We have never heard as much music as today, and music has never generated so much revenue.

The crisis in the music industry, which began with the decline of the CD and intensified with the temporary triumph of pirates, has been overcome.

We owe this to streaming,
the most successful distribution model for music of our times, and now on its way to a monopoly.

Thanks to streaming, more and more people are once again willing to pay for music.
This benefits all who produce music and all who make sure that it gets to the listeners; and it benefits – last but not least – the artists.

However, not everyone benefits to the same extent.

After all, the payment systems, which date back to the early days of streaming platforms, work better for some types of music and less well for others; some artists reap the benefits, others are put at a disadvantage.

Thus, today – while it has become clear that streaming is here to stay – it is high time to reinvent these systems in the interest of equality and the diversity of music.

The Fair Share initiative was founded a few months ago to respond to the current system’s shortcomings and injustice by working on a better approach with as many stakeholders as possible and in partnership with the contract awarding record companies.

Weaknesses and injustices of streaming

Manipulability

Currently, streaming services pay their dues to the artists as a function of clicks per track. If a song is streamed by a listener for more than 30 seconds, the system labels it “played”, irrespective of the overall duration of a song, and whether the whole track or only a part of it was played.
This system is problematic, if only because it is easy to manipulate: in order to generate high click rates and thus get a track into high chart positions, it is sufficient to stream it over a very short period of time; therefore, with little effort or even with automated procedures, the ranking can easily be scrambled. This applies independently from genre and the extent of an artist’s fame.

Discrimination

Beyond its manipulability, the system has a distorting character, because it is skewed towards music formatted in individual tracks, and in particular promotes titles that draw the listener into the piece immediately, i.e. without a lengthy musical intro. The songs do not need to be especially long either. Because it makes no difference to your income whether a track is three minutes long or ten.
In other words: Artists whose songs elude the narrow format favoured by the industry and take time to have their music unfold, are at a clear disadvantage. That also holds true for artists who view the album – rather than individual tracks – as the relevant parameter in their musical approach. Genres that do not fit into the limited streaming-friendly profile – for example jazz – are systemically discriminated against. In its current form, today’s streaming structure might devastate cultural diversity, and it is clearly unfair towards the artists, whose music is after all the essential precondition for the streaming services to even exist.

Unfair payment

We should in particular challenge the accounting model that forms the basis for streaming services’ revenue-sharing schemes. Today’s pro rata-system implies that all profits generated from subscribers of a given platform are lumped together and subsequently divided by the number of streams.
The system thus benefits musicians who target multi-listeners, who repeatedly click one and the same track. Thus, artists who cater for these target groups receive a disproportionate share of the subscription revenue, although their audience does not pay more than other subscribers. An unfair profit distribution also has consequences for the music labels’ programmes and contracting policy, i.e. it determines which artist serving which target group will receive a record deal.

Intransparency

The “pro rata” system is unfair, inappropriate and lacks transparency. Although artists receive detailed statements about how often their music was streamed, the respective price “per play”, the underpinning for their actual revenue, remains obscure and cannot be checked. The same goes for the various deductions from subscription-fee revenue paid to streaming services and music firms.

Fair Share therefore demands

01 Alternative accounting models

e.g. the user-centric payment system (UCP), in which proceeds from each client’s subscription are paid to the musician whose music that listener has heard. This system is fairer and less susceptible to manipulation.

Another option would be an extended UTCP (User Time Centric Payment) system, which would not only register, how often a single track is clicked, but also, how long it is played. This would also prevent manipulations that operate with massive short clicks.

02 Transparency

Contracts between streaming services and music companies must be transparent and reviewable. Right now, neither the artists nor their managers can check which revenue is passed on to the music companies by the streaming services or which criteria are used in calculations. They likewise receive no information about sums deducted by the companies and the streaming services.

03 Fair compensation

Contracts between artists and labels must be updated with respect to the distribution of digital revenues. Outdated clauses must be removed from the system, e.g. deductions claimed by record companies for the production of CD jewel cases and similar items dating from the era of physical audio carriers.

04 Manipulation protection

Income from music streaming must be better protected against manipulation. Record labels and streaming services have confirmed evidence of significant manipulations in the current “pro rata” system. As neither security standards nor an independent supervisory agency exist, criminal acts as well as money laundering can flourish. There has always been manipulation throughout the history of pop music. However, it has never been as easy as it is today, there has never been as much manipulation as in the current streaming system, and it has never had such a huge impact on artists’ incomes. As the current “pro rata” system disproportionately benefits the musicians who receive the highest number of clicks, manipulation leads to a further drop in the income of less-streamed artists. Those manipulating the system do not simply produce advantages for themselves but also cause direct damage to other artists.

We need a coherent and binding definition of manipulation, because there are also grey areas. Maybe, it is just an ordinary fan, who is clicking on the same title hundreds of times within a short period. Or are we dealing with someone with a mission, who was maybe paid for these clicks? Or is a bot, a click machine, at work here?

