.

The New Economics of the Music Industry

Page 4 of 5

INTERNET RADIO

 

After years of fighting over pennies, Internet radio services reached an agreement with artists, music publishers and record labels a few years ago on royalty payments. The rates go up every year, but the broad formula is that big "pure play" companies, such as Pandora and Slacker, pay either 25 percent of their total revenue per year, or a little more than $.001 per song -- whichever is greater. These payments go to a music-business collection agency known as SoundExchange, which then pays 50 percent of it to the copyright owner (usually a record label like Warner or Sony), 45 percent to the artist and 5 percent to non-featured performers. Smaller Internet radio companies pay slightly lower rates.

Anu Kirk, product lead for MOG, said at the recent Digital Music Forum in Los Angeles that Pandora winds up paying out much less than that – about a tenth of a penny per play. "It sucks that right now that artists are getting paid so little money by subscription services, but it sucks that artists are getting paid so little money by everyone," Kirk said.

David Hyman, CEO of MOG, won't divulge his subscriber numbers, but he offers broad royalty estimates that apply to both Pandora-style radio and MOG-style subscriptions. "Let's say MOG has 1 million subscribers and everyone's paying $10 per month. And let's say the labels got 60 percent of that. Now, each label gets their piece of 60 percent based on frequency of plays. So if Warner [Music, a major label] was 30 percent of all plays in a given month, then Warner gets 30 percent of that 60 percent," he says. "Then they get a wad of money. Once they get that wad of money, how do they distribute it internally? I have no idea."

NEXT: CDs

To read the new issue of Rolling Stone online, plus the entire RS archive: Click Here

prev
Music Main Next

blog comments powered by Disqus
Around the Web
Powered By ZergNet
Daily Newsletter

Get the latest RS news in your inbox.

Sign up to receive the Rolling Stone newsletter and special offers from RS and its
marketing partners.

X

We may use your e-mail address to send you the newsletter and offers that may interest you, on behalf of Rolling Stone and its partners. For more information please read our Privacy Policy.

Song Stories

“Wake Up Everybody”

John Legend and the Roots | 2010

A Number One record by Harold Melvin and the Bluenotes in 1976 (a McFadden- and Whitehead-penned classic sung by Teddy Pendergrass) inspired the title and lead single from Wake Up!, John Legend's tribute album to message music. The more familiar strains of "Wake Up Everybody" also fit his agenda. "It basically sums up, in a very concise way, all the things we were thinking about when we were putting this record together in that it's about justice, doing the right thing and coming together to make the world a better place," he said. Vocalists Common and Melanie Fiona assist Legend on this mission to connect.

More Song Stories entries »
 
www.expandtheroom.com