How the Music Industry Already Lived Through What Gaming Is About to Experience
By Written by Peter McVeigh
In 2008, the major labels signed deals with Spotify they didn't fully understand, chasing subscriber numbers instead of protecting per-unit value. Within five years, album sales had collapsed by 75% and the average signed artist was earning less per listener than at any point in recorded music history. Gaming is about to walk into the same room with the same blindfold on. This article maps exactly how it happened in music, where gaming currently sits on that timeline, and what creators and developers should be doing right now before the leverage disappears entirely.
The Moment Music Lost the Argument, and Didn't Know It
The critical mistake wasn't Napster. Napster was just embarrassing. The real damage was done in boardrooms between 2008 and 2012, when labels licensed entire catalogues to streaming platforms at rates they assumed would be renegotiated once the model proved itself. They never were.
Spotify launched in the UK in 2009. The headline deal for major labels gave them equity stakes in the platform in exchange for licensing fees that were structurally inadequate from day one. The per-stream rate settled at somewhere between £0.002 and £0.005 depending on the tier, the territory, and the deal. That sounds technical until you do the maths: your artist needs roughly 250,000 to 500,000 streams to earn £1,000 after the label takes its cut. For most artists, that's several months of releases performing well.
The labels took the equity. The artists got the per-stream rate. The equity paid out handsomely for executives and shareholders when Spotify floated. The artists got nothing from that upside, because their contracts predated any clause structure that would have entitled them to a share.
That is the specific mechanism gaming is replicating right now. Microsoft's Game Pass and PlayStation Plus have already trained consumers to expect access to hundreds of titles for £10 to £15 a month. The question of how individual developers are compensated inside those pools is already being answered in ways that mirror early streaming deals: opaquely, in favour of the platform, with "engagement-based" metrics replacing unit sales.
Do this: if you work in music and you have any relationship with the games industry, through sync, through artist partnerships, through production, understand that the leverage point for developers is right now, before subscription penetration crosses 40% of the market. After that, the conversation changes permanently.
How Streaming Destroyed Per-Unit Value in Music, The Actual Numbers
In 2000, a mid-level UK artist selling 50,000 albums at £13 retail would generate roughly £650,000 in gross sales. Their label deal, typically a 20% royalty on the published price to dealer (PPD), would deliver around £100,000 to £130,000 to the artist before recoupment. Flawed, yes. Exploitative in many cases, yes. But there was a defined per-unit value that everyone understood.
By 2018, that same artist with 5 million streams annually, which is a strong performing independent release, would generate approximately £15,000 to £25,000 in streaming revenue. If they were on a standard label deal with a 25% net royalty, they would see somewhere between £3,750 and £6,250. From 5 million streams.
This is not an argument against streaming existing. Streaming solved a real piracy problem and opened global distribution in ways that genuinely benefited artists without major label backing. The problem was the rate structure, agreed at the point of lowest leverage, by executives who prioritised platform survival over long-term creator economics.
The BPI reported in 2023 that streaming now accounts for over 80% of UK music revenue. That sounds like success. It is success for the platforms and for the rights holders with large catalogues and significant equity positions. For working artists releasing music regularly, the economics require scale that most cannot achieve.
The per-stream rate has barely moved in fifteen years. The cost of making music has not decreased. Touring costs have increased substantially. The maths has not improved.
Gaming's equivalent of the per-unit sale is the full-price game purchase. That number is under direct pressure from subscription models right now. Once consumers associate a title with a subscription catalogue, the psychological anchor shifts permanently. Ask anyone who has tried to sell a catalogue track for sync after it has spent years on a free-tier playlist what happens to the rate.
The Catalogue Trap: Why Gaming Developers Are About to Sign the Wrong Deal
When Spotify needed content, it needed all of it. The major labels understood this and used it as leverage, badly. The indie sector, represented through Merlin, negotiated better per-stream rates than many expected but still locked in structures that became ceilings rather than floors.
The trap was not the headline rate. The trap was the minimum guarantee structure. Labels accepted upfront minimum guarantees from streaming platforms in exchange for licensing entire catalogues. Those minimums sounded substantial in 2010. They became irrelevant as subscriber numbers scaled into the hundreds of millions, because the per-stream rate did not scale with them. The platform's revenue grew. The per-stream payout contracted.
Gaming developers are currently being approached with deals that follow exactly this logic. A developer with a back catalogue of ten titles gets offered a flat fee or a revenue share to include those titles in a subscription service. The flat fee is attractive because it is immediate and certain. The revenue share sounds fair because it is tied to engagement. Neither captures the value the catalogue brings to the platform in terms of subscriber acquisition and retention.
