article by Billboard magazine cited some interesting research by David Touve, an Assistant Professor of Business at Washington & Lee University who has long studied the music industry. The study found that Internet streaming, specifically Spotify, actually pays a higher royalty rate than radio airplay.
Touve found that a spin on terrestrial radio results in royalties that range from $0.000186 to $0.000372 in the U.S. and from $0.0004 to $0.0007 in the UK (at current currency rates). That's not much, is it?
Now consider that Spotify pays about 0.3 cents per
stream (an estimate based on Billboard sources and media reports), which is
16.1 times greater than $0.000186 and 8.1 times greater than $0.000372.
There are a couple of differences though.
Radio royalties feel bigger because so many people listen to radio. On-demand royalties feel small because relatively few people use services like
Spotify. Also, the way radio royalties are shared makes a big difference in how much you earn.
The way that works is that ASCAP or BMI is paid a huge lump sum by the broadcaster for the right to use that organization's member's music, and it's then divided up between writers by taking a survey of national airplay. The more plays you get during the survey, the more money you get....maybe. The trick is that it all depends on the time of day, the market, and how many plays you get during the survey period that determines how much is in your royalty check. If you happen to get a big amount of plays either before or after the survey period, you probably won't get credited for them. And to make it even worse, ASCAP and BMI have different ways of weighting the different types of plays, so you make more from radio airplay from one, or television broadcast from the other. One of the benefits of streaming is that you know the exact number of plays and where they come from (or at least you should).
That said, with restricted playlists and decreasing airplay due to stations converting to news or talk, it's harder and harder to make any dough from radio airplay, even if the royalty rates were even.
Okay, so the cash cow of the music business is turning out to be thin and sickly, so what else is new? If you were in music to make a ton of money, you're in it for the wrong reason anyway. To real musicians, producers, execs, and all manor of other people working in the biz, it's all about the music; any money that comes in is a bonus. If you don't have the passion for it, go be a banker and make some real money.