Musicians receive just 12 per cent of the $43 billion the music industry makes

A new report reveals that music industry pays musicians poorly and that most of their income comes from touring

A new report has revealed that musicians are poorly paid in the music industry, with artists receiving just 12% of the money the music industry makes overall.

The report called ‘Putting the Band Back Together’ by Citigroup, says that despite listeners in the US spending over $20 billion a year on music – that’s more than ever before – and revenues totalling in excess of $43 billion a year, musicians themselves are only receiving $5 billion of that figure.

The report says this is down to two reasons: musicians are touring more in the digital age and consumers are opting to “rent” music rather than buy it via streaming services.

The report says: “The music industry is in the midst of two profound changes. First, consumers are increasingly opting to rent — rather than buy — music. Second, the demise of physical music has prompted artists to tour more often, driving significant growth in concerts and festivals.”

Speaking to Rolling Stone, Jason Bazinet, one of the authors of the report, said the figure was “amazingly low” and that the figure revealed “an unbelievable amount of leakage.”

He said: “When you end up tracing all the dollars, around 10 percent of it is captured by the artist. That’s amazingly low.”

He added that for young artists who “don’t even understand the gory details of the music industry” the situation was particularly bad: “[They’re] not going to make that much money. There’s an unbelievable amount of leakage throughout the whole business.”

The issue, according to the report, is that instead of musicians being able to deliver their product directly to the fan, the industry is using antiquated systems that show the industry still hasn’t adapted to streaming.

The figure has, however, increased over the last few years thanks to touring and self-releasing music, the report says, adding that it thinks the industry will evolve to better suit the digital age.

One area, it suggests, is if music streaming companies “organically morph into record labels.” Another is if live gig promoters also merged with streaming services.

One of the key areas to resolve, according to the report, is to reduce the number of “intermediaries” in the industry.

It concludes: “while the artist’s share of total revenues is rising, the absolute level of value capture is quite small. In most forms of entertainment, the artist captures the lion’s share of the spoils. But, because the music industry has so many intermediaries — and because the consumption of music is so fragmented across various platforms — the artist captures very little of the aggregate revenues.”

“Over the last 20 years, the artist’s share of the industry’s revenues has hovered between 7% and 12%.”

You can read the report in full here.