Netflix's internal research, reported publicly in 2022, suggested that a single high-profile title could drive hundreds of thousands of new subscriptions. The incremental value of that title to Netflix was enormous. The licensing fee paid to its creator was not.
Do this: if a developer or their representative is sitting across from a platform with a subscription catalogue offer, the first question is not "what is the fee?" It is "what is your subscriber churn rate, and what does your own data show about which titles reduce it?" That is the number that tells you what your catalogue is actually worth to them. They will not volunteer it.
The Middlemen Profited. The Creators Did Not. Here Is Why.
Music managers were not innocent bystanders in this. Many of them, particularly those managing artists to major label deals in the early streaming era, took commission on deals that structurally disadvantaged their clients for years. Not because they were dishonest, but because the industry moved faster than anyone's understanding of what the long-term model would look like.
The labels kept their publishing rights, their master rights, and their platform equity. Artists kept their royalty percentage of a rate that was already marginal. Managers took 15% to 20% of whatever the artist earned, which in streaming terms was often 15% to 20% of very little.
The people who did well were the ones with rights ownership and scale. Universal's streaming revenue in 2022 was £8.1 billion globally. That was not built on charity toward artists. It was built on owning the IP and licensing it at volume.
Gaming's equivalent middlemen are already positioning themselves. Platform storefronts take 30% of every transaction as a baseline. Subscription platforms negotiate directly with publishers, leaving individual developers dependent on publisher advocacy that may or may not align with their interests. Publishers, like labels, hold the IP in most major studio arrangements.
Indie developers have a structural advantage that indie musicians largely wasted in 2009 to 2015: they have direct platform relationships through Steam, itch.io, and the Epic Games Store. The ones who licence into subscription services without retaining meaningful rights control or rate renegotiation clauses will look back on this moment the way unsigned bands look back on the deals they signed before they understood what "net receipts" actually meant in a streaming context.
A net receipts deal sounds fair. It means the artist or creator is paid after the platform deducts its costs. The problem is that the platform defines the costs.
What
From 2012 onwards, the argument used to justify low streaming rates was discoverability. Streaming gets your music in front of listeners who would never have found it otherwise. The implicit promise was that streams would convert to ticket sales, merchandise revenue, and broader commercial opportunities that would compensate for the per-stream rate.
For a small number of artists, that proved true. For the majority, it proved to be a rationalisation for accepting a structural disadvantage in exchange for a speculative upside that rarely materialised.
The Music Managers Forum published research in 2021 showing that the median UK musician earns less than £14,000 annually from their music. That is below the living wage. The streaming era did not solve creator economics. It redistributed revenue upward toward rights holders with catalogues large enough to generate meaningful volume.
Gaming platforms are now using an identical argument. Subscription services promise developers "discoverability" to millions of subscribers who might purchase future titles, DLC, or in-game content after discovering a game through the catalogue. It is the same logic. It will produce similar results for the same structural reasons.
The mechanism is this: once your title is in a subscription catalogue, consumers have no incentive to purchase it outright. The subscription is a substitute for the purchase, not a complement to it. The same is true of a song on a streaming service versus a download or physical sale. The cannabilisation effect was documented in music from 2014 onwards. Developers do not need to wait for their own equivalent study.
Do this: any developer evaluating a subscription catalogue deal should model the scenario where 60% of players who would have purchased their next title at full price instead access it through subscription. Then check whether the subscription revenue share covers that gap. In most current deals, it does not.
Critically, there is a dimension to this that the gaming industry has not yet fully confronted: ownership. In a subscription model, players do not own the games they access. Neither, in any meaningful ongoing sense, do developers retain guaranteed access to their own audience. A title can be removed from a subscription catalogue at the platform's discretion. It can be delisted, deprioritised, or simply dropped when a licensing deal expires. The developer has no guaranteed right of continued presence, and the player has no copy to keep.
This is not hypothetical. Music rights holders have pulled catalogues from streaming platforms during licensing disputes, and listeners lost access overnight to music they had been streaming for years. Gaming consumers are beginning to face the same reality. Purchased games tied to defunct online storefronts have already disappeared. Subscription titles are even more exposed, because the access was never tied to a transaction in the first place.
