It’s no secret that overall physical record sales are down, digital sales are increasing, and majority of consumers listen to and discover most of their music online. Most avid music listeners subscribe to Pandora or Spotify. In many cases consumers have both. But recently there has been a question regarding the amount of revenue – or royalties artists receive from online plays and streaming from some of these subscription sites. Pandora has specifically been under fire. I mentioned in one of my previous blogs about a songwriter from the 1980s named Ellen Shipley. Shipley questioned why she received only $39.00 from Pandora when she had over 3.1 million plays of songs she wrote. Ya, I am no wiz at math but even I can see that does NOT add up right. So music publishing companies (which hold the writes to the songs not the recordings, have decided to restructure their royalty payout with many of the online subscription services. Most notable was this week’s announcement of Sony/ATV-EMI’s 25% increase on royalty from Pandora plays. In honor of Tony and my recent trip to the historic Capitol Records Tower (EMI’s publishing’s former sister company), I decided to discuss the recent news about Sony/ATV’s landmark royalty rate increase.
In 2011, EMI sold off their recorded music assets and publishing company to two separate entities. Capitol Music Group (the recorded music side that includes Capitol Records, Virgin, Blue Note, Astralwerks, etc.) was bought by Universal, while the publishing powerhouse known as EMI Publishing (the songwriting rights side) was sold off to SONY/ATV music publishing (music publishers are responsible for ensuring the songwriters and music composers receive payment when their songs are used commercially). Sony/ATV recently negotiated a 25% royalty rate increase on all income coming from Pandora, one of the leading online streaming services/internet radio stations. The deal is going to take 12 months to run. Initially this was a big surprise to many in the music industry. Pandora, which is approximately 6 years old and has over 60 million users, has been extremely vocal about decreasing the previous royalty rate. Take a look at this article from Pandora’s publicity campaign to help bolster their image. Sony/ATV was able to leverage the royalty increase, by pulling rights to their music from 2 other associations on January 1, 2013. Sony/ATV has been mum on the specific terms of the deal, but CEO Martin Bandier, told The New York Post this week, “At the end of the day, we got a terrific deal for our songwriters. Our thinking has been vindicated. Hopefully it’s the first of many.”
This will hopefully cause a “domino effect” with other online subscriptions services and Internet radio. The goal is for other online subscription sites to strike individual deals with other publishing firms in order to play their songs on their sites. Deals were originally hashed out with performing rights organizations like ASCAP and BMI, but SONY/ATV hopes they can secure more lucrative deals for their songwriters and composers direct with other digital media services by cutting a portion of the fees that go to the “middle man.” SoundExchange (SoundExchange is the non-profit performance rights organization that collects statutory royalties from satellite radio, internet radio, cable TV music channels and similar platforms for streaming sound recordings), a separate royalty entity that was commissioned by the US government to collect on internet radio plays, was initially responsible for collecting income on behalf of artists and record labels. They used to take majority of fees from Pandora, and other Internet digital media services. They have been fighting the recent increases and sued ASCAP this past November.
Every week I see an article that paints a clear and direct picture. The picture is an image of the music business in the future. A future where artists have more control of their business, make more money, and have many more outlets to reach their fans and generate greater levels of income. At Fame Wizard we are staunch believers in this future. We know that more and more each and every day the music business is definitively changing, but it is moving in a very fruitful direction. It is moving in the right direction. In the so-called “golden era” of the music industry, artists were completely dependant on labels and big business to monetize their careers. You had to concede to their vision of your music. You had to concede to their picture of who you should be and how your career should be handled. But today you don’t. Today, you have access to high end recording equipment at an affordable price, marketing and promotion through social media, and online distribution through various services. The key is learning HOW to utilize these numerous and useful tools to your benefit. Learning how to monetize on your skill of writing and recording the best music possible by way of these tools. The more you learn how to do it, the more you can control your music career and paint a future the way you see fit.