Music Managers Have No Idea Where Their Artists' Digital Royalties Are, Either

If you're confused about all the news, facts and figures concerning the streaming-music revolution, don’t worry: The artists’ managers are confused, too. According to a survey of 50 artist managers released Tuesday by the Music Managers Forum, more than half -- 57 percent -- do not know the details of the revenue-sharing agreements in place between streaming services and their artists; two-thirds of the managers surveyed did not know the minimum payment to which their artists were entitled.

And even among those who did, the contracts were often opaque and light on crucial details that might illustrate why artists get as much -- or as little -- as they do from these fast-growing digital services. In fact, more than a third of the respondents’ contracts with labels and publishers contained no mention of digital income at all.

“It's just impossible,” Jon Webster, president of the Music Managers Forum, told International Business Times. “We just can't get to the bottom of the figures.”

The survey’s respondents were spread out across a wide swath of the recording industry, representing artists signed to all three major labels as well as prominent independent ones, in territories including the United States, Britain, Canada, France, Australia and Ireland. Forty-two percent of the respondents’ clients were signed to major label deals, while 58 percent were signed to independent deals across more than 100 independent labels.

Mixed Market

Some of this lack of knowledge came down to indifference. While streaming is by every account the fastest-growing source of income for recording artists, many still earn the lion’s share of their income from other sources, including the sale of CDs, touring revenues, or even sync and licensing deals, whereby a brand, studio or advertising agency will pay for the right to use a song in a film, television show or commercial.

“We're in such a mixed market, still,” Webster said. “I know some management companies that never look at royalty statements; they think it's a waste of time."

“They think a label's strategy is to keep them in a recoupment position all the time,” he added, referring to a scenario where an artist does not collect any royalties earned from the sale or stream of recordings until his label recoups all the money it has spent on the artist.

Indeed, with at least some measure of income, however modest, guaranteed, Webster said many managers would rather spend their working hours doing things like chasing down a sync opportunity, or putting together a large tour. “If you're 35 and managing an up-and-coming act,” Webster said, “you've got far more important things to worry about.”

In some respects, the MMF survey results bear that out. Just 38 percent of respondents said that artists earning more money from streaming services like Spotify was a top priority.

Touchy Subject

That number can also be read another way. After Metallica drummer Lars Ulrich’s comments comparing Napster to theft alienated a generation of fans, and after Tidal’s poorly received launch knocked its founders into a defensive crouch, both artists and their managers could be reluctant to make a fuss about what they’re getting. “You've got to be so careful of rich artists complaining,” Webster said. “People just don't appreciate that at all.”

Betting a big chunk of an artist's social capital to fight for better royalties would be risky. But doing so makes even less sense when you think there’s so little upside in streaming. Despite the fact that 74 percent of the survey's respondents believe streaming will be the biggest source of income for artists by 2020, just 2 percent thought that streaming had the potential to grow global revenues for recorded music.

That outlook may be grounded more in pessimism than fact. While the recorded music industry's revenues fell below $15 billion last year, some industry projections predict that the industry’s recorded music revenues will begin to expand in the next couple years, with streaming driving most of the gains. Raising enough awareness of what's going on with streaming could change some minds -- provided everybody is able to get on the same page.

“It takes a lot of education,” Webster said.