It’s no secret that the transition to streaming-based economic models for the music, movie and television industries has been disruptive to those businesses. But the force of that disruption has not hit all parties equally or equitably.
The media companies that own music labels and publishers, and the film and TV studios have faced challenges adapting, but at least some of the problems they face have been of their own making. The music companies were rocked, starting with Naptser in 1999, by technology changes they could have, and arguably should have, seen coming. Streaming has been a lifeline since then but they’re now dealing with slower subscriber growth amid market saturation in the major territories.
The movie and TV studios, in response to the rise of Netflix, went on a frenzied chase after tech-stock like valuations pouring billions into building out their own streaming technology platforms and billions into new programming to lure subscribers. They are now suffering the combined effects of a Peak TV hangover and a huge technology bill coming due.
The biggest blows from the streaming revolution, however, have fallen on the writers and performers in both sectors, both because they lack the resources of the media conglomerates to weather the storm, and because they’ve been buffeted by forces largely beyond their control.
The record labels that own the copyrights in the master recordings of most music artists were free to license their catalogs to streaming platforms on whatever terms they could negotiate. Except for artists with an unusual measure of contractual or cultural leverage, most had little choice (and were never really asked) but to accept those terms, which amounted to less pay for the same work.
The streaming-driven boom in movie and TV production could have been a boon to writers and actors. But they were trapped in contracts that paid them much less for the exploitation of their work on streaming platforms than in the traditional movie and TV channels. All the new work in streaming left them running in place to fall behind.
The fundamental problem for writers and performers in both sectors, however, is that streaming has turned what had long been hits-based industries into volume businesses. From either a licensing or subscriber-acquisition perspective, music, movies and TV shows are essentially fungible commodities. Their value lies in the size of the catalogs and collections of which they’re part more than in their resonance with audiences. Artists and performers are paid in the same manner for any and all of it, divided by the total number.
There are signs that a new model may be emerging, however, at least for some creators.
The new royalty payout models being adopted by Deezer and Spotify, for instance, are designed to allocate royalties not on a one-size-fits-all basis but according (more or less) to the popularity of an artist or a track. Though criticized by some as unfair to less popular or emerging artists, the new models at least attempt to align artists’ earnings with the intensity of their followings and appeal of their music.
Artists whose work generates the most streams already received bigger royalty checks than less popular artists, of course, based on their greater market share. But the new paradigms go farther, by changing the formula by payouts are calculated to more explicitly reward popularity — that is, hits — by shifting money out of the undifferentiated royalty pool into a more merit-based channel.
The settlements in the recent Writers Guild and Screen Actors Guild strikes in Hollywood are even more explicitly pay-for-play. After starting negotiations demanding a per-subscriber revenue-sharing arrangement with streaming platforms, the actors guild appear to have agreed, according to initial reports, a residuals formula similar to the arrangement the Writers Guild had accepted.
Under that formula, writers and now actors will receive bonus residual payments about the common base rate, for movies and shows that achieve certain viewing thresholds on streaming platforms. Not only will popular shows — the hits — earn artists a bigger slice of the pie, it will come with toppings that reflect the degree of their popularity.
It’s probably too early to call this a trend. And to be sure, there are important difference between the Hollywood settlements and the new music royalty models. Spotify’s new plan, for instance, shifts money from one pocket to another, whereas the writers and actors settlements will add money to a single pocket.
But after a decade or more of one-size-fits-all, take-it-or-leave-it payment terms, artists and performers are beginning to find ways to stand out.