Over recent years we have seen a number of innovative new technologies, from iTunes to the iPlayer, released that promise to benefit both creators and users alike. Unsurprisingly these new arrivals meet with frosty receptions from the artists whose works they sell. Claims that these technologies will hurt rather than help are thrown against the claims of the companies running the services, who for their part argue that they will give artists a better deal than anything that has gone before. So who is in the right?
Over recent months this running war between the two sides has once again seized the headlines as prominent musicians and industry bodies have hit out at online music streaming services Spotify and Pandora. Last month artist David Byrne followed in the footsteps of Radiohead frontman Thom Yorke and Radiohead producer Nigel Godrich by pulling a large part of his works from Spotify amid wider claims by artists that such services give them a raw deal. Music superstars Pink Floyd even came out publically in opposition to the online radio service Pandora, accusing them of trying to trick artists into supporting an 85% pay cut.
Indeed Godrich claimed on twitter that the Spotify model was actively harmful to small labels and new artists. The most prominent complaint put forward by artists has been the unsustainably low amounts that they have been paid for their online radio plays. As an example one songwriter, David Lowery, made only U.S. $16.89 in royalties despite his band’s track receiving over 1.15 million plays on Pandora: He claims to make more than this through the sale of a single T-shirt in some venues. In contrast Lowery received over $1500 from terrestrial radio royalties for the same song over the same time period.
Industry lobbying groups have likewise come out guns blazing against online radio services. The purchase by Pandora of a terrestrial radio station in a bid to pay lower rates was branded a “sick joke” by music industry groups who claim that Pandora are attempting to cheat artists out of money. David Israelite, CEO of the National Music Publishers Association, has outright accused Pandora of being “at war with songwriters”.
The companies behind these services are not taking such claims lying down however. They have claimed that these figures are grossly misleading, if not outright lies, and that far from harming artists their services actually offer them a better deal than their traditional counterparts. Pandora replied to Pink Floyd by arguing that they were being misled by an industry lobbying campaign led by the RIAA: that Pandora payouts to artists are 4.5 times more generous per listener than that paid by terrestrial radio, and greater in total than any other form of radio. The industry position that Pandora seeks an 85% reduction in artist royalties is dismissed as “a lie manufactured by the RIAA”. Spotify likewise points out that while its business model is still in its early stages it has already paid out over $500 million to artists, and is on track pay out $1 billion by the end of 2013.
With such an emotive issue it can be hard to look beyond the rhetoric to consider the issues objectively. One thing that is clear is that the numbers being thrown around by both sides are exaggerated and unhelpful. For example Michael DeGusta, a tech blogger and businessman, looked at Lowrey’s payout figures (discussed above) and calculated the actual pay-out by Pandora for the song at over $1300, with Lowery actually receiving a total closer to $234 than the headline figure of $16.89. While $16.89 did represent a payout received it was (predictably) not the whole of the story. It only represented one of the royalty streams – songwriting and performance – that Lowery was due; it represented the smallest of these two streams; and it represented only around 40% of that smaller stream as other players, including record companies and other band members, took their cuts. Indeed in a recent op-ed for the Guardian newspaper Billy Bragg argues that the problem is not the payouts themselves, but the fact that record label contracts often take a huge cut from the funds before they ever reach the pockets of artists.
On the other hand however the $500 million to $1 billion payout figures trumpeted by Spotify does ignore the fact that the underlying payout rates are measured in fractions of a penny and that even if the whole sum made its way directly to the artists the number of plays required just to make the minimum wage would still be in the order of tens, if not hundreds, of thousands of plays each and every month. For all but the biggest of artists these royalties will never even pay the bills, let alone make their fortunes.
Overall however it can be argued that the current rhetoric is perhaps missing the real point. While the situation is often described as a fight between artists and technologies, the reality is that the changing technologies are themselves often simply reflecting an underlying shift in consumer expectations. Consumers have long since left behind a world where they were the passive recipients of music. Instead they seek on-demand flexible access to the music they choose at a time and place convenient to them. Perhaps instead of railing at the business models of the new technologies, artists should be looking to seize the advantages that they can offer.