Internet Royalty Math Makes My Brain Hurt

Last year, egged on by the ubiquitous "We've Got Money for Artists!" advertising campaign... I signed up for Soundexchange (Soundexchange, in case you don't know them, are the entity entrusted by Congress to administer performance royalties for artists for internet airplay).

I've been a Pandora fan since they began. I remember seeing a job posting for the Music Genome Project back in maybe 2000 and considering applying. I have a subscription and listen almost every day. I had a vague sense of my internet plays from other people. From what i hear, I think a lot of people listen to and discover me there. So to GET PAID indirectly by Pandora, in addition to being a fan, seemed, well, awesome.

It took over six months to process the Soundexchange paperwork and I waited with cautious optimism to receive a check. I got it last week. The amounts were, from 2006 to the present:

$158 as copyright owner (i.e. label payment since I'm my own label)
$135 as performer

Honestly, that seemed kind of low. So, I wrote to Pandora to ask my total plays. They, bless them, wrote back that collectively all my songs have had about 423,000 spins

That number isn't up there with Lady Gaga, but it seemed like a lot of plays to me. Not having followed the outcome of the Digital Millennium Copyright Act, I naively thought that 423,000 plays should surely amount to more than $293. I wrote to SoundExchange asking for details about how the math works.

Their response I did not understand....

...Digital service providers are only required to reported 2 weeks worth of performances a quarter. Moreover, those 2 weeks do not have to be on consecutive days, they can report any 14 days worth of performances within a 3 month period. If your performances do not occur within that period, then there are no reported performances to be compensated for...I believe that while you had 423,000 performances from Pandora, not all of them were during a reported period.

I was confused, and spawned a discussion on the Tunecore mailing list. However, a few hours later, after writing it all up for this blog, I got a message from Soundexchange which explains the math once and for all.

To address your concerns about the amount, the number you cited ($290 or so) is just about correct for 423,000 performances by a service operating under the pureplay rates (as Pandora does). The nonsubscription “per performance” rates for services that elect the pureplay rates start at $.0008 in 2006 and rise to $.00097 “per performance” in 2010. Remember that by law 5% of your earned royalties are paid into a fund which supports backup musicians and session players, and around 8% is SoundExchange’s administrative rate, to pay our staff and keep the lights on.

So there you have it. There is no mystery or shadowy accounting going on. The numbers are just very, very low. Lower than I realized, which I suppose is the tradeoff to keeping internet broadcasters in business.

End of story. Now I'm off to put baby Alex to bed with his favorite Ulrich Schnauss Pandora station.