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Pandora Pays Artists $0.001 Per Stream, Thinks This Is "Very Fair"
journovampire writes with this story about how much artists make on Spotify. "Pandora founder Tim Westergren has claimed that the company is paying out 'very fair' sums to artists, despite its per-stream royalty weighing in at just one sixth of Spotify's. The digital personalized radio platform has previously gone on-record as saying that it pays music rights-holders approximately $0.0014 for each play of their tracks: Westergren blogged in 2013 that Pandora pays ‘around $1,370 for a million spins’. That’s around 80% smaller than Spotify’s per-stream payout, which officially stands somewhere between $0.006 and $0.0084."
How much does a radio station with, say, a million listeners pay when they broadcast a song? Pandora seems to sit somewhere between radio and Spotify as a service and so I would expect the royalty rate to be somewhat more than radio and less than Spotify.
So, does the money actually go to the artists, or just to the publishing companies?
The amount they pay out to the artist per stream is irrelevant if you don't know how much streams, how much revenue and how much other costs they incur.
If they pay $0.1/stream to the 'rights holders' and $0.001 to the artist, then that is a contractual issue between the artist and the rights holders. If Pandora pays $1M upfront to a label company to stream their library and then additionally pays $0.001 to the artist/stream and Spotify pays nothing to a label company but pays $0.006 to the label company who then gives 1% to the artist, then which approach gets the artist more money?
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A tenth of a penny per stream, times how many people for whose Pandora channels it appears, times how many times it gets repeated on that channel over the year? I would think the artist eventually comes out on top of what they'd make off the same song being sold for 99 cents on iTunes. Key point: it's not a royalty per song; it's a royalty per listen.
There's no such thing as "fairness" - it's a fairy tale concept that causes humans far too much suffering.
I would love to get $1300 for each million user sessions served by a system I designed - holy cow that would add up. I get paid for a job, and that is that. I realize that artists often sign bad business contracts (when I do, I just lose money - boo hoo).
But regardless Spotify and Pandora aren't equivalent - the songs I hear on Pandora are often ones I've never heard before. I've bought CD's based on its generated recommendations - Pandora is a promotion platform for artists. Spotify tends to be more for music on demand. It's nice that Pandora also pays the artists for the airtime - I'd imagine Pandora would survive just fine only playing for promotional value.
My God, it's Full of Source!
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Trawl the used CD shops and garage sales, et al and then rip them yourself, create your own playlist and use your portable music player, no internet connection required....
Personally, I'd like to be able to get royalty payments every time somebody used one of my commercial software programs or one of my hardware devices. Think about it. You spend a few months writing a piece of software and then get paid for it for life. Quite frankly, IMHO, the entire royalty business model is broken because while the original intent may have ensured that the "artists" weren't being taken advantage of, it's gotten so out of control that these "artists" have now been brainwashing into believing that they are oh so much more important than everyone else and that their opinions on things they know nothing about are to be taken seriously.
..and I like it even less now. Tried Pandora a few years ago. Was rather annoyed with the way it worked so I ditched it. Reading this now, and knowing many producing musicians, I like it even less than I did before. The music industry has always more or less shit on artists, and apparently Pandora is no exception.
Are YOU using the TOOL, or is the TOOL using YOU? Think about it!
I wonder if labels let Pandora get away with such low payouts because Pandora doesn't give the user quite the same control as the premium services. Unlike Spotify, which lets users construct a playlist, Pandora randomly chooses songs similar in style to the chosen artist's songs. Its approach appears to comply with the "noninteractive" requirement of the U.S. compulsory license, not allowing the user to select individual songs, and the "performance complement" requirement, playing no more than four songs by the chosen artist in three hours.
In spotify's case we know the artists get scrap because they have shit deals with their labels and the labels keep all the money. So how does this compare to Pandora?
For that matter, how much do artists get paid each time I listen to a track on a CD?
Hmmm, let's see: Artists get about 10% of retail
A CD costs $10, and say there are ten tracks on the CD.
Thus, each track costs $1, and the artists earns ten cents per track.
Most of my CDs were purchased at least ten years ago. I have no doubt I have listened to many of those tracks at least 100 times (those that were purchased more recently obviously don't have the same number of "listens", but - barring sudden death or deafness - I expect they will in time).
So the artist gets about $0.001 (1/10th of a cent) every time I listen to a track.
That's slightly less than Pandora pays and 6 times less than Spotify. Even assuming they get slightly better rates and I listen to the tracks far less frequently, the artists are still earning about as much money each time I listen to a track on CD (well, okay, ripped to MP3 but you know what I mean).
