It seems like no one can even remember a time before the novel Coronavirus dominated our everyday lives, conversations, and news feeds. In addition to exponentially mounting precautions, each day appears to bring devastating effects to new industries and groups of people. The music industry is no exception.
Even in crisis (and perhaps especially), people will always need music, and the music industry at large is unlikely to come to a complete standstill any time soon. However, music alone is no longer a sufficient way for the overwhelming majority of musicians to make a living.
The best way to visualize the true impact of this virus on artists is to break down their income by each source. While the traditional sale of their art used to be a primary income source for musicians, the rise of streaming has made these profit margins increasingly unstable and unreliable as a living wage. Based on Spotify’s recent filings, it is estimated that the dominant streaming platform pays its artists somewhere between $0.006 and $0.0084 per stream.
Sure, if you’re one of the top 10% of streamed artists (accounting for 99% of streamed music), that’s not too bad: even Justin Bieber’s abysmal new track “Yummy” managed to accumulate over 313 million streams, which alone would have put $2,191,000 (give or take) right into his pocket. However, the majority of indie artists would be lucky to hit one million streams on their most “mainstream” tracks. Per these calculations, every million streams would give the artist only $7,000, and that’s only for their supposedly “best” song. Royalty rates in the music industry have always been infamously unfair to artists, however, the modern expectation of instant access to all musical catalogues for a small monthly fee has driven the profitability of pure music consumption sharply downwards.
Now, artists’ largest revenue stream is by and large live performing. The cost of music access may have gone down, but ticket prices have certainly gone up. Smaller and medium-sized artists rely on the tours associated with each album to actually generate the income necessary to pay back their record label (recoup) so that they can begin seeing any money from their records. Touring and performing can also be an essential driving force behind album sales, as well as a direct push for merchandise — another viable, though less lucrative, revenue stream for artists that is rendered somewhat defunct without a tour behind it.
So what does it mean when a deadly global virus halts life as we know it and eliminates the possibility of live music? Well, like aviation, hospitality workers, and others, it means that they’re without their primary income source. Indefinitely.
Heritage acts have spoken up about the intense stress that a loss of touring has on their income. Without any new albums in sight, touring is the only way these artists can continue to make a living from their art. Even legendary Rock and Roll Hall of Fame inductee David Crosby has admitted that, without his summer tour, he is likely to lose his house.
Many artists have attempted to fill in the tangible absence of touring, by creating live streams. This digital live music experience can have some positive effects — allowing artists to instantly reach an unlimited number of old or new fans, or giving those in already remote locations access to the beauty of shared music experiences. Yet none of these solutions are fulfilling in the long term… or profitable.
Even playlist-ready, streaming-era musicians will be heavy hit by the lack of touring. Many of these artists poured hundreds of millions of dollars into elaborate stadium tours via set design, choreography, costuming only to be forced to postpone or cancel. Of course, these artists are typically able to benefit on their steady streaming income, but their cohort is not so lucky.
There is a great deal of uncertainty as to how live music will continue when the pandemic subsides. This mass cancellation of live events amid the buildup of, among other things, this summer’s festival season is completely unprecedented, and even the most seasoned industry execs have no idea how to move forward. Many bigger events (most notably Coachella) have pledged to merely postpone their dates to later this year. However, with no clear end to the global mayhem in sight, this can increasingly feel like an optimistic shot in the dark. Not to mention the limited venue space that agents will all be fighting to book for the August-October space, with major sports leagues like the NBA and NHL taking priority on large arenas.
Even with the promise of rescheduling, promoters may be faced with the task of refunding billions of dollars back to fans. What this means is, again, unclear, but it could necessitate asking talent to accept lower pay, and fans to pay higher fees. Given the state that the economy will likely be in at that time, this could prove to be too big of an ask.
For cancelled events and festivals, it is likely that a “force majeure” contract provision — meant to account for uncontrollable events such as natural disasters — will be used, which only pays artists, venues, vendors, etc. for any work they had done up to that point, and not for any performances. Festival organizers will still likely have to pay for staffing and marketing out of their own pocket, as their insurance likely won’t cover disease control.
