The Unseen Struggles of Music Producers and Artists
A few years back, a music producer made a startling discovery: a track he had worked on two decades ago had amassed millions of streams. His excitement quickly turned to confusion when he realized he hadn’t received any royalties from the song. Concerned, he reached out to his label, only to learn they hadn’t contacted him due to not having his current address. “If I owed money to a major record label, trust me, they could find me very quickly,” the producer, who wishes to remain anonymous, reflects. After two long years of persistent inquiries, the label finally paid him the £20,000 he was owed, along with an even larger sum for the track’s artist, who had also been waiting for their royalties. “These are people’s lives,” he asserts. “And I’d love to say I am an exception to the rule, but this is a regular occurrence.”
This situation is all too familiar to Annabella Coldrick, CEO of the Music Managers Forum, an organization advocating for fairness in the music industry on behalf of its manager members. “There’s a lot of that,” she opines, pointing to the above story as just one example of the pervasive lack of transparency in the market. Despite the music industry appearing to thrive—with record sales hitting an all-time high in 2024—not everyone is benefiting from these profits.
As pop band Sports Team noted in an interview with The i Paper earlier this year, their ability to continue making music hinges on a ‘patronage model’. “The top of the industry is absolutely booming,” Coldrick elaborates. “The world’s biggest artists are earning more than ever before.” However, a growing number of mid-level artists, like pop star Kate Nash and indie group Sports Team, are vocalizing their financial struggles in the current music landscape.
Coldrick explains that many mid-level artists find themselves locked into major label record deals. Even if they’re not personally hunting down their own royalties, “they’re probably not seeing much, if any, of their streaming income, as they are often busy paying off recoupment and recording costs from their advances, which are usually tied to an appallingly low royalty rate.”
Understanding the Economics of Music Contracts
The intricacies of music-making economics can seem daunting. At its core, a traditional major label record deal—with companies like Universal Music Group, Warner Chappell, or Sony—works as follows: the label provides an advance to cover record production costs and agrees on a royalty rate, typically 80 percent to the label and 20 percent to the artist. However, before artists see any of those royalties, they must first repay their advance, which can amount to hundreds of thousands of pounds. This process is referred to as recoupment.
Artists only recoup their earnings from that 20 percent. “It takes a really long time to become recouped and start earning money,” Coldrick clarifies. In the meantime, the label can already be profiting from the artist’s music. If that sounds unjust, the situation becomes even more convoluted with the rise of streaming services. Spotify, which debuted in the UK in 2009, retains roughly one-third of its revenue, meaning that a significant portion of the money never reaches artists.
Spotify’s annual “Loud and Clear” report, released recently, showcases impressive figures that may suggest artists are thriving financially—after all, the company paid out $10 billion in royalties in 2024. However, the complexity of how those funds are divided tells a different story. Kate Nash has even turned to using OnlyFans to bolster her income.
According to another industry insider who requested anonymity, when streaming first emerged, major record labels interpreted contract terms without consulting music creators. Consequently, many artists remain tethered to 80/20 royalty rates for streaming, a structure ill-suited to how modern consumption operates. The original ratio was based on a system where labels physically distributed, marketed, and promoted albums to reach fans. In contrast, today’s streaming largely relies on algorithms to suggest tracks, requiring minimal effort from labels.
Additionally, contracts drafted for physical formats like vinyl and CDs still apply to streaming, with labels charging for packaging and breakage despite the fact that streaming accounts for over 85 percent of all music consumption. “It’s completely immoral,” the insider remarks.
Such practices mean major labels are reaping ever-growing profits—Universal’s CEO Lucian Grainge reportedly earned a staggering $150 million in 2023—while artists continue to miss out. “We’re witnessing a resurgence for major labels reminiscent of the late 1990s and early 2000s, before the digital wave caused record sales to plummet and piracy threatened the industry,” the insider elaborates. “They are re-establishing their role as gatekeepers.”
