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The Music Streaming Industry: All that Glitters is not Gold

Updated: Jul 14


The music streaming industry, led by giants like Spotify, presents itself as a modern marvel of digital convenience and global accessibility. And it is that. Yet beneath the glossy exterior lies a system that mirrors the worst aspects of late-stage free-market capitalism and trickle-down economics, albeit without the trickle.


This blog post explores some of the compounding issues plaguing the music streaming world and how co-operatives could be the antidote to some of their shadier symptoms.


The Monopolised Streaming Landscape


Imagine the music streaming industry as a giant, glittering nightclub. At first glance, it looks exciting and welcoming—unlimited access to music, a global dance floor for everyone. But behind the scenes, it’s a pandemic super-spreader of shady deals and unfair practices.


You’ve got your streaming giants like Spotify, Apple Music, and Amazon Music, who’ve basically turned into the bouncers of the nightclub. They decide who gets in, who gets the spotlight, and who’s left in the alley looking lame. Surprise, surprise—the big-name artists get the champagne VIP treatment while independent musicians fight for the budget beer dregs.


To add insult to much injury, Spotify, the head bouncer, recently decided to stop paying royalties for about three-quarters of the tracks on its platform. If your track doesn’t get 1,000 streams a year, you get nada. Talk about kicking independent artists while they’re down. Let’s break down why this is not just unfair, but downright absurd.


The Harsh Reality for Independent Artists


Imagine you’re an independent artist trying to make a living off your music. To earn enough from streaming royalties to buy a cup of coffee in Perth, you need at least 1,000 streams on a single track. In a marketplace where finding visibility as an indie artist is like being the needle in the haystack, this target is becoming more and more unreachable. And now, with Spotify’s latest move, if you don’t hit that 1,000-stream milestone within a year, you earn nothing. You be forgiven for feeling ripped off. We bloody do.


The 1-Percenters


And who benefits from this skewed system? The major labels and their signed artists of course—the 1-percenters, who already dominate the streaming charts. They rake in the vast majority of streaming revenue while independent musicians are left scrambling for scraps. It’s ‘trickle-down’ economics at its best (yes, that was sarcasm). The wealth pools at the top, creating an ever-widening gap between the haves and the have-nots.

  

Redirecting Royalties: Robbing the Poor to Pay the Rich


So, Spotify’s decision to halt payments for tracks with fewer than 1,000 streams means that the (albeit meagre) money that should have gone to these struggling artists is now redirected to the top-tier winners. It’s like a reverse Robin Hood scenario—taking from the poor to give to the rich. This approach perpetuates a cycle where only the already successful can thrive. And let’s be clear – this policy affects three quarters of the music on the service.


The Streaming Spend Siphon


Music streaming spend in Australia is projected to hit over AUD $628 million in 2024. But here’s the kicker: most of these royalties are funnelled offshore to international artists via their labels. This setup offers little benefit to local talent or the Australian economy. While Aussie listeners might be jamming to the latest global hits, the independent artists in their own backyard are left struggling. The music played in Australian businesses and public spaces is predominantly international, making it even harder for local artists to get the exposure and recognition they deserve.


The Independent Artist’s Dilemma


For independent artists, this isn’t just about missing out on coffee money. It’s about survival in an industry that’s increasingly impenetrable for those not backed by major labels. Without fair compensation for their work, many artists are forced to juggle multiple jobs, diminishing the time and energy they can dedicate to their craft. This systemic imbalance crushes creativity and diversity, leaving listeners with a homogenised music landscape.


And while we’re talking money, Daniel Ek, Spotify’s CEO, is sitting pretty with a net worth of over AUD 7.25 billion. Meanwhile, nearly half of Australian musicians earned less than $5,999 from their music careers in 2023. Only one in five can make a (half decent) living from music. With an average payout rate of $0.003 to $0.005 per stream, you’d need over 300,000 streams to make a thousand bucks in Australia. Ouch. The bouncers pocket the cash while the performers pass the hat around, keeping the mirror ball of economic disparity spinning.


The Illusion of Opportunity: More Artists, Less Revenue


What’s obvious here is that while streaming platforms once promised a global stage for any artist, the reality is more like a talent show where the judges are biased. With thousands of tracks uploaded daily, and millions on the system, independent artists struggle to stand out. And of course, one of the biggest barriers for independent artists is getting onto popular playlists. These are the club’s prime spots where everyone aspires to be seen. But the algorithms and labels (aka the bouncers) favour mainstream artists with mainstream sounds, leaving indie musicians lurking in dark corners.


The stats highlight this disparity starkly. Despite Spotify paying out over $9 billion in streaming royalties in 2023, only a tiny fraction of artists earned significant revenue. Only 1,250 artists earned more than $1 million each in recording and publishing royalties, while only 11,600 earned over $100,000. This means over 30% of the revenue allocated to artists went to just 12,850 label-backed artists, leaving almost 11 million other artists to fight for visibility and financial survival (rounded figures).


With power concentrated and content controlled, niche and experimental genres get shoved to the fringes, and only commercially viable hits that appeal to the masses get the spotlight. This limits music diversity and stifles artists’ creative freedom. With fewer live performance opportunities and a streaming environment that’s more like a meat grinder, many artists are questioning whether they can keep going. Over time, it’s fair to expect the club’s playlist to get pretty basic, and the problem is, the bouncers like it that way.


The Pack Music Co-operative


Enter The Pack Music Co-operative—an emerging music streaming service supporting local independent musicians. Unlike multi-national corporations underwritten by venture capitalists and shareholders expecting massive returns, co-operatives ensure artists get fair compensation and keep ownership of their work. The Pack wants to turn the ‘basic bitches only’ nightclub into a diverse, all-ages festival where everyone gets a fair share, and everyone is welcome.


