31 August 2022

Listening to music should be free

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This is not intended to be an incentive to illegally obtain music! This is about my opinion on why I don't find the monetization of just listening to music (at least digitally) very justifiable. It is understandable to me, but it doesn't feel (anymore?) like the "right way". Why?

Assumption

Listening to music should be free. That's my thesis. First, I want to roughly outline how I logically justify this for myself and I will also mention some extreme points. Ultimately, however, I only hold this position to a limited extent - after all, there are fluid transitions and many factors that could create a different framework.

By music I mean a work that already exists and can be listened to, for example, via a streaming service, online or on the radio. It should be a work that no longer requires any further work time - for example, it is infinitely duplicatable digitally. Performances of such a work in the form of a concert are not meant here.

With free, I want to introduce the aspect of working time. This should usually be compensated, in my opinion. However, since the aforementioned work already exists and thus no longer requires any working time, the legitimacy of compensation is quasi-eliminated or at least no longer immediately comprehensible.

And that brings me to a crucial differentiation: indirect and direct compensation.

Direct vs. Indirect Compensation

The most direct form of compensation is probably getting paid directly by a customer, client, or fan. The more intermediaries there are between the creator and the recipient of the compensation (e.g. a label, streaming service, payment service with fees, etc.), the more indirect the compensation becomes. I want to emphasize that there are gradations of indirectness, and it's not a black-and-white issue.

For an example of indirect compensation, let's focus on music that is not produced on the basis of a direct commission. Creating such a work involves a certain degree of entrepreneurial risk: you may produce/compose music for which you won't be paid right away. In other words, you're working on a speculative basis. Of course, this doesn't mean that it's not legitimate for the work to be paid for - you're undoubtedly acting professionally and may have the intention of generating economic value with your work after all. The question is how and when this compensation occurs, and above all, how supporting forces in the form of fans or customers can understand this compensation.

This quickly brings us into the realm of transparency and, thus, trust. As a supporting fan, I assume that my support is definitely going towards the art that I want to support. As an artist, I want my fans to be able to trust me and for the support to happen as directly as possible. In this way, I can also have a much more direct relationship with my fans!

An example of a more direct form of compensation would be a commission, where I specifically compose and produce something for a client and get paid directly. However, I want to examine examples of indirect compensation because these are the ones that are more critical to me.

Example Streaming Service

I consider direct vs. indirect payment as a kind of building block principle. When musicians perform on a weekly market and receive funds directly from the audience on-site, that is probably the most direct payment I can imagine. If customers pay me for a completed order, the only instance between me and the customers is the bank at most. This can now be extrapolated and more and more different instances can be spun in between: music labels, streaming services, payment services even before one's own bank - a flow of money from the fan to the supported art could thus look like a schema (perhaps symbolized a bit drastically) as follows:

Fan $$$$ ⇒ Streaming Service $$ ⇒ Music Label $ ⇒ Bank $ ⇒ Artist $

So, for example, there could be three instances between fans and artists. However, in the instances of streaming services and music labels, I do not know how transparency behaves. But what I have noticed so far is that artists do not receive 100% of the payment from fans in the end, as the systems are designed that way and the instances themselves also want to earn something. Depending on the "service" offered, this can certainly be legitimate. However, whether this is really worked out fairly is probably a very crucial point that is criticized. For this, I can recommend the following sources that have dealt with such a question in more detail (unfortunately only in german, sorry):

Example of a Collecting Society

In my opinion, collecting societies are also very opaque. The broadcasting fee alone generates many royalties in connection with a collecting society - and all German households pay this fee. Whether they listen to or like the schlager singer who is trilling away, or not.

My research yielded the following concrete numbers: ARD receives about 70% of the broadcasting fee (source) and claims to spend about 2% of it on GEMA/GVL (source). With revenues from broadcasting fees of €8,422,080,636.04 in 2021 (source), the total amount of fees paid for exploitation rights would be €168,441,612.72, if other broadcasting companies were to spend the same percentage.

The 2021 Annual Report of GEMA leads me to the following calculation:

  • In 2021, GEMA had 84.861 members.
  • In 2021, GEMA generated €1,031,978,000 in revenue.
    • Among this amount, €67,971,000 was generated from membership fees.
    • Of that amount, €826,028,000 was distributed as payouts.
    • With the number of members and subtracting their membership fees, this amounts to an average payout of about €11,360 per member for 2021.