Major labels acknowledge this growth. “The good news is that our margins are significantly better compared to the last boom 20 years ago,” Rob Stringer, CEO of Sony Music Entertainment, stated in 2019.
“The record business struggled previously when it was in the hands of individuals primarily chasing wealth,” Tom Gray, chair of the Ivors Academy—a professional body for songwriters and composers—says. “However, since becoming public companies, the relentless pursuit of profits has taken precedence: market share, consolidation, growth. It has little to do with music and everything to do with asset wealth and pension funds.”
Artists’ Fight for Fairness
Nonetheless, artists are fighting back. Earlier this year, the iconic Irish band The Cranberries sued their label, Island Records (part of Universal), for millions in unpaid royalties. This case is not isolated; in 2022, electronic musician Four Tet successfully contested his label, Domino Records, over streaming and download royalties, compelling them to agree to honor a 50 percent rate. This highlights that unfair terms are not exclusive to major labels but extend to independents as well.
Additional complexities complicate royalty distribution. For instance, when major rights holders initially licensed their catalogs to streaming services, some agreed to “most favored nation clauses,” which ensure they cannot receive a worse deal than any other major label. Yet, when signing a record deal, an artist might inadvertently accept lower rates than if they had partnered with a competitor, and because such details are often concealed under non-disclosure agreements (NDAs), artists and their teams lack transparency.
Moreover, last year, Spotify demonetized all tracks with fewer than 1,000 annual streams—a policy thought to have been devised by Universal. While Spotify claims this measure combats fraud, in reality, it deprives independent and DIY musicians of earnings. Streaming royalties are disbursed directly to rights holders (not artists) based on their ownership percentage of all streamed music that month. Consequently, earnings are siphoned from less successful artists and redirected to those at the top of the hierarchy, predominantly major label artists.
Gray dismissively refers to this initiative as the “artist-centric model,” noting, “No one consulted artist groups about this. It’s the most absurd form of gaslighting.” He describes the change as a “reverse Robin Hood” tactic, resulting in a lack of clarity in accounting practices. Artists below the 1,000-stream threshold are left in the dark about their audience; all they can see is their lack of monetization.
This alteration was made possible by the immense power major labels wield—particularly Universal, which commands 36.2 percent of the recorded music market. This share is likely to grow as the multinational aims to acquire the Downtown Group, a leading music services company. While there remains a possibility that the deal could be blocked, signs indicate further market consolidation, which Gray warns will only enhance their leverage in licensing negotiations.
The anonymous source adds that due to this consolidation, Universal can effectively threaten Spotify by saying, “We will withdraw our catalog unless you meet our demands.” The recent demonetization scheme may be merely the beginning.
The i Paper reached out to Universal, Warner, and Sony for comments, but the labels declined to respond, directing inquiries to the British Phonographic Industry (BPI), the trade association representing record labels’ interests. While the BPI refrained from commenting on specific issues, CEO Jo Twist stated, “Streaming has provided artists with more choices than ever regarding how they release their music, and many are achieving genuine success and increased earnings across various income streams with the crucial support of record labels in amplifying their talents and helping them realize their creative potential.”
“We do see a role for major labels,” Coldrick affirms, as she collaborates with the cross-organizational Council of Music Makers to advocate for industry reform. “The questions are: Is it fair? Is it transparent?” Coldrick is advocating for regulation regarding artist payments and contract negotiations, arguing for a standard akin to a minimum wage. Without such measures, everything ultimately hinges on “how much negotiating power you possess. And how much negotiating power do most 18-year-olds really have when they sign a record deal? Not much. They’re often starstruck and will sign anything, only to spend the rest of their careers regretting it because there are no minimum standards.”
Gray is also lobbying the government for reform, remarking, “It’s peculiar that an industry fundamentally based on data and payments lacks any regulations.” He concludes that major labels “are consuming the music business alive, driven solely by the assumption that there will always be fresh talent eager to sacrifice their dreams against this flawed system.”
