As the prevalence and importance of the streaming music industry increases, there has been much discussion about fairness, with both sides of the argument chiming in with conflicting reports. Artists say they aren’t making much (if anything at all) from the plays of the music they created, while labels and streaming sites say that there is money there, and it is going to right places.
Pandora pays out under 60% of all of its gross revenues to SoundExchange, an organization that collects this money and distributes it accordingly. Despite big losses in the first quarter of 2015, the company is expecting to cross the billion dollar in revenue threshold by the end of this calendar year, so 50-60% of one billion is actually a fair amount of money, especially for the companies that now have a really difficult time moving the product they built an industry on.
The royalty rates that Pandora pays are legally-regulated, and now because of a legal fight between performance rights organizations and Pandora, certain figures have been revealed in court documents, and we can look into how much the company may end up paying songwriters over the course of 2015.
According to an analysis done by Music Business Worldwide, the streaming service sends just 4% of their gross revenue to songwriters and the publishers that own the compositions, or, those responsible for creating the music it plays all day long. So, if Pandora does pass the $1 billion mark this year, they’ll pay all those thousands of songwriters, producers, and composers just $40 million.
This money often finds its way to artists, as is demanded by law. Though the amount per play isn't very high, it does actually get to the artist, in time. The amount it pays songwriters and producers is much, much less. It is worth noting that however little songwriters are collecting, Pandora does pay higher rates than typical radio stations.
Speaking about these pay outs to songwriters, Dave Grimaldi, the company's Director of Public Affairs, said "Pandora is the highest paying form of radio, and we are proud those payments have directly contributed to ASCAP’s and BMI’s record revenues."
It's important to note that these figures apply only to Pandora, and not the industry as a whole...though payments everywhere are low.
As of right now, Pandora isn’t winning its court battle, so the amount they pay out will go up, but not significantly (though any raise in pay per play is helpful to struggling acts). To make any real difference, payments would have to rise considerably, and unfortunately the industry just isn’t there yet.
