A music streaming study found that only hip-hop and pop artists actually benefit from the system’s payment model.
According to the study, blues, jazz and heavy metal bands often end up being harmed by streaming services like Apple, Spotify and Tidal.
Researchers from the University of Hamburg and the private Kuehne Logistics University in the northern German city have found that most pop and hip-hop artists benefit from the so-called pro rata model.
In this type of payment, all profits from fees and advertisements are pooled and paid out to artists based on the share of total tracks.
It also means users can pay for music they haven’t heard.
“Because the share of all tracks determines the money paid out, short song genres benefit the most, with a segment of users who listen longer and for less money,” said Professor Michel Clement, lecturer at the Faculty of Business Administration of the University of Hamburg.
The study focused on a comparison of the pro-rata model and an alternative system, the so-called user-centric model.
The latter attributes benefits to the artist that a user actually listens to.
The researchers evaluated data from an online panel survey of the German population.
The survey included individual information on how long the streaming services were used, users’ preferred genres and any subscription fees.
The data was then analyzed in conjunction with information available from streaming services, for example on the most streamed artists and their most successful songs.
Using specially developed formulas, the researchers distributed the calculated profits for the two models and were thus able to confirm the current shares for several genres.
They found that composers, artists and classical music rights holders would have earned about $27.3 million more each year if they had been paid under a user-centric model instead of the prorated system. .
Hip-hop artists are the group that has benefited the most.
Research leader Clement explained, “A few genres, particularly jazz, blues and heavy metal, have longer average song times and are therefore at a payout disadvantage.
“At the same time, pop, hip-hop and electronic dance music have favorable conditions thanks to shorter song times.”
His research group’s survey also shows that song length has declined over the past 10 years across almost all genres, while streaming services have seen a surge in subscriptions and usage.
The study authors, who stressed the importance of a more diverse music landscape, said an open discussion needed to take place regarding fair payment models.
Spotify, the world’s most popular streaming service, was founded in Stockholm, Sweden in 2006. It has over 400 million active users.
The Swedish-American company paid out $30 billion in royalties to the music industry in 2021, according to Forbes.
Spotify has been criticized for its payment model and pricing.
Paul McCartney, Sting and Led Zeppelin were among 156 artists who signed an open letter to Boris Johnson in April 2021, calling on the UK Prime Minister to push through changes to the streaming business model.
Spotify says in a statement on its website: “We calculate stream sharing by counting the total number of streams in a given month and determining what proportion of those streams were people listening to music owned or controlled by a particular rights holder.
“Contrary to what you may have heard, Spotify does not pay royalties to artists on a per-play or per-stream rate; the royalty payments artists receive may vary based on differences in how their music is streamed. or agreements they have with labels or distributors.”
Spotify’s fiercest global rival, Apple Music, had around 78 million subscribers in June 2021, according to consumer data analytics firm Statista.
The University of Hamburg is the largest research and educational institution in northern Germany. It was created in 1919.
Kuehne Logistics University is a state-recognized private business school founded in 2010.
The study was published on May 16 in the Journal of the Academy of Marketing Sciences and is titled “Implications of Platform Compensation Models for Digital Content: Initial Evidence and a Research Agenda for Streaming Services.”
This story was provided to Newsweek by Zenger News.