Abstract
The intervention of digital service providers (DSPs) or platforms, such as Spotify Apple Music and Tidal, that supply streamed music has fundamentally altered the operation of copyright management organisations (CMOs) and the way song-writers and recording artists are paid. Platform economics has emerged from the economic analysis of two- and multi-sided markets, offering new insights into the way business is conducted in the digital sphere and is applied here to music streaming services. The business model for music streaming differs from previous arrangements by which the royalty paid to song-writers and performers was a percentage of sales. In the case of streamed music, payment is based on revenues from both subscriptions and ad-based free services. The DSP agrees a rate per stream with the various rights holders that varies according to the deal made with each of the major record labels, with CMOs, with representatives of independent labels and with unsigned artists and song-writers with consequences for artists’ earnings. The article discusses these various strands with a view to understanding royalty payments for streamed music in terms of platform economics, offering some data and information from the Norwegian music industry to give empirical support to the analysis.
Highlights
The intervention of digital service providers (DSPs) or platforms, such as Spotify Apple Music and Tidal, that supply streamed music has fundamentally altered the operation of copyright management organisations (CMOs) and the way song-writers and recording artists are paid
The production process starts with contracts between song-writers and music publishers and between performers and record labels that deal with the rights accorded them by copyright law and ends with platforms that stream music direct to the consumer for a subscription fee or for free financed by advertisers
Two CMOs are involved in licencing music and distributing revenues: TONO manages performing rights and mechanical rights for Norwegian song-writers on behalf of the Nordic Copyright Bureau, which deals with mechanical rights for melody and lyrics in sound recordings in various media for all the Nordic countries; Gramo administers the economic rights of performers and record companies
Summary
The intervention of digital service providers (DSPs) or platforms, such as Spotify Apple Music and Tidal, that supply streamed music has fundamentally altered the operation of copyright management organisations (CMOs) and the way song-writers and recording artists are paid. The production process starts with contracts between song-writers (and other composers) and music publishers and between performers and record labels that deal with the rights accorded them by copyright law and ends with platforms that stream music direct to the consumer for a subscription fee or for free financed by advertisers.
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