Big names like Steven Tyler, Bette Midler, Sony CEO/ATV Publishing Martin Bandier, and the Grammy’s president and CEO Neil Portnow all recently have spoken out against unfair royalty rates from digital streaming companies like Pandora and Spotify.
Bette Midler tweeted, “ @Spotify and @Pandora have made it impossible for songwriters to earn a living: three months streaming on Pandora, 4,175,149 plays=$114.11.” Steven Tyler said, "If the laws continue going the way they are," he said, "[songwriters] will never be paid fairly for [their] own participation. So people, forgive me for being a little jaded about the state of copyright."
This frustration seems to come in response to a court ruling that Pandora will only pay ASCAP 1.85% of their revenue, which according to Sony’s CEO, is a “clear defeat for songwriters”. The precedent upon which the ruling was made dates back to 1941, when the Justice Department established a system that says a federal judge can set royalty rates if two parties can’t negotiate an agreement for one. The problem for artists is that the judge is bound a set of parameters that tend to favor streaming services’ interests.
Streaming is the fastest growing music format right now and is poised to dominate the market moving forward.
While streaming music may not be a money maker for independent artists (and non-independent artists), it is able to offer a wide audience. In 2012, there were 10,000 artists that had over 250,000 unique listeners from streaming. In 2013, that number jumped to 350,000. Similarly, Pandora began accepting artists with digital only albums into its catalog early this year, adding around 3,700 independent artists.
As streaming becomes more prolific and quality more viable, its role in the music community will be irreplaceable. With currently over 70 million listeners each month and 1.73 billion hours of music streamed, it’s already cutting majorly into album sales. Unfortunately, until royalty laws catch up, it’s not likely that musicians--even famous ones--can expect a nice payout.