A Solution to Music's Most Troubling Trend

Aug 09, 2016

Last month, the Washington Post ran a heartbreaking story about one of the most troubling trends in the music industry today. With healthcare costs rising, many aging musicians are struggling to afford treatment.

The Post cites dramatic changes in compensation for musicians over the years.

“Accelerating the problem are changes in the music business itself: In the pre-digital era, artists who landed hit records once were assured that they could rely on continuing royalties, allowing them to enjoy retirement in comfort,” Mark Guarino writes.

But digital royalties pay less in the short term than what musicians were able to demand from the sales of compact discs and vinyl albums. The era of streaming services and digital downloads is not going away any time soon. Though expected increases in digital royalty streams in the years ahead will boost industry revenue, the annual payments may not be enough up front to deal with treatment and other living costs.

That decline in revenue over the last 20 years — and these dramatic industry shifts — have forced aging stars to rely more on touring and merchandise sales in order to generate revenue. Janice Johnston is the medical director of Arrowhead Health Centers in Arizona and a board director for the Memphis-based Blues Foundation in Memphis. As a consultant to musicians, she told the Washington Post that rigorous touring schedules, changes in routine, and dietary challenges on the road are just a few of negative influences on musicians' long-term health.

"Musicians tend to live gig to gig, which is more the mentality when you're in your prime. But when you're doing well, there's not a lot of foresight to plan for the future,” Johnston, who works to assist musicians' with their medical and funeral expenses.

Healthcare Challenges Accelerate

Guarino explains that these high medical costs are tough to afford due to how little they receive from their music recordings. Lester Chambers — a member of the Chambers Brothers — said that he and his co-artists failed to receive their royalty payments for years. They were not fairly compensated even though they had several hits in the 1960s and 1970s and their song “Time Has Come Today” was used in many films and television commercials.

"We've never been paid for our recordings," Chambers said. "That was a total rip-off. Basically because we never had lawyers."

Chambers blamed industry inexperience, in-fighting among family members and band members, and the band's record label Columbia Records for their small annual royalty payments. Chambers said that they only received roughly $4,000 to $12,000 each year.

But there is one solution that musicians can explore in order to improve their financial well-being.

A Solution to this Challenge

The story of the Chambers Brothers provides greater evidence on why industry groups like the Open Music Initiative are needed. The industry needs greater transparency and improved royalty standards to ensure proper compensation for artists and intellectual property holders.

Musicians also need a more liquid market that allow them to sell their royalty streams if and when desired. Typically, musicians have had to resort to “back-room” deals that made it difficult for them to receive fair value for their assets.

In cases like that of the Chambers Brothers, where the annual royalty revenue was too low to have an immediate benefit, access to a liberalized market for music royalty assets could prove useful. Musicians can bring their assets to this market where thousands of willing buyers can take part in auctions and establish a true market price for them.

More importantly, it provides musicians and artists an opportunity to get fair value up front for the long-term cash flows expected down the line. This lump sum can help a musician achieve financial security in difficult circumstances, such for healthcare costs.

It's a difficult situation, and clearly the best scenario is for musicians to avoid falling into such hardships in the first place. But for those that have the need, options like a fair platform for selling royalties are both necessary and welcomed.