JEFF PILSON Says 'Ridiculously Bad' Royalty Rate For Music Streaming Is 'Unsustainable'

In a new interview with the "Arroe Collins View From The Writing Instrument" podcast, former DOKKEN and current FOREIGNER bassist Jeff Pilson spoke about the importance of streaming in supporting music industry revenues. He said (as transcribed by BLABBERMOUTH.NET): "Well, streaming is a big part of our consideration right now because it's the primary source of where people listen to music, is through streaming services. And that's rough on the artist, because the royalty rate for streaming is ridiculously bad. So, for us, it really comes down to — you do your best. We still sell physical CDs, so that's a good thing. Our audience still does buy physical CDs, so they get to see that album cover and everything, but that's an increasingly rare thing. So, streaming becomes a consideration because the revenue stream is so much lower.

"I think what's gonna have to happen here one of these days is musicians are gonna need to do what the actors and writers just did in Hollywood and either come up with a strike or something to renegotiate what streaming revenue is, because it's really, really poor," he continued. "And it's unsustainable. You're not gonna get people being able to make a living making music pretty soon, and that's gonna be dangerous. Then the standards of music are gonna go way down — something we are dead set to avoid."

During the chat, Pilson also criticized the method of using artificial intelligence to write music, saying: "Unfortunately, computers can write music now, which is crazy — it's a crazy thought. But, yeah, that's another big reason why there needs to be renegotiating happening because there's probably gonna be a lot of people unemployed now that write elevator music and that kind of stuff, because a computer can do it. So why not? And that's dangerous."

For years, Spotify has been criticized for offering paltry payouts to musicians and songwriters, with some claiming that the service gives major-label artists an unfair advantage via playlist placement and other promotional avenues.

In recent years, Spotify CEO Daniel Ek has been trying to defend Spotify's payouts, telling CBS News in early 2023: "We don't pay artists directly. [Artists] have their deals with their record companies and their deals with their publishers, et cetera. And what Spotify does is we pay out to those record companies and these publishers, and don't know what individual deals these artists may have."

Three years ago, Spotify created a web site called Loud&Clear to clarify exactly who receives payments.

According to Forbes, "Spotify has been paying back nearly 70% of every dollar generated from music as royalties to rights holders who represent artists and songwriters. These organizations, which include independent distributors, publishers, performance rights organizations, record labels, and collecting societies, then pay the artists and songwriters based on their agreed terms."

Spotify boasted 574 million monthly active users as of last September. The number of people paying for Spotify Premium stood at 226 million.

In the third quarter of 2023, Spotify posted a rare quarterly profit of $33.88 million, a stark contrast to the 2022 loss of $249.73 million.