Spotify/music royalties controversy

[Larry Kart]

Good (I think) primer on the tangled web of music royalties, with an emphasis on Spotify:

http://www.digitaltrends.com/music/how-do-music-royalties-work-and-why-does-everyone-complain/

Those who know more, please weigh in; I/we need to know as much as possible.

[Blue Train]

Pandora, Spotify or any internet radio pay a much larger percentage of their revenue than anyone else. Pandora has 200 million users and still hasn't made a profit.

http://articles.latimes.com/2012/jun/05/business/la-fi-tn-pandora-lobbying-royalties-20120605


http://seekingalpha.com/article/1400531-pandora-poised-for-profit


http://blogs.reuters.com/mediafile/2013/05/10/music-royalties-and-pandoras-box/

Edited July 17, 2013 by Blue Train

[Blue Train]

Speaking of copyrights.....read about Ira B. Arnstein.

http://www.steamthing.com/2013/05/adventures-of-a-copyright-troll.html

http://www.thenation.com/article/174123/professional-victim-ira-b-arnstein?page=full#axzz2ZJpYwVfV

Edited July 17, 2013 by Blue Train

[Larry Kart]

Pandora, Spotify or any internet radio pay a much larger percentage of their revenue than anyone else. Pandora has 200 million users and still hasn't made a profit.

http://articles.latimes.com/2012/jun/05/business/la-fi-tn-pandora-lobbying-royalties-20120605

http://seekingalpha.com/article/1400531-pandora-poised-for-profit

http://blogs.reuters.com/mediafile/2013/05/10/music-royalties-and-pandoras-box/

These stories seem to be based on/to accept without independent verification the claims of Spotify, Pandora as to how they do business, what their costs are, the amounts they pay in royalties, and how they apportion them. I'm not saying they're lying -- I don't know -- but why would one accept their version of the facts as sufficient?

[Blue Train]

Pandora, Spotify or any internet radio pay a much larger percentage of their revenue than anyone else. Pandora has 200 million users and still hasn't made a profit.

http://articles.latimes.com/2012/jun/05/business/la-fi-tn-pandora-lobbying-royalties-20120605

http://seekingalpha.com/article/1400531-pandora-poised-for-profit

http://blogs.reuters.com/mediafile/2013/05/10/music-royalties-and-pandoras-box/

These stories seem to be based on/to accept without independent verification the claims of Spotify, Pandora as to how they do business, what their costs are, the amounts they pay in royalties, and how they apportion them. I'm not saying they're lying -- I don't know -- but why would one accept their version of the facts as sufficient?

They're based on their publicly disclosed financial statements. Pandora paid $258.7 million in royalties in 2012.

Edited July 17, 2013 by Blue Train

[Larry Kart]

I should add that I use Spotify (don't have Pandora) more or less the way the artists (I think) would hope. I hear of a recording I might be interested in, I listen to enough of it to make up my mind, and then very often I buy the CD. "Listen to enough of it" is the key for me; the clips on Amazon and elsewhere usually aren't long enough for me to make up my mind. Further FWIW, I don't use Spotify for any other reasons -- listening to any music via computer for pleasure doesn't do it for me; the sound quality isn't good enough compared to what I've got elsewhere.

Pandora, Spotify or any internet radio pay a much larger percentage of their revenue than anyone else. Pandora has 200 million users and still hasn't made a profit.

http://articles.latimes.com/2012/jun/05/business/la-fi-tn-pandora-lobbying-royalties-20120605


http://seekingalpha.com/article/1400531-pandora-poised-for-profit


http://blogs.reuters.com/mediafile/2013/05/10/music-royalties-and-pandoras-box/

These stories seem to be based on/to accept without independent verification the claims of Spotify, Pandora as to how they do business, what their costs are, the amounts they pay in royalties, and how they apportion them. I'm not saying they're lying -- I don't know -- but why would one accept their version of the facts as sufficient?

They're based on their publicly disclosed financial statements.

And we know those can be trusted -- see recent behavior on Wall St.

[Blue Train]

I should add that I use Spotify (don't have Pandora) more or less the way the artists (I think) would hope. I hear of a recording I might be interested in, I listen to enough of it to make up my mind, and then very often I buy the CD. "Listen to enough of it" is the key for me; the clips on Amazon and elsewhere usually aren't long enough for me to make up my mind. Further FWIW, I don't use Spotify for any other reasons -- listening to any music via computer for pleasure doesn't do it for me; the sound quality isn't good enough compared to what I've got elsewhere.

