,000 streams for a track in a month) will be used to increase the payout per stream for all recording musicians.”

The impact of this cap is twofold:

High-performing artists may reach the cap on their earnings for their most popular songs, limiting their potential income from those tracks. However, they would still benefit from the increased base payout for all their other songs. For lesser-known artists, the increased base payout from the pool could significantly boost their overall streaming income, even if their individual songs didn’t reach the million-stream mark. So, while capping top artists’ earnings might discourage them from investing resources into creating hit songs since their financial reward would be limited, it would also allow for more equitable streaming payouts across the board.

Before diving deeper into the proposed capped payouts, it's helpful to examine how streaming payouts work under the current model:

Spotify’s FAQ page from their most recent Loud and Clear report states that “Spotify, like every major streaming service, pays royalties based on an artist’s share of overall streams across the platform. [They] call this ‘streamshare.’” According to the report, “[200,000] artists generated 95% of the total royalty pool on Spotify, while contributing 15% of all tracks uploaded daily to Spotify.” Effectively, under Spotify's current model, the most popular artists capture a significant portion of streaming revenue, while the vast majority of artists receive miniscule payouts.

To clear things up, here’s some quick math based on the current cap amount and proposed pay rate:

If an artist had 10 songs generate over 1 million streams per month, they would receive $10K per song, and this would translate to $100K a month, or $1.2 million per year. If they have a larger catalog of songs, let’s say around 50, that are each generating over 1 million monthly streams, they would make around $500K a month, or $6 million per year. So, while the cap may reduce payouts to top earners, it’s still a pretty sweet deal for artists with consistently popular music. Here’s where the act makes the biggest impact: if a lesser-known artist has 10 songs that each generate 100K streams per month, they would receive $1000 per song and earn $10K per month or $120K per year—an actual living wage!

Now let’s look at one of the most frequently streamed artists: Drake. While precise monthly streaming figures for individual artists are often unavailable, we can make an educated guess about Drake's potential earnings under the Living Wage for Musicians Act. Drake currently has 84.2 million monthly listeners. To keep things simple, let’s assume that those are not repeat listeners (although many of them likely are). Drake has an extensive catalog of songs, with around 140 singles and 23 albums. If the 84.2 million streams from those listeners were split amongst his singles, that would amount to around 600K streams on each single per month (84.2 million monthly streams / 140 singles). 140 singles x 600K streams x $0.01 per stream would amount to a grand total of $840K per month—a little over $10 million per year. So, Drake would still earn a significant amount of money under the act, and other musicians would still have room to make a living from streaming, as well.

It's important to note that the one million stream cap figure is subject to change during the legislative process.

Will the Living Wage for Musicians Act Become a Reality?

The Living Wage for Musicians Act is still in its early stages. While it has the backing of artist advocacy groups, its path to becoming law remains uncertain. Stay tuned for further developments in the battle for just compensation in the music industry!

If you want to read more about the act, check out this article on the UMAW website.