Performers See Tiny Revenue From Streaming... But How Much Do They Make From Radio?

from the you're-measuring-it-wrong dept

Copycense points us to a Billboard/Reuters article over the fact that music performers are not making very much money from online streaming services. The article is designed to be "shocking," but seems to leave out some rather important facts. For example, in the US, if Billboard did the same calculation, it would find that performers make even less from radio. That's because performers make nothing from radio in the US, because Congress realized a while back that radio is advertising for musicians, and it seems ridiculous to force radio stations to pay musicians to advertise for them. In fact, the repeated stories of record labels illegally paying radio stations via payola showed that the market actually valued things in the other direction.

It seems quite odd that Billboard would leave this out of its analysis, instead, trying to position the streaming revenue as being so low as to be problematic. Yes, the numbers are low, but streaming radio acts as advertising for musicians that let's them make money in lots of other ways.

This is the same discussion we had last week when some people got too focused on the question of whether or not Spotify was making people buy more music. That's not the point. The point is whether or not streaming services make people buy more of anything that helps fund those musicians. Narrowly looking at just whether or not those streaming services pay musicians is really missing the point. It's like asking how much NBC paid BMW to air BMW commercials. The answer is nothing. The money went in the other direction, because that's where the real value was.


Reader Comments (rss)

(Flattened / Threaded)

  •  
    identicon
    Joseph, Mar 4th, 2010 @ 4:29pm

    "streaming radio acts as advertising for musicians that let's them make money in lots of other ways"

    really? What other ways?

    payola came about and existed in a time when the result of radio playing a certain artist was consumer record sales. In proper modern context, with record sales on the vast decline, what is the incentive for the money to flow from the labels or artists to the radio station or broadcaster (digital or otherwise)?

    This is a part of the evolution and the shifting economics of the industry. Radio may need to pony up for something that they never did in the past and figure out how they will make up the difference, or cut their own budgets, etc.

    Do you believe artists should be compensated for having their music in Guitar Hero? That is advertising for them as well, although it isn't streaming. This could be a slippery slope where every use of a song is viewed as "advertising the artist" and thus used as leverage not to compensate for its usage.

     

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      Nastybutler77 (profile), Mar 4th, 2010 @ 4:48pm

      Re:

      "Do you believe artists should be compensated for having their music in Guitar Hero?"

      I believe, if I'm not mistaken, that Mike has said in a prior post that artists SHOULDN'T be compensated for having their music in Guitar Hero. And it was for the same reason. It's exposure that can be capitalized on. What other ways, you ask? Oh, I don't know, maybe ticket sales, merchandise sales, name recognition, endorsement deals, and that's just off the top of my head. Please think things through before you post.

       

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      Colin, Mar 4th, 2010 @ 6:25pm

      Re:

      I've actually downloaded 3 albums from bands I became fans of thanks to Guitar Hero/Rock Band.

       

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      Overcast (profile), Mar 4th, 2010 @ 7:13pm

      Re:

      Do you believe artists should be compensated for having their music in Guitar Hero?

      Would the music be in guitar hero if people hadn't already heard it? No. You think most people have heard "Smoke on the Water" - for instance, because they own the album?

      And yes, they should be paid for that.

       

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        Dirt_is_Fun (profile), Mar 5th, 2010 @ 5:44am

        Re: Re:

        Wow, an I guess you don't follow the news. RedOctane, who makes Guitar Hero, has clearly stated that they would drop the use of popular songs if the licensing agreements forced them to pay a performance right. Your argument makes no sense and follows the typical fallacy that undervalues innovation and overvalues content. People buy Guitar Hero to play the game, the use of popular music is a value add, not a core value. RedOctane knows their business, and knows that it isn't a source of welfare for the performance rights organizations.

         

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        Nastybutler77 (profile), Mar 5th, 2010 @ 4:40pm

        Re: Re:

        There is a ton of music in these games that I (and I'm sure thousands of others) heard of until I played the game. Like Priestest, Silversun Pickups, and others that soon after the release of the game started becoming known and popular.

        If you have actually played any of these games (which I suspect you haven't) and have heard of every single artist and know every single song, then you are either in the music business, or have way too much free time to explore music.

        That doesn't even take into account all the DLC that follows on XBox Live or PSN where small bands get songs for these games released after the game has been out for a year.

         

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    NAMELESS.ONE, Mar 4th, 2010 @ 4:36pm

    this is a satire WARNING

    LOL
    anyways when all things are free like movies and games and tv and such what will hte poor actors and musicians do then?

    OH no said the actor one day i have no money to the tree in the forest.

    DID anyone hear him. NO cause he was too lazy to walk out of the dark aged woods and realize that society wants something in return and if you never give you aren't going to get.
    --
    copyrights past 10-14 years are ridiculous , insane and immoral and unethical and only seek to promote laziness, greed and despair.

    This is now long past being nice about it. ITS long past giving these labels and there golf budding yacht building programs funding of any sort.

    WE should be saying FUCK YOU a lot more.

     

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    Nastybutler77 (profile), Mar 4th, 2010 @ 4:50pm

    This makes as much sense as movie studios complaining that websites and TV programs owe them money for showing their trailers.

     

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    Bas Grasmayer, Mar 4th, 2010 @ 5:04pm

    Mike, you seemed to leave out the answer to the question "How Much Do They Make From Radio?"

    You claim "even less" and I would love to believe you and spread this idea, but could you provide a link to some research that suggests this please?

     

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      Anonymous Coward, Mar 4th, 2010 @ 5:42pm

      Re:

      Uhh...