Pandora, Spotify or any internet radio pay a much larger percentage of their revenue than anyone else. Pandora has 200 million users and still hasn't made a profit.

http://articles.latimes.com/2012/jun/05/business/la-fi-tn-pandora-lobbying-royalties-20120605

http://seekingalpha.com/article/1400531-pandora-poised-for-profit

http://blogs.reuters.com/mediafile/2013/05/10/music-royalties-and-pandoras-box/

These stories seem to be based on/to accept without independent verification the claims of Spotify, Pandora as to how they do business, what their costs are, the amounts they pay in royalties, and how they apportion them. I'm not saying they're lying -- I don't know -- but why would one accept their version of the facts as sufficient?

They're based on their publicly disclosed financial statements.

And we know those can be trusted -- see recent behavior on Wall St.

So, they're cooking the books to show they're losing money and hurt the value of the company....and the bottom line of those major investors, CEO, anyone else with shares? If a company is going to fix the books it's to make the stock value go up and make those doing it more money. No one fixes the books to get less money for themselves.

P.S. I don't use either Pandora, or Spotify.

Edited July 17, 2013 by Blue Train

[AllenLowe]

I would say that Spotify is a bit of a scam, but no more so than song publishers like SESAC - the idea, really, with SESAC is to keep their big clients happy while screwing everybody else, and probably the same with Spotify.

To give you an idea - 20 years ago when I put out a single CD, same label as now, same distribution, SESAC my publisher - I normally got, as mechanicals, in the first year, $500-$1000 (usually 100-250 dollars quarterly), and then it just stopped. OK, I figured, take what you can get.

Fast forward, 20 years - I put out Blues and the Empirical Truth; same label, same distribution - THREE CDS of my compositions - plenty of exposure and reviews;

total royalties (and I'm NOT joking) to date: $.05. Yes you are reading correctly; 5 cents. This is for a CD project with Marc Ribot, Matt Shipp, Ros Rudd. And those are described as my "electronic royalties." I have seen nothing else.

and yes, I recently resigned from SESAC -

Edited July 17, 2013 by AllenLowe

[Larry Kart]

I should add that I use Spotify (don't have Pandora) more or less the way the artists (I think) would hope. I hear of a recording I might be interested in, I listen to enough of it to make up my mind, and then very often I buy the CD. "Listen to enough of it" is the key for me; the clips on Amazon and elsewhere usually aren't long enough for me to make up my mind. Further FWIW, I don't use Spotify for any other reasons -- listening to any music via computer for pleasure doesn't do it for me; the sound quality isn't good enough compared to what I've got elsewhere.

Pandora, Spotify or any internet radio pay a much larger percentage of their revenue than anyone else. Pandora has 200 million users and still hasn't made a profit.

http://articles.latimes.com/2012/jun/05/business/la-fi-tn-pandora-lobbying-royalties-20120605

http://seekingalpha.com/article/1400531-pandora-poised-for-profit

http://blogs.reuters.com/mediafile/2013/05/10/music-royalties-and-pandoras-box/

These stories seem to be based on/to accept without independent verification the claims of Spotify, Pandora as to how they do business, what their costs are, the amounts they pay in royalties, and how they apportion them. I'm not saying they're lying -- I don't know -- but why would one accept their version of the facts as sufficient?

They're based on their publicly disclosed financial statements.

And we know those can be trusted -- see recent behavior on Wall St.

So, they're cooking the books to show they're losing money and hurt the value of the company....and the bottom line of those major investors, CEO, anyone else with shares? If a company is going to fix the books it's to make the stock value go up and make those doing it more money. No one fixes the books to get less money for themselves.

P.S. I don't use either Pandora, or Spotify.

I'm suggesting -- just suggesting, but again recent corporate behavior in general and the history of the music business in particular makes me suspicious -- that they have if not two actual sets of books a way of calculating/stating the bottom line that allows them to pay less in royalties that they otherwise might, and that savvy investors understand this and proceed accordingly. Given that royalty payments would seem to be the main cost of doing business for Spotify and the like (correct me if I'm wrong), cutting corners in this manner might be worth some risk. As for those in the firms who hold shares, I would assume that they are in it for long haul, and that once the royalties model that works for the firms is established/accepted, there will be time down the road for rewards to be reaped.