You could argue that the percent the artist is earning is far too low - that the middlemen are siphoning off too much into their own pockets - but that's a different issue. As it stands, it seems to me that online streaming services are paying them about the same (if not more) than they might get from more traditional sales, at least if you calculate based on the number of times a song is heard.
Maybe measuring "per listen" (stream) isn't the optimal way of calculating revenue.
Why do artists expect to be paid at all for recordings of their music? For a very brief period in history, making money off of recordings was made possible by a coincidental combination of technology and artificial scarcity caused by the cumbersome nature of physical media. Before the advent of physical recordings, musicians had to make money by performing. After the advent of digital recordings, musicians will once again have to make money by performing. Anything else will prove to have been historically anomalous.
Making and distributing recordings will still be in artists' interest, because they will serve as a way to generate demand for performances. That is, recordings will become a form of advertising, which will be distributed for all intents and purposes for free, or even at the expense of artists.
Can we quit wringing our hands about this now? Art will survive just fine.
While true, it's irrelevant for two reasons:
1) The radio doesn't play the songs you want on demand; and
2) The radio is effectively a way to drive album sales. Spotify is a REPLACEMENT for the album.
It used to be that it was worth it to play your songs on the radio (even at a loss) because people that liked your one song might want to hear the 10 hours you wrote--that would never be heard on the radio--and spend $10 on the album.
Now you pay Spotify $10/month for unlimited access to the entire album. To the entirety of the artist's catalogue. To the entirety of all the included artists' catalogues.
This is obviously and trivially less money than any one of those artists would make previously from you if you liked their music. Perhaps the argument could be made that more people are listening and giving a tiny amount of money to each artist, but I rather think that given the stats I've seen, this isn't even close to true.
This is much different from the time when people were pirating albums, since many fans would go out and buy an album that they downloaded because they wanted to support the artist. Now people feel that because they're paying $10 to Spotify or Rdio that they ARE supporting the artist. They're not going to pay for a subscription AND an album. That's exactly the opposite of the point of these services.
They need a new model. Streaming on its own for $10/month is clearly not enough money to go around. Spotify has infrastructure costs and has been bleeding money (I think they had a break-even or profitable quarter just recently?). Meanwhile, they also need to distribute the remainder of the already paltry $10 between a zillion artists. It makes no sense.
Performers get zero payments for songs played on the radio (http://diymusician.cdbaby.com/2014/08/didnt-know-radio-royalties/). The authors of the songs (music and lyrics) do get paid. The payments to the rights holders (authors) of the music get paid from radio at a rate which is somewhere around $0.0003 per listener (give or take about 300% - source: http://davidtouve.com/2011/12/...).
In contrast, a permanent digital download and a CD (which can be played as many times as you like) have the same one time rate of $0.096 per track. This is set by law and is called a mechanical right.
So lets see what kind of relative value we have to a CD or PDD:
One radio listener, one listen = $0.0003, iow a permanent right "breaks even" at 320 listens
For Pandora and Spotify, they have to pay the entire chain - producers, artists, authors, promoters, etc.
If we scale the total fees using an album model, with a typical album costing $9.99 and having 12 tracks, of which 30% goes to the retailer, the value of a "track" is $0.583, or about 6x the amount paid for the author on that track. (you can argue the specifics, but if you're buying tens of millions of CDs worth of songs, you'd better get pricing that it *at least* this good)
So at that 58.3c/permanent track...
One pandora listener, one listen = $0.0014, break even is at 416 listens
One spotify listener, one listen = $0.007, break even us at 83 listens.
Radio has to play that track for 1920 listens to match the total compensation paid by the two streamers.
What does online streaming look like now? Pandora is slightly below Radio in their compensation per track to everyone they pay. You might contend that Pandora "finds" new artists better due to their model instead of radio playing whatever they're given to promote, and therefore provides slightly more value. Spotify, OTOH, lets you choose just what you want - you can play Brittney Spears all day, over and over - and therefore it's more like buying a track. And if you were to hit 83 plays on a track, you'd have been better off just buying the track. 83 plays seems like a lot, but that's over an entire lifetime - actually lifetime plus 70 years in copyright.
Is it just my observation, or are there way too many stupid people in the world?
People keep complaining about stuff like this without realizing that no one is forcing artists to list themselves on Pandora at all.
You don't have to put your music on their service. At all.
If you did put your music on their service then you agreed to whatever their rate was at that time.
