Music
Payments to musicians have increased
Music industry sales have increased. photo
© Rolf Vennenbernd/dpa
Labels make good money from digital sales. To what extent do musicians also benefit from this? The music industry presents a study.
Increased income from music labels in recent years has also led to more payments to artists Artist led. This was the result of a study commissioned by the Federal Association of the Music Industry (BVMI) and published on Wednesday. The BVMI is the music industry association based in Berlin and represents the interests of large and many small music labels and covers around 70 percent of the market share in Germany.
Accordingly, music labels paid 43 percent of their income to musicians in 2022. These payments were divided into advances and license payments, with advances made accounting for the largest share. Advances are fixed payments to musicians to cover creative costs for music production.
License payments were only made “on top” – i.e. only when the advances were offset against the income. Royalties are pro-rata payments generated from the sale or exploitation of music. For comparison: In 2010, music companies only paid 21 percent of their income to artists.
The advances paid regardless of success show that music companies bear a large entrepreneurial risk, said the CEO of the BVMI, Florian Drücke, according to the announcement. “With the study, we are making a contribution to ensuring that the perspective of our members and thus the entrepreneurial dimension is included in the debate about distributive justice and changing billing models, also in order to further objectify the basis for the current exchange on this topic.”
There has been a discussion about fair remuneration for artists for years. The study does not explain how the payments are distributed between well-known and relatively unknown artists – i.e. who benefits more or less proportionally. This also depends on individual contracts that the artists have agreed with the record companies, it was said before the study was presented.
Marketing scientist Michel Clement from the University of Hamburg, who has dealt with the topic in the past, is pleased that the study examined payments to artists. The database is established and therefore meaningful because a large part of the music industry is represented. Clement also expressed criticism of the industry study. “The study does not take inflation rates into account, as this also influences the level of absolute total investment.”
In addition, according to Clement, payments to artists have also increased because there have been price adjustments in the extremely important streaming market and there has been more money in the pot overall due to the increase in streaming sales.
Overall, the sale of both digital music and sound recordings brought in sales of around 2.21 billion euros in Germany in 2023, as the BVMI announced on Wednesday. Sales of digital music, for example from streaming and downloads, accounted for the largest share at 81.5 percent, with sales of around 1.78 billion. Of all digital sales, streaming accounted for 74.8 percent.
According to scientist Clement, the digitization of the music industry also shows in this study that both labels and artists benefit from cost efficiencies in digital sales and marketing.