Written by Natalie Larsen

Indie artists have been traditionally excluded from major labels due to their obscurity and improbability of generating revenue, causing difficulty in creating a career. Nowadays, however, independent artists have more power and capacity to survive, even thrive, without the help of a major label. The advent of the internet, streaming, and social media, as well as legislation regulating for rights of independent recording artists, have pivoted the music industry in the 21st century.

Since its founding in 2006, Spotify has been one of, if not the dominant music streaming service in the industry. Other major services include Pandora, Deezer, Apple Music, and Amazon Prime. All of these services notoriously prioritize profits over artists. Spotify is arguably the worst offender, as it has come under fire recently due its controversy surrounding one of its top podcasts, the Joe Rogan Podcast. This has brought attention to the privilege major artists have, such as Neil Young and Joni Mitchell, who have simply taken their music off of Spotify. Artists with this caliber of success do not have to worry about the financial consequences of losing streaming revenue. However, the majority of artists on the platform do not have that luxury, and are torn between standing up for what they believe in and receiving measly royalty payments for which they are dependent on for income. Moreover, this controversy has reignited a debate over fair payments to artists for streams. Publishers and managers, as well as musicians, are hoping that this conversation continues, leading to Spotify and other platforms considering how much they really value the artists that utilize their services.

Tidal

Tidal was founded in 2014 and offers a different perspective on what a music streaming service should look like. Its values are to deliver the highest sound quality as intended by the artists, create deeper connections for fans through unique collaborations with the artist community, and a commitment to empower artists to create and deliver their art exactly as they intended. Tidal pays its artists nearly three times the amount per stream that Spotify does, $9.27 per 1,000 streams compared to $3.30 per 1,000 streams. Just by this increase in payment, Tidal has conveyed the greater value it places on artists than the typical streaming service. They also allow their artists to upload their music directly rather than having to go through a third party distributor, putting more power in the hands of artists.

Artists should consider, however, that in a popularity contest between Spotify and Tidal, Spotify still reigns supreme. Tidal is similar to Spotify in that it curates a “daily discovery” for users based on their listening habits. But the number of playlists available on Spotify based on genre, mood, activity, and decade is vast. Many have found mainstream success by having a song of theirs featured on a Spotify playlist, which led them to get picked up by a major label. One such story of success is that of indie artist Wallice, whose song “Punching Bag” was featured on the Lorem playlist, which as over 900,000 followers. From there, the song was streamed 4 million times and caught the attention of London-based indie record label Dirty Hit.

Figure 1: Wallice’s official music video for Punching Bag. Source: YouTube.

But could Tidal eventually replace Spotify as the preferred streaming service by the masses? It’s quite possible. More listeners are seeing what a listening experience could be like when the needs of artists and fans come first. As noted by an article from the Weekly Ringer,

“Spotify doesn’t care about the standard of music they allow on their platform, for allowing indie artists to upload their music without much overview attracts more listeners to the app. This exploits these smaller artists, since the intention behind hosting them is for profit, not for the shared love of music. More artists means more listeners, and more listeners means more profits.”

— Norah Walsh & Alexi Woodward

As debate over fair compensation for streaming evolves, it seems that Tidal is taking a step in the right direction. Music fans are slowly ditching Spotify, increasing Tidal’s popularity. By prioritizing the needs of artists through providing higher pay, delivering music in high quality audio, and empowering them to upload their music directly onto their service, Tidal is at the forefront of artist prioritization. It will be interesting to see if other streaming services follow suit.

SoundExchange

Another solution to finding a streaming service that pays artists fairly for streaming their music is SoundExchange. By administering statutory licenses, artists are able to stream their music on digital radio services while being paid a fixed rate for each play. This differs from agencies such as ASCAP or BMI, as they only pay out to songwriters, composers and publishers, versus owners of recordings and the artists on them. SoundExchange collects playlists from internet, satellite, and cable radio services and identifies how many times an artist is being played. They then pay out 50% to the rights owner (often time the record label), 45% to the featured artist, and the remaining 5% to non-featured artists. To date, they have paid out over $7 billion in royalties. Registration on SoundExchange is free and easy for artists. Often, the business holds royalty payments for payout until an artist signs up.

