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German Artists Organize to Demand Bigger Slice of Streaming Pie

Billboard logo Billboard 2/5/2020 Alexei Barrionuevo

In an unprecedented move that has sparked a conversation among artists and major labels in Europe about how much streaming services pay, and what artists benefit most from the current royalty structure, a group of managers who represent German stars like Helene Fischer have mounted a campaign to boost their cut of online revenue.  

The managers, who represent superstars who built their careers in the CD era, say the current payout model, built on platforms like Spotify, unfairly favors artists whose music is consumed the most in aggregate, which means that fans who spend the most time listening to music online have an outsized influence.  

They want a more “user-centric” model that pays artists a share of what individual subscribers listen to, which would mean that every user’s consumption counts equally. Under such a system, if a user only streams songs by James Blake, Lizzo and Drake, for example, the part of the user’s $9.99 subscription fee allocated to creative output would be distributed among those three artists and no one else.   

“Whereas the statements from record companies detailing actual sales per unit are transparent and comprehensible, streaming statements are still a mystery,” says Gaby Allendorf, a spokeswoman for the German campaign, dubbed “Fair Share,” which includes artist managers, music publishers and lawyers. “The most-played artists receive massive bonuses, while there is very little chance for newcomers to earn money with their music.”  

Among the artists represented in the campaign, first reported in the German newspaper Frankfurter Allgemeine, are Fischer, one of the top-10 highest-paid women music artists in the world, according to Forbes, along with Marius Müller-Westernhagen, Sarah Connor, Herbert Grönemeyer, Robin Schulz, Nico Santos, Andreas Bourani, Álvaro Soler, Santiano and Peter Maffay, who became a star with the album Steppenwolf (1979) and has since sold more than 40 million records.  

Universal Music Group, which has eight of the original 10 Fair Share artists signed to its labels, indicated a willingness to discuss changes to the current streaming payout model. “We welcome any proposal that maximizes fairness and transparency and promotes the health of the ecosystem,” the company said in a statement to Billboard. “Music’s rapid change offers the opportunity to optimize models for sustainable and mutually beneficial success, if approached properly. We are committed to getting it right.”

Warner Music Group went further, saying it favored a change in the streaming accounting model. “We fully support the concept of user-centric payments,” WMG said in a statement. “However, we must ensure that any system implemented is reliable, fair, transparent, and underpinned by accurate data for all artists and rights holders.”

Sony Music Germany declined to comment.

The German campaign is distinctive in that it highlights the tension between artists who built their fame through the physical-distribution model and the newer generation flourishing under digital streaming. The difference between artists who are popular on CDs versus streaming is more apparent in Germany, because CDs remained popular there long after most other countries.

Fischer, 35, has sold at least 15 million albums, and her 2013 album, Farbenspiel, became the most legally-downloaded album ever by a German artist in 2014. She released a double-CD of Christmas songs in 2015 that sold 1.3 million copies. Her touring largely drove earnings of $32 million from June 2017 to June 2018 -- more than Britney Spears and Celine Dion and good for eighth place on Forbes’ Highest-Paid Women in Music 2018 list. Fischer, who played 14 European stadiums in the summer of 2018, has averaged $867,000 and 10,814 tickets per show since 2010, all in Europe, according to Billboard Boxscore. 

Germany, the world's fourth-largest music market, still has one of its largest physical musical markets, at 35% of its total 2018 revenues. But the overall value of its market, driven by a 21% slide in physical revenues, fell by 9.9% to $1.31 billion.

The Fair Share artists are also feeling pressure from a new breed of local artists that in recent years have become mega-stars singing and rapping in their own languages. German hip-hop acts like Capital Bra, who signed with Universal last year, have broken streaming records in their home countries. Driving mainstream adoption has been a streaming consumption model that prioritizes local repertoire over global acts, which has allowed local hip-hop acts to snag multiple chart spots every time a new album is released.

The new model the German group is pushing for also seeks to expose and prevent attempts to manipulate streaming platforms. Such attempts have become more prevalent, industry sources say, in particular among local-language hip hop acts in Europe and Asia.

Allendorf says that supporters of the initiative suggest that “other motivations” might be at play to explain why some customers are streaming individual songs several hundred times a week. “If you understand the current system you know how easy it is to manipulate,” she says in her statement. Allendorf echoed suggestions that “streams are bought illegally and en bloc or generated with so-called ‘click machines,’ which not only distorts the competition, but also aims to paint an inaccurate picture of our music culture.”

The music industry has been girding against streaming manipulation. Last year an industry-wide coalition of record labels, publishers and collecting societies banded together and signed a 21-point “Code of Best Practice” aimed at preventing and detecting when bots or humans are artificially inflating streaming numbers. All three major record labels were among the 24 companies and trade bodies backing the global campaign.   

In some cases, artists themselves have encouraged fan campaigns that smack of attempts to game the system. Just two weeks ago, Justin Bieber reposted on his Instagram (which has 126 million followers) a fan’s guide to how to game various platforms in order to boost his new single, “Yummy,” according to The Verge. (Among the tips: create a Spotify playlist with the track and let it play on repeat while you sleep.). The post has since been deleted. Fans of Harry Styles pushed similar efforts for the singer’s “Sign of the Times” single, as did BTS’ ARMY when it claimed in 2018 that it distributed more than 1,000 logins to help lift up the group’s Love Yourself: Tear album on Spotify, which plays into Billboard chart position.

For its part, Spotify has denied allegations that it was paying producers to create songs under fake names that were then put on premium playlists to generate money for the platform.

In the latest dispute, rather than target the streaming platforms, as Taylor Swift famously did when she held back 1989 from Apple Music in 2015 in a royalty dispute and then strategically in 2017 with Reputation, the Fair Share artist managers are directing their concerns at the major recording labels -- “the link between the artists and the streaming services,” as Allendorf puts it. The German managers invited executives from all the majors -- Universal, Warner Music, Sony Music and BMG -- to a meeting on Feb. 17 in Berlin to discuss the billing and remuneration model.

Warner said that none of its executives would attend because of “sensitive commercial issues.” A spokeswoman said the label had already started “bilateral talks with the managements concerned, in which we will discuss the points individually.”

Universal, whose CEO for Central Europe Frank Briegmann also received an invite, indicated he likely would not attend the gathering. “We feel those conversations can be more open and constructive and transparent when meeting with them directly,” the label said in a statement to Billboard.

BMG, whose CEO Hartwig Masuch was also invited, has expressed support for a user-centric model. The label welcomed the German effort to “highlight some of the inequities of the traditional record deal,” a spokesman said. “We do not find it justifiable in a world in which record companies no longer have the costs of pressing, handling and delivering physical product for them to try to hold on to the lion’s share of streaming revenues.”

BMG derives more of its revenues from publishing than recording and none of the artists known to be part of the Fair Share group are signed to the label, the spokesman confirmed.

Additional reporting by Wolfgang Spahr.

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