We also need transparency! The streaming services must disclose whether and how they fight manipulation, where they discover manipulation, and which artists are involved. Such acts must have consequences. Streaming accounts used for manipulations must be closed. Charts rankings based on these accounts need to be revised, along with the revenue share resulting from those ratings, always in order to benefit the artists who suffer from distortions in the figures that are caused by manipulation.

In the short term, electronic safety systems must be installed to prevent songs or play lists from being run in continuous loops. In the long run, all participants should become aware that manipulation is not a petty offence but a serious crime. This, however, will only happen once the music streaming system in toto has been revised and modified, ensuring that those involved realise that fairness and transparency are relevant values for all forms of cultural production and its remuneration.

The current accounting system’s vulnerability and exposure to manipulation undermines music’s diversity and overall evolution. It has become even more difficult than it used to be for newcomers to reach an audience. The same applies to artists whose works extend beyond the mainstream.

Fair Share calls for a restructuring of the distribution of streaming profits – in the interest of cultural diversity and a vibrant musical scene that can develop and transform, today and in the future.

Join in, together
against weaknesses
and injustices

Fair Share Goals

The initiative Fair Share fights for a fair and transparent music market. The primary concerns and goals of this non-profit initiative and it’s voluntary members are:
 

  • The implementation of “user centric” compensation models.
  • To encourage transparency of all market players towards artists and creators.
  • Protection against manipulation by, for example, the implementation of a “two-factor authentication”.

Mission statement

The initiative ascribes itself a respectful communication with all partners, colleagues and negotiation partners. We ensure no-one will be discriminated against based on their gender, origin, music genre, ethnic affiliation, skin color, disability, religion or sexual orientation. Fair Share will not admit anyone who does not act in accordance with our democracy, our constitutional law plus those who spread misanthropy, hate, agitation and conspiracy theories.

Supporter:

Name Company
Albrecht Fiebiger
Alexander Kaufmann
Alexander Maurus Wanderlust Entertainment GmbH
Andreas Wolff Music Paradise Tonstudio
Anna Bustorf Mavie Management
Anna Seifert
Arndt Schmöle
Axel Schulz Artist Manager
Benjamin Budde Budde Music Management / FBBD
Björn Bäurle Live Nation
Björn Deparade Wasted Talent Entertainment GmbH
Britta Ostermann The Box Management
Chantal Stockmann Kanzlei Stockmann
Christopher Hellwig Projekt38
Claudia Kaloff kaloff artist relations
Daniel Baron
Daniel Kempf OWTF Entertainment
Daniel Maurer Red Rooster Musikproduktion GmbH
Dieter Semmelmann Semmel Concerts GmbH
Doris Kulossa-Delfino Label recordarpa (Blockflötenbau)
Dr. Angelika Strittmatter SWS Scheuermann Westerhoff Strittmatter Rechtsanwälte Partnerschaft mbB
Florian Fischer FFMV / FBBD
Florian Graser
Florian Müller Budde Music
Frederik Boutahar IRRSINN Management GmbH
Hanno Heekeren
Hans-Peter Vogel
Hendrik Fauer
Horst Zaunegger Zaunegger
Iris Hofmann Privatperson
Isabelle Saadatnejad Hush Hush
Jan Clausen Factory 92
Jan-Simon Wolff Budde Music
Johannes Ribic Privatperson
Josephine Garvey Jewel Music GmbH
Jürgen Müller Privatperson
Kai Manke Networking Media
Katharina Köhler Musikmanagerin
Lena Förg
Lisa Mckeown
Manfred Rolef M | ROLEF
Marc Feldmann Marcsfirma
Marco Beiergrößlein Privatperson
Mark Löscher Music Is Okay
Mark Reeder Mark Reeder MFS
Marlen Bonsai Kitten
Matthias Böttcher Rough Trade
Michelle Leonard
Nicolas Pasquet Dirigent
Olaf Dr. Meinking M26
Oliver Heinz Heinz & v. Rothkirch
Patrik Majer
Paul Grauwinkel Grauwinkel Management
Peer Jalowietzki Piazza Media GmbH
Rita Flügge-Timm DolceRita Music & Publishing GmbH
Robin Grubert
Rocko Schamoni
Sascha Kulasevic Voralberger Volleyball Verband
Sebastian Bohnenberger KNSTRKT Management
Sidney Bieri
Siegfried Traub SGT Musican live & teach
Sophie Kammann Internashville
Stefan Bosch Stefan Kriesme_Übersetzungen und Bürotätigkeiten
Stefan Dabruck SD Management
Susanne Neeb
Sven Bünger ChefProduction
Sylvia Kollek Marken Medien Musik
T.M. Peters AHOImusic
Tessy Schulz TESSYSCHULZ – International Artist Management + Music Consultancy
Thomas Ebner Ebydrums
Thomas Wolf Wanderlust Entertainment GmbH
Thorsten Wulfes Thorsten Wulfes Consulting
Tina Krug Honey & Spice
Uwe Kanthak Uwe Kanthak Künstlermanagement GmbH
Uwe Scheier ZOS Studio und TV
Verena Mack
Verlaashi
Davin Enterprises Dr. Cyrus Alamouti
ROYALIST

Copyright © 2021 Fair Share Initiative e.V.i.G.