Friday, July 9, 2010

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.


Anonymous kcrusher said...

Agreed. We're still waiting for SX to complete our application - which they show receipt on January 20th of this year. I really question the fairness of their reporting and payments - it seems like they have an awful lot of 'unclaimed payments' and the artists I know that are getting paid are all saying the same thing - the payments don't seem appropriate for the amount of play they seem to be getting.

Anonymous Sky said...

Thanks for reporting this. I have just released the TTOIN project and am
Starting to study the various royalty issues at SX. You have cleared
It up!

Anonymous Anonymous said...

Really? Are we expected to believe that $5000 worth of equipment and $100 a month worth of upkeep (at most) means that they can only afford to pay artists a fraction of a cent per play? I'm not buying it.

Blogger jeremiah said...

Interesting. Signing up with SX for my electronic / jazz project northstation is on my to-do list. (seems like: why not?) Now I think it's gotten knocked down a few rungs in priority.

And imagine the massive royalties that might pour in from net-play of sound art works!

Anonymous Matt Erion said...

a completely self contained artist has to have part of their royalties withheld for backup musicians? What backup musicians? Government slush fund I'm sure.

Anonymous Karl Staib - Work Happy Now said...

Wow, that math does seem skewed. I wonder how much Pandora is making each year. They probably don't make as much as a radio station, but still make some good money off of other people's music. I know the revenues aren't quite there yet, but when they are they need to adjust that math.

I like how you took the time to find out the story. Good for you.

Blogger Travis said...


I want to purchase Into the Trees. From what source do you receive the most revenue for your work?

PS: Where was the cover photo taken?

Blogger helenahandbasket said...

hey, thanks for asking travis. if you purchase my music from, that works out the best for me ;-)

the cover photo was taken by Jeff Rusch, in my backyard!

Anonymous kamih said...

Zoe you rock! :)
Have you considered getting a Flattr account?
The minimum you have to pay is 2 euros per month. They already have 46,056 users (after being open 2 months).
I am sure you would do great with it!

Blogger Unknown said...

A friend sent me to your site... Such a great advice!... I'm totally blown by the numbers you show, although I had an idea that most of the music we put on web sites is a pure loss apart from spreading the word about it...

I already believed the project I'm currently building would be great, now I'm certain of it. Every artist with real fans will run to it ;)


Blogger Christopher said...

All math hurts my brain but don't tell anyone. What I really want to know is does the rate change if Pandora makes a profit in 2010 like they expect will happen.

How much is Pandora expected to put aside for making money on something they don't actually produce? Not that it matters because like Hollywood I am sure they would just start using hocus pocus accounting to never turn a profit.

Anonymous Anthonette said...

This is really very nice post and i like your information and thanks for sharing this article with us it will helps me and many more users.

Anonymous Paul said...

Wow, those numbers are astounding! I wonder how they profit from that? I suppose it works for them somehow.

Anonymous Anonymous said...

So, 8% of your earnings goes to SoundExchange and 5% of your earnings goes to session musicians, but this doesn't explain what percentage of the overall profit Pandora Media is receiving, it only explains the monetary amount an artist gets paid for each play, and how that percentage is divided. I'd like to know how much Pandora makes for each play.

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