This kind of shit drives me nuts.
Digital Music News reports on PJ Wasserman, a composer, producer and creator of chillout, psyTrance and electronica. His complaint is that after 151,781 plays of his music on YouTube, he received a payout of $10.02.
On the surface, that seems like a massive ripoff. Other musicians have reported similar financial horrors. How’s a musician supposed to survive on that kind of income?
Here’s your answer: you’re not supposed to.
Artists get performances royalties from a variety of sources, from streaming services to radio to television to being heard in the hair salon. Those fees are determined by a variety of methods.
For radio, performing rights organizations such as SOCAN and Resound collect a fee based on a percentage of a radio station’s gross revenues. The more the a station makes selling ad time, the more it has to pay for the privilege of playing music as part of their business model. The same applies for television.
There are separate licenses for public performance that must be paid by arenas, stadiums, clubs, stores, spas, the aforementioned hair salons–anywhere copyrighted music (live or prerecorded) can be heard by the public. Again, if you’re using someone’s music as part of your business, the rightsholders of that music need to be paid. It’s only fair, right? The performance collective with whom you’re registered–SOCAN, BMI, ASCAP, SEAC, BPI, etc–collects that money on your behalf and distributes it accordingly.
But back to radio for a second. Here we’re dealing with what’s called a blanket license. It doesn’t matter how many people listen any time a given song is played over the air. There could be 35,000 tuned in when your song is played so your song reached 35,000 people simultaneously. Or, depending on the day, your song could be pumped out from the same station through the same transmitter to the same geographic area and on that occasion, it’s heard by 13 people and a dog. Either way, the fee you as an artist will earn will be exactly the same. This has been the situation since the 1940s.
Streaming is different. Artists are paid according to the exact number of people who listen to a given song whenever an individual selects it to be played. That payment is usually a fraction of a fraction of a cent–but it’s still something for each and every play a song gets.
So let’s compare. ONE spin of a song on a radio station might be heard by tens of thousands of people all at once, resulting in a payment to the artist of a few cents. A stream of the same song might be heard by the same number of individuals but spread out over the course of a week or a month or even longer. Hit songs get lots of spins/listens/streams, meaning greater payments from both radio and streaming services, resulting in higher royalty payments.
However you slice it, the net result is the same. In other words, streaming is the new radio.
Where the debate gets all bullshitty is when people start comparing radio play royalties and streaming royalties to music sales. This is about as far as from an apples-to-apples comparison as you can get. You can’t equate the two.
Margins on CDs, vinyl and paid downloads are pretty fat when compared to streaming and radio play royalties. Sale royalties have been very, very good for many, many artists for decades. But the fact that we, the music consumer, can now access any song we want without having to buy anything is great for us but lousy for the artist. If we can access any song we want anytime we want it, we don’t need to possess (i.e. buy it).
There are other things we can debate about the rise of streaming and its effect on artist incomes, but my goal here was to draw and apple-to-apples comparison with the way things are with radio. So the next time an artist complains about how little he/she is making from streams, remember how the numbers and payments work. Where we can sympathize is how they’re not making money by selling us pieces of plastic and digital files.
And remember this: the argument shouldn’t be with YouTube, Spotify, Rdio or any other streaming service. It should be with the music collective and copyright organizations that negotiate the fee these services are required to pay. Spotify doesn’t just set some arbitrary royalty amount; they’re paid what they’re told to pay by the music industry people order them to pay. What artist should be screaming about is greater transparency on behalf of the collectives, their record companies and their publishing companies.
So don’t cry about earning $10.02 for 151,000 YouTube plays. That revenue was never designed to replace what you would have received under the old physical sales model. And remember that if 151,000 people heard your song on the radio, you’d only get a fraction of that.
We need to start thinking of “listens” and not “sales.” Those are the metrics going forward, like it or not.