I hope I have read this annual report correctly. But the fact that it's so complicated to read is an indication to me that these systems are in need of revision. The complexity may be understandable to some degree, but I'm convinced that something like this could be made much more transparent and straightforward just by using more modern language and format in such a report. For example, there could be a similarly simple calculation like the one I made above (if I did it correctly) on a separate page.

Now, just imagine that - if my calculation is correct - a member gets over €10,000 per year in passive income for just indirectly done work. In addition, there is also a great deal of luck and taste involved, what kind of music is popular with the audience, what is promoted and amplified by key players, and therefore experiences more success, etc. All these aspects are simply not transparent and highly opaque.

Insight into my self-employment: at my lowest hourly rate with the usual correction loops, €10,000 would be enough for about 45 minutes, and at my highest hourly rate with the usual correction loops, even only about 15 minutes of music. However, on average, I create new music for about an hour a year (trending upwards) and do not generate anywhere near this €10,000 (much of what I produce is licensed music on entrepreneurial risk).

To me, this example calculation is somehow a problem. Of course, it could simply mean that I have too little success or should even use more indirect compensation models. However, the fact remains that it seems very opaque to me and/or was difficult to research how and where funds flow back and forth when it comes to such indirect compensation models. And that's something I don't think is right.

Example Production Music

There is another model that contains slightly fewer instances of indirect compensation: Production Music / License Music. There may be the following chain:

Customer $$$$ ⇒ License Agency $$ ⇒ Bank $$ ⇒ Artist $$

Receiving the art can often remain free and accessible. As an example, I would like to mention three Production Music archives where you can listen for free to music, whereas for the same quality of music on the radio, you more or less passively pay money (through listening to advertisements or the broadcasting contribution!): AudioAhead, Proud Music or Extrememusic. So there are already artists who compose and produce music and make it freely available for listening - this is not an utopia.

It is mainly about compensating the economic added value for the customers and getting a share of this added value. That means listening is free, but as soon as the using instance wants to generate economic added value with my music, they pay. Personally, I find this quite fair.

Example Crowdfunding

There is ultimately one example that, in my opinion, comes relatively close to immediate compensation: being supported directly by fans through a platform. A platform where there ultimately doesn't need to be a distribution key because fans support the art directly. For example, I am on the following platforms:

There are only a few instances between an artist and their fans on these platforms, and often only minimal percentage fees (through platform and online payment services). As a result, an artist effectively keeps more of the support from their fan base. Personal experience: However, one also needs a fan base that is truly willing and convinced to support them. For me, this fan base is still in its infancy, and I am incredibly grateful to the few fans who are currently supporting me already! In addition to the financial support, being close to fans is also beneficial. I can see the concrete people behind the support, and it makes me much more motivated. This is a completely different feeling than simply reading a play or click count, which ultimately cannot say much. And I can be in direct contact with my fan base and generate content that they really like.

Conclusion

Overall, it seems very difficult to have non-immediate payment for artists through methods such as royalties from collecting societies or payouts from streaming services. For fans of the art, it is certainly not immediately clear what their favorite artist is truly receiving from the expenses that the fanbase incurs (such as through subscription fees). Additionally, I wonder how easy and transparent it is for artists to see who earns what. Unfortunately, I have no personal experience or insight on this - intuitively, however, I would assume that even this data is only pseudo-transparently held (such as through dark patterns or unclear number assignments). Just researching this was very difficult.

As an artist, I do not want my fans to financially support me and ultimately not have the opportunity to see very concretely how their funds come to me. If I am a fan of someone, I also do not want to pay monthly contributions that may end up going mostly to someone else.

Furthermore, I believe that education and knowledge should be as freely accessible as culture in general. I consider the mere reception of culture to be essential and important for people. Of course, this conflicts a bit with the existence of the artist themselves: eventually, lifetime must be invested in creating art. And this time must be secured by a livelihood. Nevertheless, I am convinced that there should and could be other systems. Above all, all musicians should be aware of these things and should not feel obliged to be part of a streaming service / collecting society / etc. And they should also no longer have to fear for their own existence.

Update

05.09.2022: Based on a reader comment, I addressed the value concept of music in a new post: The Value of Music.

31.07.2023: I came across an article in the taz (german daily newspaper) that, in my opinion, aligns with the theme of my post here: Musik existiert nicht mehr (analog) (means "music does not exist anymore analogue"). In that article, it says:

"[A streaming service] can remove my "purchased" movies from [its] media library, and then they're gone."

To me, this highlights another aspect of the problem with music consumption through indirect compensation. You give up the control of your artwork to third parties and let these intermediaries decide how to treat your own fans / recipients.