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Style & Culture

How I Hear It: Spotify, Pandora royalties less than fair

Online streaming services can help gain exposure for artists, but miniscule income from plays not always worth it

Although I’m not much of a Spotify user, I think it’s pretty cool that, with a free account, I can log in to the service and listen to millions of songs whenever I want. It’s a great tool for fans to be able to listen to their favorite tunes without the pesky annoyance of paying for anything.

Since the digital piracy age, music has increasingly become free, except it’s legal now, and the artists are getting paid for it. That’s got to be a win-win for all involved parties, correct?

Well, there have long been grumblings about how unfair the payment model is for artists and musician Damon Krukowski of popular indie groups Galaxie 500 and Damon & Naomi, wrote a very interesting article for Pitchfork earlier this week that gives an inside look at how unfair this system really is.

Galaxie 500 is on their own record label, so all of the money they receive goes directly to the band. According to Krukowski, in the first quarter of 2012, their 1998 song, “Tugboat,” was played 7,800 times on Pandora, or about 85 times per day. The three writers of that song were paid a mere 7 cents each, or 21 total cents.

Not per play, but total.

They fared better with Spotify, getting paid 35 cents over the same period. There are other stipulations in the contracts that get artists paid a bit more, but it’s still not much.

“To put this into perspective: Since we own our own recordings, by my calculation it would take songwriting royalties for roughly 312,000 plays on Pandora to earn us the profit of one — one — LP sale,” Krukowski wrote.

He goes into deeper detail about the lack of transparency from these companies and other issues, ending by saying he has “simply stopped looking to these business models to do anything for [him] financially as a musician.” He doesn’t seem too fired up about what these companies are doing to him financially, since he claims to be in it for the love of the music. Still, he is concerned about other musicians. Why else would he have written the article?

Some big name artists probably rake in too much money from touring, merchandise sales, CD sales and other avenues to care about not getting much out of streaming services. Artists like Coldplay, Adele and The Black Keys, however, have opted not to make new material available on Spotify and the like for the first few months of shelf life. Coldplay’s manager Dave Holmes has expressed concern that Spotify competes with iTunes and other download services, from which artists get a much bigger cut.

It may be hard to sympathize with groups who will rake in millions no matter where their music is available, but what about the little guys, small groups just getting started and trying to make it in the business? How do they fare in all of this? Streaming services can be a double-edged sword for these groups.

Let’s say a local Maine band, who we’ll call The Blindfolded Ponywalkers, just released their debut album, “Wayward Hooves.” The album does pretty well across the state and attracts attention across New England. With all the buzz they’ve been getting, they think it might be a good idea to get their album as much Internet exposure as possible, so they go through the necessary steps to get it streaming on Pandora and Spotify.

Pandora is a music discovery site that rolls out music depending on what you like. The Ponywalkers’ lead single, “Clip-Clop in the Dark,” shares similarities with groups like Led Zeppelin and AC/DC. Users of the site with stations tuned to those interests hear the song in their stations, like it and give it a thumbs up. The song gets played more and more because of its positive reception.

That’s really awesome for the Ponywalkers because they’re getting listeners from across the country who would not have heard their songs otherwise. However, if their deal with Pandora is similar to the one Galaxie 500 has, then if “Clip-Clop in the Dark” gets played 1,000 times, they’ll earn less than 3 cents as a band for those plays.

Artists nowadays get a lot of their money from touring and selling merch on the road, so at least the Ponywalkers got a lot of new fans who probably want to see them live. Except that after hearing their songs on Pandora, their new fans are opening Spotify and listening for free instead of buying the CD, which also doesn’t give them much money.

As good as the music is, the Ponywalkers won’t be able to take their songs on the road if they can’t pay for gas, venue bookings and other necessary expenses. Not being able to profit from their music makes survival difficult for the band, especially if they’re trying to make music their career.

It’s possible that I’m not entirely sure what I’m talking about and that fictional situation is an extreme dramatization based on ignorance, but it’s an example laid out to convey the point that Spotify, Pandora and similar services probably do more harm than good for artists, especially more obscure ones trying to make a living.

To cite an extreme example rooted entirely in reality, Krukowski wrote, “Pressing 1,000 singles in 1988 gave us the earning potential of more than 13 million streams in 2012.”

As Krukowski wrote, “And people say the internet is a bonanza for young bands…”