Comments on: Fine Print: What Do Royalty Rates Actually Pay?

By: Create Digital Music » Last.fm Will Pay Unsigned Artists Directly for Online Plays; What it Means

Mon, 21 Jul 2008 02:33:59 +0000

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By: Gavroche

Gavroche — Sat, 12 Jul 2008 20:03:01 +0000

Oops, clicked submit too soon.

The math is correct — Pandora shouldn’t be charged these crazy rates as this would kill their business, as well as most music discovery startups. Music discovery sites are KEY to revitalizing the music industry and are a big way that people discover new music. They are doing a great public service, and so royalties that cripple their operations should’t be imposed. This would go AGAINST the purpose of copyright law to promote the creation and distribution of arts for the public. Especially since the artists aren’t really making anything from these digi royalties.

By: Gavroche

Gavroche — Sat, 12 Jul 2008 20:00:23 +0000

Sudara — I agree with you that the industry doesn’t place a lot of value on music, especially streamed digi music. But this isn’t really a big surprise to me. IMO, artists should not expect to make money from their songs streaming online; this is the easiest way to expose your music to millions of people and it is probably the best/quickest/easiest promo method you can do. Then, when somebody wants to download your song, they pay for it. Thats where the $ comes in, I think. But, we’re experiencing a time when people aren’t paying to download, for whatever reason. So I think the music model needs to be rethought so that certain value adds give the consumer a reason to buy the song.

doesn’t You can do the math: that’s enough to bury Pandora, but not enough so that you’d ever see any of the change. Everyone loses.

By: Oh Travioso

Oh Travioso — Fri, 11 Jul 2008 03:08:26 +0000

I’m taking a short business course, and Tim from Pandora came to speak and talked about the royalty rates destroying the Pandora business model. They seem to have a pretty vocal following, so I hope they’re able to successfully lobby a change.

By: Peter Kirn

Peter Kirn — Thu, 10 Jul 2008 20:58:26 +0000

Yeah, that’s true, I agree — but the flipside is, the revenue from advertising in an audio stream is likewise limited, because we don’t have audio ads, we have banner ads alongside a feed. So the majority of ad revenue doesn’t necessarily even come from the music. For instance, I use last.fm all the time, but spend relatively little time using it to listen to music; I’ll click through for artist info. They’re not playing the music at all in that case, so it’s not necessarily a predatory situation (though if I were the artist, I’d want an incentive for people to come to my site instead).

So I don’t know that it’s necessarily that CBS and Last.fm think the music lacks value. On the contrary, I think they’d really *love* it if you listened to a stream and went and bought the album through them — hence the prominent links to Amazon, iTunes. They’re going to make more money that way. So in the ideal world, you figure artists and sites like this actually have some common interested in better monetizing it.

But I agree — this royalty business is nowhere near the scale yet where it’s going to matter to artists. Now, if streaming does explode in size, on the other hand, to the point where 20,000 plays is *small*, then the game changes.

By: sudara

sudara — Thu, 10 Jul 2008 20:24:33 +0000

Thanks for the good set of articles, Peter.

At $0.0005 per play and a $10 minimum before payout, an artist would have to reach 20,000 plays before they see a cent.

One would have to be pretty darn popular to get a monthly twelve-pack of beer out of the deal. Not exactly livable - even if this was the standard across all music sites and you had a nicely sized fan base.

All that this announcement does for me is highlight and solidify the (lack of) value that industry places on a piece of music. $0.0005 to the artist is pretty darn close to nothing. Even sending the actual mp3 file over the intertubes (for example, with Amazon s3) generally costs more than this. It is a novelty amount of money. It seems to exist solely so that they can claim they are ‘paying independent artists’ when in fact they will rake in big advertising dollars on their long-tail artists and at worst will pay out a bit of small change to the small group of artists who manage to make it over the minimum of 20,000 plays.

By: Steve

Steve — Thu, 10 Jul 2008 18:25:08 +0000

Thanks for the extra info, Peter. Interesting, and certainly something to think about further.