Beyond the traditional label-backed artist, there is an entire sector of musicians working full-time as DJs, whose career is based entirely on the premise of nightlife, live performance, and social closeness. They can now expect to go months without gigs, and therefore, without paychecks. This is a blow directly to an industry of workers who overwhelmingly live in overpriced, densely-populated cities on a paycheck-to-paycheck basis. This blow could mean the permanent closure of countless agencies, DJs, production companies and more — and should this last until Summer, that outcome is all but definite.
The promotional blow to artists, and even the severance of their most lucrative income stream is not the worst of blows to the $26 billion global live events industry. Promoters are likely to feel the effects of the virus more than the individual acts themselves. All but giants like Live Nation and AEG are at serious risk of shutting their doors for good as they are forced to pay expenses that they will likely never get back, without any hope of new income in sight. Additionally, with no events to book, agencies — including giants like UTA and Paradigm — are overseeing major layoffs and salary reductions. Promoters, agents, tour managers, sound engineers, venue employees, equipment companies, and more are now all completely out of a job: their only revenue stream, not just their most lucrative.
In support of their band and crew, artists like Soccer Mommy and The National have begun to make plans to reroute fan club and webstore revenue amidst “postponed” tours with no rescheduled dates in sight. However, their dwindling streaming revenue makes such a feat, once again, unsustainable.
To make matters worse, touring isn’t the only aspect of the music industry taking a major hit during the pandemic. Despite the domination of streaming, record stores continue to exist as havens for dedicated music lovers looking for rare collectibles and tangible ways to support their favorite indie acts. Yet unfortunately, like all other brick-and-mortars selling nonessential goods, they have all shuttered their doors indefinitely. By design, record stores are practically all struggling small businesses, which makes this universal closure especially difficult.
Some stores are offering phone, online, pickup, and delivery ordering options in an attempt to generate any money — but at the end of the day, record shopping is an intensely in-person and explorative experience that most music fans cannot perform online. Like with everything else, this kind of universal and uncertain closure is unprecedented. Iconic Orange County record store-cum-indie label that forged the careers of alt-rock icons such as Cherry Glazerr, together PANGEA, and The Garden even closed their doors for the first time in 10 years. They’ve started a mail ordering system for the time being, but it’s simply not a sustainable business model.
Perhaps a more direct assault to musicians themselves and their labels, however, has been the closure of the world’s largest record retailer: Amazon. Last week, they announced their decision to pause all shipments of ‘nonessential’ items — which of course includes physical music purchases.
The annual Record Store Day was postponed from mid-April to late June, a date that’s ultimately as uncertain as the virus’ overall projection. The event was a major driver of physical sales, promoting new or re-issued releases and accounting for nearly a quarter of last year’s record sales.
There are some counteractive measures being taken to save musicians. Digital music marketplace Bandcamp has attempted to lead a charge in redirecting their profits back to artists. On March 20, they raised $4.3 million for artists by waiving all fees. More dominant DSPs have responded to mounting pressure for them to do the same by, instead, donating to the Recording Academy’s Musicares COVID-19 fund. Spotify has additionally announced their own Relief project where they will match donations up to $10 million, recommend verified financial relief for musicians, and make it easy for artists to use their page to ask for donations from the public either for themselves or others. These efforts are a reassurement that even the biggest modern music industry players are aware of the immense financial crisis facing an overwhelming majority of industry workers. However, raising money is hardly as impactful as giving artists a larger royalty share during this period.
The fact remains that, since the decline of physical sales and even digital music downloads, musicians have relied on alternative revenue sources to keep them going. With these income streams completely severed, modern musicians will be unable to make a living just by making music alone. Many iconic indie artists have signed a petition calling for Congress to extend unemployment benefits to musicians and other gig workers during the pandemic, while the coronavirus stimulus package is set to include $75 million towards the National Endowment of the Arts and potential relief for gig workers. The fate of underground music is still, however, extremely unstable.
Ultimately, this serves as a sharp wakeup call to the fact that musicians’ salaries are a reflection of anything but the actual consumption of their product. Artists whose music isn’t tailored for the short attention span generation of playlisting, Tik Tok, and social media influencing have always struggled to make ends meet, but now alarmingly so.
The music will continue to function, but smaller acts, live gig workers, and more will and are suffering as the global pandemic brings an indefinite standstill to the most lucrative revenue industry streams.