If Spotify and Pandora Are the Future, Do Artists Have One?

Psy
“Wait, 1.2 billion views and you’re paying me 0.6 cents a view?” / Photo by Getty Images

Streaming services’ growth stirs debate over slim royalties

The New York Times has seen the future of music, and it doesn’t look good for musicians.

As the Times reports, the comparatively teensy amount artists earn from streaming services has caused concern throughout the industry.

While the average musician might earn 7 to 10 cents on an iTunes download, artists receive a fraction of a fraction of a cent each time their songs are played on streaming services. That’s not terrible if you’re Psy, who a Google executive recently said had earned $8 million on the 1.2 billion views for “Gangnam Style,” a rate of roughly 0.6 cents per view. It’s less good if you’re Zoe Keating, a self-described “avant cello” musician who late last year revealed that despite getting more than 1.5 million plays on Pandora in a six-month span, she received less than $1,700. Spotify was a bit kinder: Her 131,000 plays last year yielded almost $550.

Pandora, for one, lobbied last year for permission to lower its royalty rates, which unlike Spotify’s are set by law. A wide range of artists, from Brian Wilson to Rihanna, opposed the leigslation, the so-called Internet Radio Fairness Act. So did the American Association of Independent Music, which represents many prominent indie labelsBillboard reports that the legislation isn’t completely dead and is “just hibernating.”

Artists might dream of penny royalties, but streaming service providers are swimming in big bucks. Pandora is publicly traded, with a share price that values it at nearly $2 billion. Spotify isn’t public, but its investors have reportedly pegged its value at $3 billion. To put that into perspective, the entire music industry saw revenues of roughly $7 billion in 2011, according to the Recording Industry Association of America.

Streaming service companies might be worth a lot on paper, but they’re not contributing much to the record business just yet. Pandora had $202 million in “content acquisition costs” in its last four reported quarters, and Spotify recently said it had made $500 million in royalty payments, the Times notes. That pales in comparison to music downloads’ $2.6 billion in 2011 sales.

Read more here: http://www.spin.com/articles/streaming-services-artist-royalties-spotify-pandora-youtube-debate?utm_source=spintwitter&utm_medium=social&utm_campaign=spintwitter

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