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Terms and Conditions for Payments

from Online Music Streaming Platforms

 

STUDENT PAPER

By Mathieu Sabadie

SKEMA Business School

Lille, France

 



ABSTRACT 

The problem we speak about is very important within the whole musical industry. In fact, payments from online platforms are to be one of the most important sources of revenues for artists. We should care about this issue because it could provoke discouragement of artists but also because, with the emergence of DIY (Do It Yourself) artists and the difference of money they earn, this situation could finish with the end of Major Labels.

Our problem is that payment terms and conditions are not equally dispatched between online platforms, Major Labels and Artists when we speak about benefits created by the online music market.

I have chosen to base my analysis on 3 particular contract frameworks to see, thanks to different tools, which framework could be the more efficient to provide more equity.

We easily see that the two frameworks from the CSI Documents are the most efficient to solve (not perfectly) our issue. From these two solutions, we should retain the Cost plus Fee one, because it is more flexible and precise than the other one.

Our answer could provide more equity, but also more flexibility in payments and terms, and a real adaptation to the music industry could save Major Labels by regulating the market better, and providing more equity.

Key words:  Music Streaming, Payments, Online Platforms, Youtube, Royalties, Spotify, Labels

INTRODUCTION

Among passion, the most important motivation for artists is to earn money. The fact is that the music industry has been radically changing during the past decade. Indeed, with the emergence of a highly connected world, big musical labels had to find a new way to attract people towards buying music while they now can have it for free thanks to illegal fire sharing. In fact, the sources of benefits were drastically cut by the end of the material disk: benefits for disks sales passed from 12.8 billion dollars to 5.4 billion dollars between 1999 and 2008[1] and Labels were not able to find radically new ways of making money. Due to this situation, a new actor came into play with the Apple Itunes Store in 2004: the downloading and streaming web platforms. The system they created was rules free because completely new. Labels and digital actors went into struggle to control this fast growing market, overcoming since 2015 the physical one[2].

If we go out this general vision and look more into details, we can see that even if web platforms are all losing money (174 million dollars for Youtube, 250 million dollars for Pandora between June 2016 and June 2017[3] ³), artists with label contracts payments are not as important as we can imagine in this area.

Nowadays, web platforms must pay advances to Major Labels to exploit their music catalogs. Major Labels next verse royalties to the Artist, based on the contract clause(s) related to this topic. The fact is that Major Labels redistribute only a few parts of it (17 $ per 1000 plays on free platforms for example).

Payments are formally formulated and decided within the artist’s contracts and must be documented to prevent stakeholders’ issues or misunderstandings. It is a mandatory to use element and must be agreed by all parts. Different payment frameworks are usually available, and I have decided to base my reflection in five different forms: AIA, CSI and Consensus Doc.

I will provide answers to the next questions:

  • What are the differences between the different Payment forms useful to improve artists’ retribution?
  • Which one would be the most efficient to enable artists’ royalties to be higher?
  • What are the potential risks, among artists’ benefits, not to use the relevant change orders form?

More

To read entire paper, click here

 

Editor’s note: Student papers are authored by graduate or undergraduate students based on coursework at accredited universities or training programs.  This paper was prepared as a deliverable for the course “International Contract Management” facilitated by Dr Paul D. Giammalvo of PT Mitratata Citragraha, Jakarta, Indonesia as an Adjunct Professor under contract to SKEMA Business School for the program Master of Science in Project and Programme Management and Business Development.  http://www.skema.edu/programmes/masters-of-science. For more information on this global program (Lille and Paris in France; Belo Horizonte in Brazil), contact Dr Paul Gardiner, Global Programme Director [email protected].

How to cite this paper: Sabadie, M. (2018). Terms and Conditions for Payments from Online Music Streaming Platforms, PM World Journal, Volume VII, Issue VI – June. Available online at https://pmworldjournal.net/wp-content/uploads/2018/06/pmwj71-Jun2018-Sabadie-payments-from-online-music-streaming.pdf



About the Author


Mathieu Sabadie

Lille, France

 

 

Mathieu Sabadie is a Student and a Project Management Practitioner both in associative and in professional life. He has run events, projects and Programmes in further different sectors (Music, Arts, Logistics, Consulting). He has been Project Manager for the SKEMA Arts Week (event for 1500 participants) or Place, Beverage and Media Manager at Skip the Beat Festival (first edition of a House Music Festival in Lille for 1000 participants). He has also been a Project Manager for the three French Speaking curses of the Escola Europea de Short Sea Shipping in Barcelona and Junior Consultant for International Team Consulting, also in Barcelona. He is now working as a Freelance Consultant for various French SME and passing and MSc in Project and Programme Management / Business Development in SKEMA Business School in Lille, France and will be graduated on June of 2019. Throughout this Master he is involved in the organization of a TEDx Conference in SKEMA and has run a project in rural village development in Morocco. He is Agile PM Foundation and Green Project Management certified and currently passing the Prince 2 Foundation Certification. He also has some experiences in Recruitment, Sales, Business Development, Customer Service and Team Management. Mathieu can be contacted at [email protected].

 

[1] Ben Kilmer (2010). The Evolution Of The Music Industry The Effect Of Technology And Law On Strategic Management And Sustainability. SlideShare. Retrieved from https://www.slideshare.net/BenKilmer/theevolutionofthemusicindustrytheeffectoftechnologyandlawonstrategicmanagementandsustainabilitykilmer2010

[2] IFPI (2016) GMR 2016. IFPI.org. Retrieved from http://www.ifpi.org/downloads/GMR2016.pdf

[3] Daniel Sanchez (2017). What Streaming Music Services Pay (Updated for 2017). Digitalmusicnews.com. Retrieved from https://www.digitalmusicnews.com/2017/07/24/whatstreamingmusicservicespayupdatedfor2017/