In the for-profit sector, streaming royalties are a complicated mess, to say the least. Payouts depend on several factors and are not uniform across platforms. Spotify, for example, pays out somewhere between 60 and 70% of its total revenue to artists. SoundExchange is unique in that it is a non-profit designated by the Library of Congress as the sole U.S. organization authorized to collect royalties from services that transmit sound recordings under statutory licenses.

With this tie to the federal government, SoundExchange uses its position to advocate for issues related to the rights of creators of sound recordings. Their website provides valuable information for artists, fans, and industry professionals about the Music Modernization Act, American Music Fairness Act, CLASSICS Act, and several other relevant issues. Thanks to their litigation work in 2021, the Copyright Royalty Board increased royalty rates at +17% for music played on commercial non-subscription digital streaming services and +8% for music played on commercial subscriptions services. Their focus on policy and advocacy makes them stand out as a true leader for the recording industry.

TikTok

Today, a core component of measuring an artist’s success is the amount of engagement they receive from fans. This is especially true for major record labels who have taken to social media and streaming platforms to find their next big artist. TikTok has revolutionized the way artists and fans can connect, and even collaborate.

A prime example of this mutually beneficial relationship is between singer Doja Cat and a teenaged TikTok user named Haley Sharpe. Sharpe recorded a video of herself performing a dance to the Doja Cat song “Say So, “which went viral. Doja Cat noticed, put it in her music video, and then performed it at the Grammy Awards. On other social media platforms, artists can retweet something from a fan or read a DM from them, but TikTok offers something more unique. The platform almost feels like it was designed to be communal, as opposed to Instagram or Facebook, where the focus is on the artist’s branding of themselves and less so on engagement with the fans.

One artist that found success through the app is Tyler Colon, otherwise known as Tai Verdes. When Verdes decided to become serious about pursuing music, he started putting his music on TikTok. He noticed that listeners were especially engaged, who would migrate from TikTok to his YouTube and Spotify pages for more. After Tai got picked up by a major label, his most viral song, “Stuck In The Middle,” was streamed over 100 million times on Spotify.

Figure 3: The official music video of Tai Verdes’ viral TikTok song, “Stuck in the Middle.” Source: YouTube.

Major labels are realizing the value of the app from a cost-benefit analysis. Rather than paying for an extensive social media campaign to promote an artist, they have found more success with a much lower cost. All they have to do is pick an artist with an extensive following on TikTok, pitch one of their songs to Spotify so that it will be placed on a playlist with millions of followers, which will then expose it to a wide range of listeners.

However, there is an identified formula for success on TikTok. The three primary characteristics users look for are simplicity, vulnerability, and unique song/dance challenges. Lyrics play a big part in instant popularity, as users look for songs with relatable themes such as heartbreak, nostalgia, or partying with friends (that are easy to lip sync to). A song must also be short and catchy enough to grab someone’s attention, maybe even have a good rhythm for a memorable dance to be invented alongside it.

TikTok reflects the fearless, eccentric, creative attitude of Gen Z and through it, record labels are picking out the artists that best represent the generation’s personas. It’s a disruptive technology in an industry when, for the longest time, major labels had the power to decide what kind of music an artist should be releasing, what they should be wearing, saying, and essentially having total control over their branded entity. Now, fans are deciding what they like, how to dress, what to sing about, what to dance to, and the industry is forced to listen.

Final Thoughts

These three music platforms have created a redistribution of power from major labels and publishers to the artists and fans. We are living in a unique time where independent artists have more tools and resources than ever before to make it on their own. Living in obscurity, having to support oneself through other means, and adopting the “starving artist” trope should not come at the expense of the expression of oneself through music. More people are realizing that music is a viable career option, and technology is catching up to it.