[AllenLowe]

I also have it on pretty good authority that Spotify is losing a ton of money,

[Blue Train]

I would say that Spotify is a bit of a scam, but no more so than song publishers like SESAC - the idea, really, with SESAC is to keep their big clients happy while screwing everybody else, and probably the same with Spotify.

To give you an idea - 20 years ago when I put out a single CD, same label as now, same distribution, SESAC my publisher - I normally got, as mechanicals, in the first year, $500-$1000 (usually 100-250 dollars quarterly), and then it just stopped. OK, I figured, take what you can get.

Fast forward, 20 years - I put out Blues and the Empirical Truth; same label, same distribution - THREE CDS of my compositions - plenty of exposure and reviews;

total royalties (and I'm NOT joking) to date: $.05. Yes you are reading correctly; 5 cents. This is for a CD project with Marc Ribot, Matt Shipp, Ros Rudd. And those are described as my "electronic royalties." I have seen nothing else.

and yes, I recently resigned from SESAC -

PROs don't pay mechanical. That would be Harry Fox....and by "electronic royalties" do you mean the internet? That would be Soundexchange. SESAC also only pays for a feature performance. That could be why you're not getting anything from SESAC.

Edited July 17, 2013 by Blue Train

[AllenLowe]

I should have said performance royalties; supposed to be based on airplay of one kind or another, and SESAC pays for any performance, radio or otherwise.

[Blue Train]

I should add that I use Spotify (don't have Pandora) more or less the way the artists (I think) would hope. I hear of a recording I might be interested in, I listen to enough of it to make up my mind, and then very often I buy the CD. "Listen to enough of it" is the key for me; the clips on Amazon and elsewhere usually aren't long enough for me to make up my mind. Further FWIW, I don't use Spotify for any other reasons -- listening to any music via computer for pleasure doesn't do it for me; the sound quality isn't good enough compared to what I've got elsewhere.

Pandora, Spotify or any internet radio pay a much larger percentage of their revenue than anyone else. Pandora has 200 million users and still hasn't made a profit.

http://articles.latimes.com/2012/jun/05/business/la-fi-tn-pandora-lobbying-royalties-20120605

http://seekingalpha.com/article/1400531-pandora-poised-for-profit

http://blogs.reuters.com/mediafile/2013/05/10/music-royalties-and-pandoras-box/

These stories seem to be based on/to accept without independent verification the claims of Spotify, Pandora as to how they do business, what their costs are, the amounts they pay in royalties, and how they apportion them. I'm not saying they're lying -- I don't know -- but why would one accept their version of the facts as sufficient?

They're based on their publicly disclosed financial statements.

And we know those can be trusted -- see recent behavior on Wall St.

So, they're cooking the books to show they're losing money and hurt the value of the company....and the bottom line of those major investors, CEO, anyone else with shares? If a company is going to fix the books it's to make the stock value go up and make those doing it more money. No one fixes the books to get less money for themselves.

P.S. I don't use either Pandora, or Spotify.

I'm suggesting -- just suggesting, but again recent corporate behavior in general and the history of the music business in particular makes me suspicious -- that they have if not two actual sets of books a way of calculating/stating the bottom line that allows them to pay less in royalties that they otherwise might, and that savvy investors understand this and proceed accordingly. Given that royalty payments would seem to be the main cost of doing business for Spotify and the like (correct me if I'm wrong), cutting corners in this manner might be worth some risk. As for those in the firms who hold shares, I would assume that they are in it for long haul, and that once the royalties model that works for the firms is established/accepted, there will be time down the road for rewards to be reaped.

The only way this has a chance of working is if the stock value goes up, which it's not. Just like with Amazon....investors are not happy of no profit. It took 8-years for Amazon to show it's first profit....and they actually had a reason. They had to buy/build warehouses and stock everything they were selling and have a large workforce to get it all shipped.

Pandora/Spotify just needs a few places to store their servers, but it's close to impossible to make a profit paying 80% more than non-internet companies.

Pandora is in it's 12th year of loses and Spotify in it's 7th. At some point they're going to have to show a profit, or everyone will just jump ship.

Edited July 17, 2013 by Blue Train

[Larry Kart]

But they haven't jumped ship yet. Wonder why.

[Blue Train]

But they haven't jumped ship yet. Wonder why.

Because they're holding out on the hope that Congress will change the law and make it an equal playing field. If that happens the value of the stock will skyrocket.

Edited July 17, 2013 by Blue Train

[AllenLowe]

though they have become the antichrist, and are probably stealing money from me as well, I spend a lot of time with Spotify. And the sound is decent through decent speakers - certainly better than your average radio station.

