Citigroup study finds musicians took 12% of music industry revenue

Artist revenue has always remained a topic for major discussion in the music industry. The truth is, despite the large earning potential for artists, often they don’t receive the proportion of revenue they deserve. Citigroup have just published a report about the funds generated in 2017 by the music industry and how these funds were distributed. The eye-opening report contained shocking details about artist earnings, revealing that artists, contrary to popular belief, are not receiving the proportion of revenue they really deserve.

According to the report, the music industry generated $43 billion during 2017, which is the highest figure since 2006. Despite the rise in revenue, artists only took home 12% of the total figure, an incredibly small proportion considering their contribution to the overall industry. However, this percentage is also on the rise, with artists having only taken home 7% in 2000. Could this continue to increase into the future?

Source: Consequence of Sound

It is speculated that this growth is due to the shift to live shows and touring as a revenue stream for artists. Gone are the days when selling physical copies of albums was the key to generating a massive income. Now earning money as an artist is all about touring, without touring or performing at festivals, artists continue to struggle to make a substantial income. For electronic music artists in particular, touring can provide a great deal of revenue.

This is due to the rise in streaming, which has seen artists receive a very small proportion of revenue from industry giants like Spotify, Apple Music and Deezer. Back in the day, artists would take a large sum from selling physical copies of their albums. As the music industry became increasingly saturated, the volume of music available to listeners increased, making purchasing every single track financially draining on the consumer. This led to an increase in illegal downloads, something which damaged the music industry greatly. However, this was soon diminished by the introduction of streaming platforms. The downside for artists is that the income generated by a single stream is very small, but for huge artists like The Chainsmokers, streaming revenue provides a great deal of income. While artists receiving billions of streams are able to generate a great deal of income from streaming platforms, smaller artists struggle to make a significant income from making music alone.

Artist revenue through streaming platforms has been a huge topic for discussion over the years, with Taylor Swift having lashed out at Apple Music in 2015. The disagreement arose as Apple Music, when first launched, offered users a three-month free trial. The issue that Swift and many artists had with the policy was that Apple Music didn’t provide any revenue for streams during this time, despite making its own high volume of revenue from advertising.

In the electronic music industry, performing live shows and being booked by festivals remains the biggest source of income for artists. Despite this, it is vital that artists continue making music in order to stay relevant. Fans are much more likely to go and see a DJ who has created plenty of great tracks than a DJ who does not produce any music at all. Producing music is by far one of the most effective ways to build a loyal following. Festivals also place a great deal of value on booking artists who have created their own tracks, especially when those tracks have generated over a million streams. Performing as a DJ was once a craft that was separate from producing music, but now the two couldn’t be more closely intertwined. In fact, it is difficult to excel at one without also excelling at the other. In short, you create music to develop your brand and build a following, you perform live shows to make money and create content.

According to the report, streaming, live shows and purchased songs generated more than $20 billion in 2017, which is a record high. From that figure, labels, publishers and other music businesses took $10 billion while artists took a shocking $5.1 billion, which mostly came from touring. When artists are the ones behind creating music itself, it is truly shocking that such a small proportion of revenue is earned by them.

In the majority of other industries, it is the creators of content who benefit the most from revenue. In the music industry, this couldn’t be further from the truth. Businesses like PR agencies and labels are taking a much bigger proportion of industry revenue than artists. For this reason, it is unsurprising that so many producers are quick to set up their own record label rather than releasing tracks on major labels. Those who own their own labels and release music through them are in a much better position for generating a great deal of revenue within the music industry.

Despite artists earning such a small proportion of the total revenue, there is still plenty of earning potential there. Though the figures may be shocking to most, the industry continues to undervalue its artists and offer them a smaller proportion of the revenue than they deserve. What can only be hoped is that this may change in the future to make the industry more fair for its content creators. The overall percentage has increased since 2000, potentially signalling that it is set to increase into the future. For artists, these statistics are yet another reminder of the continuing difficulty to gain an appropriate level of revenue in the music industry.