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An outdated music payments process is causing big problems for artists – why and how can this be fixed?

by Spanish Point - Aug 21, 2019
An outdated music payments process is causing big problems for artists – why and how can this be fixed?

Despite the impact technology has had on the distribution of music, the music payments process is largely the same as it has been for decades. This is causing real issues for artists and their livelihoods.

Technology has revolutionised the availability of music for artists, mostly in a positive way. The ability to share their work and reach new audiences across the world through streaming has reduced the barriers to entry and increased opportunities for ambitious artists. However, the year on year global increase in streaming has not been reflected in the royalty payments being received by these artists. While consumers and artists have adapted to the digitization of music, the systems and processes for managing payments are in many cases the same as decades ago.

Even the methods used to pay artists have not been modernised. Royalty payments are often made through cheques, despite the variety of digital payment options on offer. With streaming globalizing music, payments are sometimes made in various currencies. To process the payment the artist must pay conversion fees which seriously reduces the benefit they receive. Another issue lies with the record companies. Rigorous offline processes used to manage and update artists’ payment information create further unnecessary complexities and delays for artists. These bureaucracies result in royalties remaining uncollected for long periods and in many cases the payments never reaches the person to which they are intended.

Another issue is the absence of transparency for artists who find it difficult to predict their income. Often they do not have any view on what they are earning and have no idea of their royalty payments until they receive the cheque. In addition to music metadata issues beyond their control, artists often do not receive their due payments. With the aforementioned reduction in revenue for pay, lack of transparency in earnings is rendering careers in the music industry less financially sustainable.

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A lack of consistency and standardization in payment schedules contributes to the problems. Each stakeholder in the process follows their own schedules, which have no alignment. With the increased number of digital sources of music, in particular, due to music streaming, CMOs (Collective Management Organisations) will receive many sets of royalty payment data. If there is a mismatch in the payment schedule of the music streaming platform and the CMO, the artist’s royalty income may be delayed to the next payment, which may be in months.

The burden of correcting these issues should not be with the artist, but rather with organisations within the industry. Many CMOs are championing change and implementing technologies to prioritise fair payments for artists. Central to this change is accuracy and consistency in music data matching. Spanish Point Technologies’ matching engine is a high performance cloud based application that plugs into CMOs systems to support royalty matching at a fair cost. With increased data volumes from various streaming platforms, this is time to correct the issue. Talk to our music Matching Engine team.

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