Publishing & Songwriting

How Much Do Digital Music Services Pay Copyright Owners? [INFOGRAPHIC]

StremaingDollarsAs music fans continue to have more options in their digital music consumption, the ways that artists and copyright holders get paid continues to become
more complicated and fuzzy – often because of outdated copyright laws and private
negotiations
occurring between artists, labels and streaming services. Given
that digital music services like Spotify and Pandora are continuing to see their
user bases grow  at the same time that global music sales continue to decline overall, music services need to become transparent
enough so that artists can get a clearer grasp of the viability and sustainability
of their music careers through the usage of their recordings.


With that in mind, the following infographic displays the
projected revenue for 2012 earned by Pandora, Sirius XM and Spotify, and then
compares that to the amount of money copyright holders receive in return for
the usage of their recordings.

click image to enlarge

Enhanced-buzz-wide-8746-1350918114-19Source: Buzzfeed

Does This System Benefit Anyone?

The data above describes an interesting reflection of the current state of copyright laws, as they don't seem to work in the favor of either content providers or the creators. Spotify was recently slammed for having an “alarming” and “unstainable” business model by financial analysis firm PrivCo, where "virtually every new dollar of revenue went directly to music companies as royalty payments, evidencing the fact that the more members Spotify adds, the more money the company loses".

Meanwhile, Pandora recently made an announcement regarding
how much revenue particular artists are generating through their service, but didn't account for how those payouts are being split between labels and artists. 

One has to ask, then: Since people clearly want to continue listening to music on the Internet, why then are we so slow to advance the space by establishing updated and more straightforward copyright laws that can benefit both musicians and streaming services alike? Are musicians destined to get the short end of the stick, while music services continue to earn millions / billions from the exploitation (for better or for worse) of their art?

Tell us what you think! Leave your thoughts and comments below.

Hisham Dahud is a Senior Analyst for Hypebot.com. Additionally, he is the head of Business Development for Fame House and an independent musician. Follow him on Twitter: @HishamDahud

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5 Comments

  1. That part is misleading; terrestrial radio pays songwriters and their publishers, but not recording artists or owners of the master recordings (yet).

  2. Hmmm… Let see. You’re wondering why its taking forever for our government to pass new updated copyright laws. It’s probably for the same reason that our government hasnt passed anything meaningful in the last couple of years… They cant agree on the best way to tie thier shoes in Washington!

  3. I don’t think copyright law is to blame. Copyright merely establishes the rights of the intellectual property owner. What is required is the establishment of a compulsory license to lower the cost of entry for new technology and enable more sites to acquire a license.

  4. Another couple important points left out:
    As Jay pointed out above, terrestrial broadcasters pay songwriters an publishers. In the indie world this usually the same as recording artists and master owners, but not always. Also the payouts are based on an antiquated survey model where the lesser played are just not paid. Payouts are top heavy, geared toward the top 20% of popular artists.
    Pandora averages 1 minute of ads per hour while SiriusXM averages 13. I personally think Pandora would be more profitable is they sold 13x as many ads, but that’s just me.
    Spotify has the highest ever conversion rate of free to paid users. If they can stay alive another couple years on funding money, it could very possibly become self sustaining.
    The new bill put forward by the Internet Radio Fairness coalition has Clear Channel working along side their market-share-stealing enemy, Pandora. I like Pandora but I can’t support anything put forward by Clear Channel. Especially when you look at the details; it’s just stripping the CRB of effectiveness and independence.
    I’m all for compulsory license reform, but maybe we should let some musicians have some input?

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