The question the industry needs to answer honestly is whether consumers will begin to respond to this by seeking to preserve their own copies. Physical media sales for games have declined sharply, but a portion of the market has never abandoned disc-based purchases precisely because a disc represents a form of ownership that a subscription licence does not. If platform removals become more frequent and more visible, that behaviour may intensify. Whether that takes the form of renewed physical purchasing, archival practices, or other approaches will depend on what legitimate options remain available to consumers. What is clear is that "access" and "ownership" are not the same thing, and the subscription model has been deliberately constructed to obscure that distinction.
The Territories Lesson: How Global Licensing Gutted Local Music Economies
One of the least-discussed consequences of the streaming model was what it did to local and regional music markets. Before streaming, a French artist's album sold in France at a price that reflected French consumer purchasing power and local distribution economics. An Australian release priced for Australian retail. Streaming globalised both the access and the rate, and the rate did not favour markets where currency conversions worked against creators.
Spotify pays per stream in local currency at local rates, but the effective payout to rights holders is often settled in US dollars or euros before being distributed. For UK artists earning through smaller markets, the conversion layers and minimum payout thresholds created additional friction. For artists based outside major markets, the streaming model often delivered less proportional revenue than the physical and download market it replaced.
Gaming is a global product by nature, and subscription pricing is already tiered by territory. A Game Pass subscription costs significantly less in markets like India or Brazil than in the UK or Germany. The platform benefits from subscriber volume globally. The developer's share of the pool is calculated from global engagement, but the effective revenue-per-subscriber in lower-cost territories dilutes the pool for everyone.
This is not theoretical. Apple Music and Spotify already operate tiered pricing models where a stream in Germany pays out differently to a stream in Egypt, and the Egyptian stream still counts in the algorithm as evidence of your global reach. Reach and revenue are being deliberately conflated.
If you are managing an artist and you have not audited your streaming statements by territory in the past twelve months, you do not have an accurate picture of where your revenue is actually coming from or what rate you are being paid per market.
The Negotiation Window Is Open, But Not for Long
The music industry's leverage evaporated at the point where streaming became the dominant consumption format. Before that point, somewhere around 2015 to 2016 in the UK, there was still a viable physical and download market that gave rights holders an alternative. After that point, there was no credible walk-away option. The platform knew it. The labels knew it. The rates did not improve.
Gaming has not crossed that threshold yet. Subscription services account for a meaningful but not yet dominant share of gaming revenue. The 2023 Newzoo Global Games Market Report estimated subscription services represented approximately 6% of total gaming revenue globally, with growth projections suggesting significant acceleration through 2026. That number will look very different in three years.
The window for developers to negotiate favourable catalogue licensing terms, retain meaningful rights, build in rate renegotiation triggers tied to subscriber growth, and establish transparent engagement metrics in their contracts is open right now. It will not remain open.
For music managers, the direct application is this: your artists' catalogues are being licensed into gaming platforms for sync, for in-game use, and for branded content at rates that will become the market precedent. Push on every deal. Name a rate renegotiation clause linked to platform subscriber milestones. Insist on most-favoured-nation clauses relative to comparable artists at the same career stage. Reject any deal that defines "net" without an explicit, auditable cost definition attached.
The music industry learned these lessons after signing away the leverage. The gaming industry has not yet signed. That is the difference. It is also temporary.
What Music Managers Should Actually Take From This, And Say Out Loud
If you manage artists, you already live inside the consequences of deals that were signed before anyone fully understood the model. You know what a 0.003p per stream rate feels like across a 200,000-stream month. You know the conversation with an artist who has 2 million monthly listeners and cannot make rent.
That knowledge is worth something beyond your own client list. The gaming industry does not have a community of experienced professionals who have already been through this specific negotiation failure. You do. There is a genuine advisory role here for music managers, music lawyers, and music business professionals who understand rights licensing, catalogue valuation, and platform deal structures.
Developer communities are not naive, but they are in the position music managers were in 2009: looking at a new distribution model and trying to work out whether it is an opportunity or a threat. It is both, and the outcome depends entirely on deal structure.
Practically: if you have sync clients working in gaming contexts, or if you are building relationships with game developers for artist partnerships, use your knowledge of how streaming contracts failed music creators as a direct briefing tool. Walk them through what a minimum guarantee structure does over a five-year term when subscriber numbers scale. Show them what "net receipts" language has meant in practice for your artists. That is genuinely useful information they are not getting from inside their own industry.
The music industry has paid an expensive education in how platform deals redistribute value away from creators. If the gaming industry is going to learn from that, it will not be from think pieces. It will be from specific people in specific rooms saying: here is exactly what that clause cost us, and here is what you should put in its place instead.