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How Artists Make Money…and How The Music Industry Takes It Away

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GIGCO

5 min readOct 28, 2022

The music industry is unfair. Whether pressed in vinyl or digitally uploaded to a streaming service, the artists that actually make the music have always been on the wrong end of the deal.

It’s been like this for too long. Art and commerce might seem like distant worlds in the same universe, but there’s a commercial side to the arts that can’t be overlooked. Finding a reliable source of income has always been a major challenge for music artists, and the way that artists make money has changed drastically over the years, but the traditional publisher/ record label deal plays over and over; a broken record. That’s bad news for artists.

Read on to learn more about the problems with the commercial music industry, and how GIGCO is going to fix them.

For the record: how the industry works

Fans are always parting with their hard-earned cash to support their favorite artists, so whose pockets are they actually filling?

Well, even the biggest stars in the world rarely see more than 20% of their music’s royalties.

Here’s how the old publisher/ record label deal works out:

When you sign off the exclusive rights to your music, the record label is allowed to publish, distribute, and sell copies of your music until the contract ends. The label gets all the money from sales and then it breaks off a tiny percentage of the earnings to give back to the artist in royalties. The biggest labels take exclusive rights to an artist’s music by offering an initial, lump-sum advance, and they get the majority share of future sales revenue in exchange.

Touring now becomes the artist’s main source of income.

Before streaming services and the age of the playlist, fans were forced to buy albums. Sales of physical vinyl records and, later, CDs were a credible source of artist revenue. These days, if a user skips a song before the thirty-second mark, Spotify won’t count it as a stream and the artist receives nothing. Media outlets promising that the “vinyl revival” is on are telling only part of the story, and physical sales are showing no sign of catching up with digital formats.

It’s clear that there’s a gap between what streaming services rake in, thanks to subscribers, and what they fork out to artists in return.

But, first, let’s go back to the start of the digital age of music.

Daylight robbery in the digital age

The global music industry struggled to adapt to the Internet age after its emergence in the late 90s. It radically impacted the way that we experience music. Peer-to-peer streaming services like Napster and Limewire undermined artistic value, gifting music to users for free without the artists’ permission; theft, basically. They were soon hit with landmark piracy lawsuits, thanks in part to resistance from artists as big as Metallica. But the damage was done, and they had ushered in a new era of digital music distribution.

Not-so-sweet streams

Now, let’s get back to streaming services. With services like Spotify and Apple Music, users now have millions of songs at their fingertips from countless artists around the world. They’re great for promoting new artists and exposing their tracks to a global audience, but it’s clear that they’re also responsible for one of the biggest issues with the modern music business: low royalty rates.

The majority of revenue from streaming finds its way through various agents and intermediaries at major record labels before it reaches your favorite artists. By that time, everyone’s taken a slice of the cake and the creatives behind the art are left with a small percentage; a plateful of crumbs. We struggle to speak on the situation without effing and blinding, so we’ll let the numbers do the talking: subscription services pay artists somewhere between $0.003 and $0.005 per stream.

Even if you owned 100 percent of your music, you would still earn only one hour’s UK minimum wage for every 3,000 streams. 87 percent of all music streamed on Spotify comes from artists signed to the top four record labels. So, unsurprisingly, new and aspiring artists who are either independent or signed to smaller labels are the biggest victims of the current deal.

When the music stops

The pressures of the pandemic and lockdown have only made matters worse. Fans are listening to more music than ever before, but most of that music comes from streaming services that don’t pay the bills.

On top of this, artists are mourning the loss of live music and a reliable revenue stream. Given the time and money that show promotion involves, artists struggled to secure live bookings even before the pandemic. Unfortunately, lockdown forced artists to seek alternative income streams, and countless venues have closed their doors. So they’re getting creative elsewhere, and some are turning to merchandise. British rock band While She Sleeps even started selling t-shirts with the details about the royalty rates Spotify pays them printed on them!

Artists have been suffering at the hands of publishers and goliath record labels for too many years. Those in the music industry still struggle to make a living wage.

The value of the British music industry has been slashed almost in half.

Now, artists need better royalty rates and greater leverage when signing contracts, and venues that have survived the pandemic need to be protected against further closure. That’s where GIGCO comes in.

Setting the record straight

It’s time to undo the damage done to the global music industry.

GIGCO’s decentralized booking system gives artists, venues, and fans the platform to connect with one another. That means easy-to-book gigs for artists, venues, and fans made secure with instantly deployable smart contracts built on the Solana blockchain.

The future of live music is just around the corner. With GIGCO, artists and venues can book gigs directly, without third-party interference, turning cafés, bookshops, and record stores into potential venues for hire.

With GIGCO, artists can sell their work in NFT and NFS formats, so that fans can invest directly in their favorite artists’ work. Our platform severs the ties that have bound artists to unfair deals with major record labels for decades, so they won’t have to worry about what music will be marketable to a mainstream audience. It’s a modern solution to an age-old problem, empowering artists with the keys to break free from dodgy contracts with big labels.