As an addendum to the Last.fm story today, what are the actual royalty rates we’re talking here? They’re not much – precisely the reason musicians will have to get broadcast-style play counts to ever see anything worth counting. For instance, Last.fm makes the comparison with the BBC in the Wired story. The BBC has more hegemony than even a giant US ClearChannel radio station, and I suspect it’d be virtually impossible for an unsigned artist to see that number of plays.

How little? Try $0.0005 per play, as Steve of sighup writes in comments. (I think that’s just radio plays; assuming you get both radio and on-demand plays, you should do a little better – but, still, you might be better off with your CD sales out of your guitar case.) Keep in mind, that’s on top of other revenue, like performance royalties from ASCAP, BMI, and such, but it’s still not much.

Low as that may sound, it’s in the same ballpark as traditional webcasting rates. Prior to the big shake-up over Copyright Royalty Board rates here in the US, its rate was US$0.0008. And that’s only in the US, whereas Last.fm is international – and some of that goes to SoundExchange, and some goes to your label, and … you get the picture.

As music listening takes new forms, that builds new business models. But who calls the shots? Who gets to play, and who reaps the benefits? One immediate danger is that major label deals will dominate as outlets vie for position. Online outlets like MySpace have started to look a bit like the same-old, same-old world of major labels and big deals. “Indie” music sometimes makes an appearance, but nearly always in the form of signed artists and often in the shadow of the majors. Unsigned artists can get onboard, but the playing field often isn’t level – and while majors negotiate lucrative deals for their music, unsigned artists and indies have to give theirs away for free. At the other end of the spectrum, unsigned artists often don’t get paid by services that benefit from their work (like MySpace).

That’s why Last.fm’s announcement yesterday was a potential bombshell. Now fully available after months of development, the Artist Royalty Program will pay artists royalties on plays directly – no label required. Unsigned and independent artists can sign up to earn royalties from on-demand plays and Last.fm’s streaming radio.

Last.fm Artist Royalty Program (last.fm/uploadmusic)

Royalties 101

To fully understand what that means, let’s back up and talk about where royalties come from in on-demand online music. This is entirely separate from downloadable music – that’s pretty straightforward. If you, for instance, sell a track on your band’s website for 50 cents, people pay 50 cents, own the track, and you get 50 cents. If you sell it through another vendor, then you get a slice of the sales pie.

But on-demand, streaming music, via radio stations or elsewhere, works differently. Since the days of radio, broadcasters have wanted broader access to music. Obviously, if they had to negotiate rights individually for each track, they couldn’t exist. So the solution has always been a system of blanket royalties. In the online space, there are two kinds of royalties, coming from two different licenses. Here’s the simplified version (lawyers, feel free to clarify):

A crazy scheme in which you pay a monthly fee and get unlimited music, huh? Imagine that.

Part of what was strange about flat fee advocate Jim Griffin’s new proposal for an ISP monthly fee for music is that subscription-based music lives already, from digital radio to music services. Amidst rumors that Apple might add subscriptions, the Zune, Rhapsody, and Napster all have flat-fee subscriptions right now, thank you very much. (I’m even told there are music players aside from iPod, though I don’t know if I believe this.)

I was a big fan of YottaMusic, a friendly Web front-end that connected to Rhapsody, and mourned its passing at the beginning of this year. But here’s good news: you can restore Yotta’s best feature, which was keeping track of music played in a Web browser for the superb Last.FM music community service.

Rhobbler

Rhapsody is clever enough not only to work in Web browsers on multiple platforms (even Linux), but generates an RSS feed of music you’ve been playing. Rhobbler hooks into that RSS feed and uploads to Last.FM. It’s a kludge, certainly — I’d love to see this built into the Rhapsody interface, along with other improvements. But it works: sign up once, and you’re done.

As some commenters noted in regards to the Griffin story, there’s a lot of music out there to keep track of — and a lot of us are listening to more than ever before. But that’s why it’s so nice to have tools like Last.FM. I also find, curiously, that subscription music for me feels like on-demand radio; instead of reducing how much music I buy outright, I just buy music I’m even more excited about.

If you’re not already a member, be sure to join our CDM group on Last.FM:

CreateDigitalMusic @ Last.FM

… and yes, promoting your own music there is encouraged! (Albums at right represent albums heard last week by CDM members. And, uh, dude … the group is all guys at the moment. I know ladies reading the site, and Last.FM has plenty of women, so join in and share your listening tastes!)

Music community Last.fm has made a big announcement today: you can now play full-length tracks and entire albums for free on the Web. Last.fm has managed to leap over restrictions on what qualifies as a “jukebox” by signing deals with labels, from indie to biggie. So far, the US, UK, and Germany are covered, but Last.fm promises other parts of the world soon. You don’t get unlimited plays for each track, but a future subscription service will unlock that ability along with other features. (Last.fm’s subscriptions are already a nice feature, so paying a bit extra for that I imagine will appeal to a lot of people.)

So, how do artists get paid? That’s the interesting bit:

• Artists (or whomever the writer / publisher is) continue to collect royalties via collection societies like ASCAP and BMI, as with other services.
• Artists and labels get an additional cut of Last.fm’s ad revenues.
• Last.fm does an excellent job of referring people to digital downloads, via band websites and services like Amazon and iTunes. Those services are increasingly DRM-free (Amazon has the largest DRM-free catalog currently). And you can even go buy a CD if you like.

Beginning to get the picture? The digital age has brought a shift in consumption, but it’s possible it can still bring big revenue opportunities for artists. Connections to live music and merchandise of course can also help, and unlike a service like iTunes, Last.fm’s collections are curated largely by the community of people listening to them — which is good news for artists trying to get discovered.

I’m looking for a catch, but I think the only real catch is seeing whether this will translate into real checks for anyone but the biggest artists. And for that, we’ll just have to see how these services evolve. But by opening the door to full-length plays on Last.fm, that service clears the path for other services to get similar deals, or to connect to Last.fm’s listener data and community for their own service. The business model continues to get better. And for listeners, it’s a dream.

Free the Music [Last.hq, the Last.fm blog]

This may stretch your definition of “good news” for webcasters, but the latest on the Internet Radio crisis runs something like this:

Webcasters don’t yet have to pay new fees for their broadcast. But they’re still accruing debt — fast. Sort of like our credit card debt.

Webcasters may get a small break on the minimum fee, one that could literally have shut down “personalized” radio services. SoundExchange explains the deal thusly:

Under the new proposal, to be implemented by remand to the CRJs, SoundExchange has offered to cap the $500 per channel minimum fee at $50,000 per year for webcasters who agree to provide more detailed reporting of the music that they play and work to stop users from engaging in “streamripping” – turning Internet radio performances into a digital music library.

Note the big attached “ifs”, which are vaguely worded in the official SoundExchange announcement, and sound all the more threatening given, according to SoundExchange, the previous rates are already in effect. Whichever side you’re on here, you have to give SoundExchange some credit for, erm, negotiating skill. “Hey, so while you’re dangled over this bridge, I wonder if we might … negotiate some small items?”

The one shred of good news: apparently Congress has applied some pressure on SoundExchange to negotiate, meaning public action has actually made some difference. Whatever the ultimate solution, it’d be nice to think some sort of public involvement might push the government to do something effective.

Wired has some good reporting on this:
Net Radio Wins Partial Reprieve as Royalties Loom

Meanwhile, I have a partial vacation to get back to. See you soon.