Monday, April 25, 2011

The Myth Of Streaming Royalties

Nearly everyone in the music industry believes that someday in the near future, the music business will change from a digital download business to a streaming business, with listeners subscribing to a service like Rhapsody to essentially rent their music instead of buy it. Subscription is something that the record labels desperately want, the idea being that getting a steady $10 a month from say 10 million people is a pretty good steady income and better than the ups and downs of CD and download sales.

Of course, the problem here is that it's good for the record labels, and not that good for the artist. How is that money divided up? How much will the artist make in the end? Do recording contracts even cover this scenario? Does the artist get paid like a songwriter does from ASCAP or BMI?

What may be a window into the future lies in a statement made by David Renzer, chairman and CEO of Universal Music Group Publishing at the Association of Independent Music Publishers (AIMP) earlier this year, according to Digital Music News.
"For every 250,000 streams on YouTube, that is the equivalent of one credit of ASCAP performing rights value," Renzer relayed. "One credit is less than $8, it's about $7.60." 
That means that a song with a massive amount of traction like Rebecca Black's "Friday" will only received $3,405 for 112 million views.

Now consider this. Commercial broadcasters pay $.0019 per performance on a web broadcast, which will increase to $.0021 in 2012 and $.0023 in 2014. That's less than 1/4 of one percent that you still have to split with your publisher, if you have one. Webcasters like Pandora pay $.00102 in 2011, $.00110 in 2012, $.00120 in 2013, $.00130 in 2014 and $.00140 in 2015, which is even less.

If it wasn't bad enough being an artist and trying to make money in the digital download age, being one in the streaming age is going to be even worse. Starts to make gigging and selling merch look pretty good, doesn't it?
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1 comment:

Oli said...

It's hard to see how things will pan out: I'd say there are probably some legs in streaming subscription as a business, but only for the services themselves and those that have the licensing rights to huge catalogues. It's really an old paradigm (skim a point or two off some huge numbers) in a new situation, where skimming everything EXCEPT a point or two off some much smaller numbers will, I suspect and hope, be the way that new music gets funded, and creative musicians pay their rent.


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