What To Know About a Congressional Resolution on Streaming Royalties

Congress may soon weigh in on behalf of artists in the fight for more equitable royalties from streaming services like Spotify. According to Rolling Stone, Representative Rashida Tlaib, Democrat of Michigan, sent a letter to her congressional colleagues proposing a resolution to establish a new streaming royalty. The proposal would, the letter argues, seek to increase the amount of money streaming services pay artists for streams of their music. 

“…the current lack of regulation or codified streaming music royalty program has driven a race to the bottom,” Tlaib wrote in her letter, according to a press release. “Streaming music platforms’ payouts per stream are minuscule, and declining each year — leaving working musicians with little of the income generated by these platforms.” 

The proposal is simply that — a proposal. But legislating streaming royalties would both align streaming payouts with the established system employed by traditional radio and bring the American music industry up to speed with some European countries. Furthermore, many musicians see reform of the streaming royalty system as essential to affirming the value of creative work. 

Here’s what you need to know about the Tlaib’s proposal

How Do Artists Currently Get Paid for Streams?

Short answer: It depends on the streaming service. Several streaming platforms have unveiled direct-to-artist payment options. SoundCloud launched their Artist-Friendly Royalty system last year, and Warner Music Group recently became the first major label to sign on to SoundCloud’s AFR program. Tidal offers Direct Artist Payouts on its premium memberships.

But Tlaib’s proposal takes aim at Spotify’s pro-rata system. Under this system, all of the money that Spotify’s nearly 200 million subscribers pay to the service goes into a pot (with all of the money the service earns on the ads it plays for its nearly 200 million non-paying subscribers), and musicians are paid based on the percentage of overall plays. So if 2% of all Spotify streams were of songs by Beyoncé, then Beyoncé will earn 2% of the royalties that Spotify pays out. Essentially, even if you don’t listen to Beyoncé, part of your subscription fee goes into her pockets. 

Why Are Some Artists Unhappy with the Current System of Streaming Royalties?

The aforementioned pro rata system favors established artists. For emerging or independent artists with smaller audiences, the payouts are often paltry – an amount that often equates to a fraction of a penny per play. As such, many musicians argue it has become increasingly difficult to make a living from their creative output. 

What Could Congress Do to Make the System More Equitable?

That remains to be seen. But Tlaib’s proposal came after the Michigan representative spent months working with the Union of Musicians and Allied Workers, a music nonprofit organization that works on behalf of artists. In 2020, UMAW launched a campaign advocating for a per-stream royalty rate of at least one cent. While that doesn’t sound like much, for a large swath of working musicians, it would go a long way in helping them sustain a career in music.