Transition Music Corporation | Some Footnotes on Online Streaming Music Companies
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Some Footnotes on Online Streaming Music Companies

Some Footnotes on Online Streaming Music Companies

Streaming and Micropennies: The Footnotes

By BEN SISARIO – January 29, 2013 – NY Times Media Decoder Blog

1. The role of record labels. When it comes to royalties, the relationship between artist and label has long been fraught, but it has become especially strained in the streaming age, for two reasons.

First, digital services generally don’t do business with musicians directly, but instead go through labels or distributors, which are then responsible for paying royalties. But exactly how those royalties are calculated is often in dispute. Older artists may have no provisions in their contracts for suchstreaming services, or digital music at all. And despite some major lawsuits, the matter is far from settled.

Second, there is wide suspicion in the industry about the deals between labels and digital services. Labels own equity in some of these services, as a condition of licensing their content. (The major labels, for example, own a minority stake in Spotify.) Critics say this creates a conflict of interest, in which labels could accept a lower royalty rate in exchange the benefits of ownership, like profits from a sale. Artists — and, especially, their managers and lawyers — worry that this money would never trickle down to them.