BMG CEO Hartwig Masuch has poured cold water over the streaming-fuelled revival for major labels, claiming that their margins will soon be coming under pressure as artists demand a greater share of streaming income.
“I believe there will be some wake-up calls. I am very cynical about the view that the good days have returned. Every renegotiation will cut down massively on the margin,” he told the Financial Times.
There are clearly some competitive instincts at work here, with Masuch telling the FT that BMG is now paying artists 75% of streaming revenues – like Kobalt, positioning itself as a better deal for them than the major labels.
“Scale is not working. You have to massively bring down the cost base. Digital is portrayed as very complex . . . but if you take that cost out, how do you justify such a low rate?” he said. “Why in the hell would an artist decide to take less than 75 per cent? That becomes a very hard discussion.”
Kobalt’s artist payouts of between 70% and 85% of streaming revenues are also cited in the piece.