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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.
See this page, which has much more information, graphical breakdown of who gets what, etc.
Oh no... it's the future.
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.
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.
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?
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.