Co-operatives operate on principles of democratic member control, economic participation, and concern for the community. Everyone at the festival gets an equal vote on how and where their music is played, how to share the profits, and what snacks to bring.


Instead of the exclusive, impersonal global club, localised, community-connected approaches offer an equitable alternative that prioritises the needs of independent artists and the broader arts economy.

The Pack’s localised, co-operative platform aims to foster deeper connections between artists and their communities, involving local listeners, businesses, and governments to create a supportive environment for artists.


  • Local Listeners: Place-based curation can cultivate a loyal listener base that is more likely to support local artists through streams, purchases, and live events.

  • Local Businesses: Businesses can collaborate with artists to host live performances, sponsor events, and use local music in their venues, creating additional revenue streams for musicians. These partnerships can also strengthen the local economy and enhance the cultural vibrancy of the community.

  • Local Government: Governments can play a crucial role by providing funding and infrastructure support for localised music platforms and events. Policies that prioritise local music in public places and fair compensation for artists can help build a more resilient and diverse music ecosystem.


The Pack Music Co-operative exemplifies the place-based community development approach to the music ecology. Founded by local unsigned musicians in Western Australia, The Pack prioritises their community’s needs, providing independent musicians with the tools and opportunities to thrive.


A Smaller System with a User-Centric Payment Model


In the vast, over-saturated markets of globalised music streaming, independent artists struggle for exposure and income. However, deliberately smaller, localised systems using user-centric payment models like The Pack, offer a promising alternative.


The current pro-rata payment model pools subscription revenue and disperses it against artists’ share of total streams, benefiting top-tier artists. In contrast, the user-centric model allocates each subscriber’s fee directly to the artists they listen to, ensuring fairer earnings based on actual listenership.


Benefits of User-Centric Models in Smaller Systems


  1. Direct Support from Fans: Fans’ listening habits directly impact their favourite artists’ revenue, strengthening artist-fan bonds.

  2. Increased Revenue for Independent Artists: Independent artists can see more revenue by focusing on actual listener engagement.

  3. Transparency and Trust: User-centric models offer greater transparency, building trust between artists and platforms.

 

Localised Promotion and Meaningful Exposure


Smaller, community-focused systems also provide opportunities for localised promotion and meaningful exposure that global platforms overlook.


  • Targeted Marketing: Localised platforms can tailor marketing efforts to specific communities.

  • Community Engagement: Artists can engage directly with local audiences through streaming, social media, performances, events, and collaborations.

  • Collaborative Opportunities: Localised platforms can facilitate collaborations between artists and other local entities.

  • Enhanced Visibility: Smaller platforms feature artists more equitably, ensuring they are not overshadowed by major label acts.


The Demise of A&R: A Barrier to New Artist Discovery


The music industry has long relied on Artists and Repertoire (A&R) departments to discover and nurture new talent and provide a pipeline for signing new artists to labels. However, streaming’s rise has diminished A&R’s role, driven by the shift towards streaming and data-driven social media music discovery. Major and independent labels have slashed A&R budgets and staff, narrowing the pipeline for discovering new talent and making industry entry pathways increasingly opaque for artists.


The Pack Music Co-operative: A Beacon for Emerging Talent


The Pack Music Co-operative supports emerging artists, providing visibility and growth opportunities. Unlike annual events like BigSound, which offer discovery opportunities to around 300 of the many thousands of emerging acts who apply to perform for labels and agents each year, The Pack offers year-round discovery, ensuring artists don’t become invisible in the global streaming market.


The Pack’s integration with local businesses and governments amplifies artist exposure even further. Playing local artists’ music in local places and public spaces creates a familiar soundscape, leading to more live performance opportunities, collaborations, and public event bookings.


This engagement fosters loyalty, word-of-mouth promotion, and grassroots support, creating a robust profile for broader recognition. Consistent local exposure helps artists build strong profiles, attracting larger labels, export opportunities, and media attention.


Conclusion


By embracing the co-operative model, we can empower independent musicians, preserve cultural diversity, and keep the music industry vibrant and inclusive for future generations.


The Pack will ensure emerging artists have the tools and support to thrive, fostering a vibrant music ecosystem benefiting artists, listeners, and communities.


The journey towards a fairer music industry will be tough, but with collective action and innovative thinking, we can build a future where all artists have the chance to thrive. It’s time to ditch the club scene and build a community festival that truly values and supports the creators of the music we love.


Can you help?


Over the next months we're running a major community capital-raising campaign which aims to raise at least $50,000+ to develop a fair music streaming service. We've scheduled exciting activities to actively involve and unite our community in support of this groundbreaking initiative. You can donate directly through our Australian Cultural Fund Campaign Page.


Campaign Events:

  • Hack the Music Industry: Innovate solutions for the independent music scene on September 14, 2024.

  • Patron's Local Music Karaoke Night: Sing your favourite local tunes and support The Pack on September 14, 2024.

  • Local Music Scavenger Hunt: Discover hidden music gems in our community on October 26, 2024.

  • Silent Disco Ball: Dance the night away while supporting local artists on November 30, 2024.


How You Can Help:

  • Donate: Every contribution brings us closer to our goal.

  • Advocate: Sign and share our petition.

  • Participate: Join in our events and spread the word.

  • Partner: Partner with us and showcase your support for local music.


Join Us in Making a Difference!



 

 

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1 Comment


Mark Wood
Mark Wood
Sep 28

hi

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