BPI: Record labels' margin on a 9.99 music streaming subscription is 0.51 with artists receiving 1.331

By Emmanuel Legrand

As a preamble to the hearings of the CEOs of the three British major record companies by House of Commons' Digital, Culture, Media and Sport (DCMS) committee, trade body the BPI issued a report suggesting that "music streaming is helping thousands of artists to hit major sales milestones in the UK and its global reach is amplifying artist success."

  According to BPI data, around 1,800 artists achieved more than 10 million streams in the UK alone in the past 12 months. For the BPI, that's "72% more than the total of 1,048 artists who achieved the equivalent 10,000 album sales in the CD, LP and download market of 2007." The study also shows that the top 1,500 artists in the UK "generate on average nine times as many streams outside the UK as they do at home."

  The report also looks into the economy of streaming by breaking down the revenues from streaming services paid to rights holders. According to the BPI, on average, labels receive gross revenues of around 4.33 out of a typical 9.99 subscription, of which artists receive 1.331. Out of the label’s remaining share of 3.00, costs represent 2.49 (including investment into artists such as A&R and global marketing), leaving labels with a margin of 0.51.

Derive more value from platforms

  The remaining 5.67 are split between the exchequer (VAT); the streaming service (DSP); and publishers and songwriters.

  The BPI also noted that "artists are receiving a higher share of revenues nowadays than they did in the CD era" with artist royalty rates are "typically higher" in streaming (around 20-30%), compared to CD era rates of 15%-20% of net PPD (and subject to deductions). 

  The BPI urged the UK Government "to introduce measures to derive more value from platforms – including: addressing issues with certain user-upload services, which return just a fraction of the value of premium services; combatting industrial-scale piracy, which continues to drain some 200 million annually from the UK recorded music economy; supporting British music’s potential to double the value of exports to 1 billion over the next decade; and encouraging inward investment into UK music.