The music industry’s transition to the digital era has been fraught with controversy, and not every artist has embraced the technology completely. Prior to his death, legendary singer Prince was fiercely opposed to having his songs hosted on digital platforms, while Taylor Swift once went toe-to-toe with Apple over its streaming compensation policies — and won.
Although hit makers usually have little to worry about in terms of streaming compensation, indie artists are often underpaid, and experts say their contributions to the music industry are frequently overlooked. According to data from the Worldwide Independent Network (WIN), independent labels generated over $6 billion in sales in 2016, accounting for 38 percent of the global market for recorded music.
Richard Burgess, CEO of the American Association of Independent Music (A2IM), a non-profit trade organization for independent musicians, hailed the legislation as “a significant step toward better lives for music creators and those that support them.”
A2IM, which lobbied for the bill’s passage, worked with the industry and policymakers for years. The organization’s chief told CNBC recently that while similar bills have been proposed in the past, the MMA represented a compromise of sorts.
“It doesn’t encompass everything we wanted,” Burgess told CNBC in a recent interview. “It does, however, represent a package of things that were doable.”
While the exact financial impact of the MMA on independent artists is still unclear, Burgess said the economics of streaming for all artists is likely to receive a boost from the new law. Royalty payments vary based on the platform, with YouTube being notorious for its relatively low payouts, according to Burgess.
“It ranges from the full value of the stream down to 18-20 percent,” he said, and can change over the course of an artist’s career. When a performer first lands on the scene, they tend to receive a smaller percentage of money from streaming. As that artists’s career progresses and hopefully becomes more successful, that percentage goes up.
As time goes on, Burgess says it will be easier to see the effects of this bill.
“In terms of being paid, especially considering independent artists tend to be songwriters as well, it will definitely have a positive impact on them,” Burgess said. The transparency that comes with a new royalty collection and distribution regime will also help, he said.
“Anything that straightens out the industry, grooms the data and makes sure it’s in a central place where anyone can access it, and makes sure payments are being paid is definitely a positive,” Burgess told CNBC. “This is a huge step in the right direction.”