Tech Transformers

Music stars clash with streaming services over money but believe future lies in tech

Music streaming has driven down the costs for consumers, but artists are still feeling the pinch.

During last week's Web Summit technology conference in Lisbon, high-profile singers expressed their frustration at streaming services, record labels and regulators, for not compensating artists properly, but admitted new technology could be key in helping them win.

"It's a good thing in that music is being consumed more now than ever before, it's easier to get the music out to the fans. The thing that has to catch up is the licensing laws. They are literally 74 years old which makes no sense because everything about music evolves daily," Grammy award winner Ne-Yo, told CNBC in an interview on Thursday.

"That has me in a negative place really. All songwriters are asking for is a level playing ground, we just want what we are owed."

It's the latest criticism of the new state of music where streaming continues to grow rapidly. Digital music revenues now overtook sales of physical formats for the first time in 2015, according to the International Federation of the Phonographic Industry (IFPI), the body that represents the recorded music industry. Streaming revenues account for about 43 percent or $2.9 billion, of the $6.7 billion made from total digital music sales.

Innovation in focus

But many artists have maintained that they are not getting paid enough despite the growth. This has led to high-profile clashes in the music business. In 2014, Taylor Swift pulled her albums off of Spotify. And stars have tried to challenge the incumbents. And last year, rap mogul Jay Z bought another streaming service called Tidal, in a bid to create a platform for artists.

It's still a tough slog, according to many singers, but some stars are realizing the need to embrace new digital platforms. Tinie Tempah, an award-winning artist from the U.K., said that the downloading culture present in the the 2000s, helped him get big.

British musician Tinie Tempah speaks as Hans-Holger Albrecht, CEO of Deezer, US musician Ne-Yo and Eric Wahlforss, Co-Founder & CTO of SoundCloud listen, during the Web Summit in Lisbon, Portugal on November 10, 2016
Pedro Fiúza | NurPhoto | Getty Images

"I was at a point where I was willing to give my music away for free," Tempah said during a panel discussion at the Web Summit on Thursday.

"Now we're in a streaming era, I don't feel artists are being compensated, but I think it's a good time for an artist who hasn't been developed in the past five years … I think anybody has a shot at becoming a big star … that's a big plus."

The "Pass Out" singer said that labels weren't "excited enough" about streaming when the platforms began popping up, and if they had been more innovative, the industry would be in a "better place".

Future technology

Streaming providers however hailed the growing technology as a great opportunity with new areas such as the use of data able to help artists.

"The truth of the matter is we can't go back to the old days … if you look at stats nowadays in terms of growth…it is a massive opportunity for the industry and for the artists as well," Hans-Holger Albrecht, chief executive of streaming service Deezer, said during the panel discussion, adding that the company pays back over 70 percent of its revenues to publishers and labels.

"Streaming services can do much more with artists in terms of access to clients," Albrecht said.

The Deezer CEO told CNBC in a separate interview that the company is looking at artificial intelligence as a way to bring more useful data for artists deciding where to do their next gig or trying to figure out where their biggest fan bases are.

While the relationship between artists and streaming providers might not be perfect, Ne-Yo said he is willing to see what technology develops that can help the industry thrive and compensate singers better.

"I love the idea of an app in real time that says who is listening to records, how often it is being played, what areas it is being played, that will be really helpful for us," Ne-Yo told CNBC.