END OF STORY SHUT THE FUCK UP.
If you don't like the rate now, then tell that to pandora and if they don't give you more money then either suck it up or leave.
Again... End of fucking story.
Let me put the prices in some perspective. I can go to Youtube, search any song by just about anyone, and find that song often listed by the publisher of that artist... and I can listen to that song over and over again for free.
So... Where is the money coming from that pays these artists? The ad revenue from non paying users? On a per ad basis you're talking about a tiny amount of money. And then you have to keep in mind that a user could listen to several songs between each ad. Which means that ad revenue has to be split between all those artists and that is only after Pandora has gotten enough to meet their bottom line. All things considered, the price is not unreasonable.
Does it suck that artists aren't making the record company money they used to make? Perhaps... but that's over and done with. The day of the rock god is over. Accept it.
If you want to be a professional musician these days then you have to crowd fund yourself. Set up a website, distribute exclusive content through it, do fan requests, interact with your users, and try to sustain yourself with a subscription model if you can. That... or try to sustain yourself with live performances. The record deals are gone. You're not going to buy yourself islands with your guitar unless you're very lucky.
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BUT radio plays that song to millions of devices simultaneously, whereas P & S play to a single device. If it's listens we're worried about (and that is what this is about), it would take Pandora 5.7 years for a million people to consecutively listen to that 3 minute Lady Gaga, but radio can distribute the same amount of listens in just 3 minutes.
Is it just my observation, or are there way too many stupid people in the world?
Then why are they in this business? If musicians can't find another way to make money, they need to find a job that will get them some.
For many musicians, they tend to get into this as if it was the lottery. That is, they go in there expecting that they can write some songs and make an actual living off of it, with no actual evidence that they can. Some of them make it huge, but most don't.
So why are they making music? Because they want to. And why am I paying them to do what they want to do? No one pays me to play video games, even if I have a phenomenal kill ratio and a winning record.
I don't owe musicians anything. If they have a product that I need to get from them, or I want to pay them for, then fine. If I don't think their stuff is worth more than some fraction of $10 a month, then that's their problem. If musicians can't live off of that, then they need new management or a new career. That's exactly what I'd need to do if what I did brought in no money.
But it seems a lot of people think they have a RIGHT to listen to music, created by others for the purpose of selling and providing an income, for FREE
"I have a right to listen to music" makes a lot more sense than "I have a right to be paid for my hard work." Nobody has a _right_ to be paid for working. If they did, homeless people could dig ditches and fill them in all day and get paid for that because they were working really hard.
all the bitching and moaning that happens on Slashdot about how shit should be free.
Where? I don't see it anywhere.
I do see people pointing out that shit _used_ to be free: no compensation at all to the artist for radio plays in the US, compensation at 1/8th what Pandora pays in the UK.
Shit cost money to make and distribute
kinda seems like Pandora's doing the distribution in this case: promotion, discovery, transmission of the music, negotiation of deals, collection of money, all of it. iTunes and Google Music will even deal directly with artists, though most of them seem unable to figure that out. I guess you're saying we'd better make sure these new guys are paid adequately for their hard work, and aren't being squeezed too hard by the greedy record labels who keep making news cycles like TFA to build up hate toward the companies that are about to make them irrelevant?
How about a model where the artists only continue to get paid if they continue to work. You know, like the rest of us? Let's call that model the "Touring and Selling T-Shirts and Actually Writing New Material" model. Couple that with a crazy strategy called "Setting Up an IRA and Actually Saving for Retirement Like Everyone Else" and they might be viable.
Of course, that assumes enough people want to see them play and buy their T-shirts that they can afford to save for requirement. If they can't, I suggest that they instead try the "Get a Real Damn Job Because No One Owes You The Right To Chase Your Dream If You Aren't Good Enough to Make A Living At It" model.
It doesn't hurt to be nice.
This is true. When I was a kid in the 80s (teen years), I bought lots of records and CDs. By my late 20s (late 90s), that had dwindled considerably, more so in my 30s, and now that I'm in my late 40s, I basically buy no music. Maybe a song per year on average, if that much. I don't engage in filesharing.
So the $30 or $40 I spend per year on Pandora for an ad free account, which I use probably less than 10 hours per month, is comprised in part of money I would never have given the music industry in the absence of something like Pandora. Note, it isn't that Pandora caused me stop buying music -- I had already stopped more than a decade before I started listening to Pandora. For the music industry, whatever they get out of my Pandora usage should be considered pure gravy that they wouldn't have gotten if Pandora or something like it did not exist.
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