[Shawn]

Spotify's losses continue to increase even after their revenue doubled in 2012.

In 2011, when the music service made its US debut after years of popularity in Europe, Spotify brought in about $252 million in revenue, according to the Journal. In 2012, revenue jumped to $576.5 million, the report said. Losses meanwhile have grown from $60 million in 2011 to $77 million in 2012, largely due to increased licensing fees, the Journal said.

Here is one of the main issues Spotify faces, their paid subscribers vs. those using the free streaming plan.

As of July, Spotify has about six million paid subscribers, one million of which have signed up since December. But there are another 18 million Spotify users who don't pay, opting instead to listen to up to 10 hours of free music filled with radio-style ads each month.

Full article:

http://www.theverge.com/2013/7/31/4575506/spotify-doubled-revenue-in-2012-but-losses-grow

[robertoart]

Spotify just informed me people who listen to Shuggie Otis also listen to Donald Byrd

[alocispepraluger102]

free spot users, how much would you pay for the service? i'm thinking $10/ month would be very fair.

[marcello]

The best revenue streams, in the USA, are through Digital Audio Services such as the Music Choice on your local cable TV service, the Dish Network, Direct TV and Sirus XM. Public TV (NPR) and Background Music Services like Muzak, and DMX also. Very good rates.

Other than those, performance royalties from outside the States is very good also. That is both live performances ( you fill out a form of every original song you play at a live performance and give it to the venue to be submitted to the regional PRO) and Radio play.

Spotify and Pandora, if used in the manner that Larry has used them, is great. The problem is the vast majority of users never buy a physical product, and these companies pay a beggars rate. If music is their whole crop, so to say, the should be willing to pay a rate that is more than a 1/3 of a cent. That goes for terrestrial radio also.

I'm going to try to post a recent BMI accounting here for you to see, but the name will have to be omitted.

Nah, I couldn't get it done!

[JSngry]

Basically, what all this news (factual or not, who knows for sure in The Music Business?) seems to be saying is that a lot (most?) people want (or are at least happy with) free background noise just as much or more than anything, as long as it resembles music or talk, they're good to go.

So go motherfuckers, go with that. Go as far as that will take you, your free background noise. And then don't call me asking for money to come back home, because all the roads done closed and all the skies done fell and al the rivers done went dry.

Oh well, right?

Right!

Get yourself a college girl and/or learn to play your own instrument and then just move the fuck on as far as making that money goes.

[jeffcrom]

[David Ayers]

Ever watched TV? did you watch the program through or just enough to decide if you want to buy the DVD? or do you refuse to watch TV and *only* buy the 'physical product'? or do you refuse to fork out for a cable service on the grounds that you don't have a physical product at the end, or that few individuals involved in making the shows make more than $0.01 per viewer per show and most probably make a tiny fraction of that? There's a simple logic to streaming. And TV seems to be doing quite well financially. I don't think the argument is one of general principle, but I do know why we folks here have a concern about how minority music is doing. That said, I don't see the kind of discussion we have here re. royalties on 60-year old recordings reflected in any parallel concerns about e.g. revenues to Laurel and Hardy's estates from youtube clips.

[marcello]

Actually, the royalty rate for TV is very good indeed (I know that's not your point), even for "incidental " music such as those few seconds of music for "cues". I know a few musicians who spend a day in the studio recording such music for agencies who do this kind of music placement. It pays some bills. The agency has their own publishing company and artist gets the composer rate. You'd be surprised to see the names of some of the musicians that do this work.

The point really shroud be (and is) that a professional, full time musician should be paid fairly for the fruits of his labor when that fruit is picked!

A sample royalty spreadsheet.

[David Ayers]

Actually, the royalty rate for TV is very good indeed (I know that's not your point), even for "incidental " music such as those few seconds of music for "cues". I know a few musicians who spend a day in the studio recording such music for agencies who do this kind of music placement. It pays some bills. The agency has their own publishing company and artist gets the composer rate. You'd be surprised to see the names of some of the musicians that do this work.

The point really shroud be (and is) that a professional, full time musician should be paid fairly for the fruits of his labor when that fruit is picked!

A sample royalty spreadsheet.

Well, I do know TV music pays well, and I know the names of many who have done it in the past.

As for 'fair' pay, who decides? As far as I can see, too much music gets recorded. If there is a paying audience, fine, if not then not. I notice that terrestrial radio pays less than streaming services. But our discussion here is not about that, apparently.