      "For example, in the US, if Billboard did the same calculation, it would find that performers make even less from radio. That's because performers make nothing from radio in the US, because Congress realized a while back that radio is advertising for musicians, and it seems ridiculous to force radio stations to pay musicians to advertise for them."

       

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      Mike Masnick (profile), Mar 4th, 2010 @ 6:06pm

      Re:

      You claim "even less" and I would love to believe you and spread this idea, but could you provide a link to some research that suggests this please?

      In the US, the answer is ZERO. Elsewhere it's greater, but in the US radio does not pay performers for music (hence the fight over the performance rights act). US radio only pays songwriters, not performers.

      So performers make nothing from radio and never have in the US, and somehow they survived just fine.

       

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      Hephaestus (profile), Mar 4th, 2010 @ 8:31pm

      Re:

      "You claim "even less" and I would love to believe you and spread this idea, but could you provide a link to some research that suggests this please?"

      Okay there is no performance rights act yet on radio. There is your proof that they make nothing on radio. I believe that the RMLC or ASCAP actually charges but the artists see nothing. Some artists do however charge for being on radio stations as guests.

       

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        Hephaestus (profile), Mar 4th, 2010 @ 8:38pm

        Re: Re:

        Oops that was already answered by Mike. I forgot about europe ...

        Europe - the leading indicator as to how well ACTA will actually work in the US. ROFLMAO. Learn from history and past events or you will be doomed to repeat them.

         

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    Pixelation, Mar 4th, 2010 @ 5:11pm

    I can see it now...

    The RIAA/ artists scratching their collective heads wondering why "pirating" of music saw an increase that coincided with the radio tax.

     

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      Hephaestus (profile), Mar 4th, 2010 @ 8:54pm

      Re: I can see it now...

      Actually the cause is quiet simple. Stations began playing the most popular music based on the music charts. People got tired of hearing the same sh!t over and over again.

      20 years back a pirate 500 watt college station in upstate new york played PF's "the wall" on continuious loop when the DJ's went on spring break. "How can you eat your pudding" rings through my brain every time I am near SUNY Delhi.

      That is actually what we are in for when the "performance rights act" and ACTA are passed. All britney all the time. Which will lead to more people listening to other-alt music as they get fed up with whats played. It is a very simple thing to see when you are not inside the music industry.

       

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    Matthew (profile), Mar 4th, 2010 @ 5:22pm

    The movie trailer comparison doesn't apply because those trailers lead directly to box office ticket sales. Trailers show only a tiny portion of the movie, while songs are streamed in their entirety. That is a big difference. A lot of people are listening to music from a computer these days and free streaming serves as an alternative to purchasing a song that may only be listened to a few times. It could potentially kill the impulse MP3 purchase (Apple...Lala... yes, they know this.) I feel a monthly subscription ($9.99??) is a fair price to pay for unlimited access to, potentially, the entire history of recorded music... so long as the artists see some of this (to benefit the little guy trying to make a living, not Metallica.) That's only fair seeing how such a service will surely detract from digital sales. But I don't see it working until these services can be accessed by car audio systems, anywhere you may drive to. Sorry, I'm getting ahead of myself.

     

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      mobiGeek (profile), Mar 6th, 2010 @ 12:02pm

      Re:

      The song is only a small portion of the entire act that one gets when they buy a concert ticket. It is a no-cost item that leads to the purchase of scarce resources (posters, t-shirts, hired performances, etc.).

      Your comments show you still view "music is the product". Music is the content that in the past pushed people to buy plastic disks/cassettes/vinyl. Because of that old method of gathering revenue, artists/managers/labels mostly ignored other avenues of revenue. Now that technology has eliminated the inefficient way of delivering content, thus squeeze out the opportunity to profit from that inefficiency, artists/managers/labels need to focus on those other streams.

      And as many Techdirt articles have pointed out, those artists that do go down that road tend to find they have Way More income specifically because the inefficiencies have been eliminated. Their customers are getting great value directly from the artists and thus are rewarding them directly with higher profits than if the had to do business through middlemen who specifically blocked that kind of access.

       

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    bob, Mar 4th, 2010 @ 6:20pm

    Ummm

    In fact, the repeated stories of record labels illegally paying radio stations via payola showed that the market actually valued things in the other direction.
    It seems quite odd that Billboard would leave this out of its analysis, instead, trying to position the streaming revenue as being so low as to be problematic.

    Billboard is just another mouthpiece for the recording industry. I expect nothing but BS from them.

     

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    mikeinrichmond (profile), Mar 4th, 2010 @ 6:34pm

    Thank you Mike for this wonderfully coherent and well thought-out piece. Great job!

     

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    Flakey, Mar 4th, 2010 @ 6:53pm

    "Do you believe artists should be compensated for having their music in Guitar Hero?"

    The licensing is paid, whether the artist gets paid or not. It was being discussed not to long ago that the labels wanted more money for the licensing on those games and the game makers were saying, "Nope, charge more and we will go elsewhere for the music".

    Today's radio landscape is very little different from the days of payolla as they have found a legal way to do the same thing. They pay for advertising to run a certain song from the label. If you hear the title of the artist and song; you've just heard a paid for advertisement when dealing with the major labels.

    The fees that were wanted for podcasts, streaming, and on line broadcasting nearly cratered all the on line action. As usual, it should be a money maker for the labels as they want more than most sites are going to pull in. In short, greed is the problem again.

    Lowering license fees and removing the barriers to most sites getting legal would put them in orbit as far as money goes. Doing so requires loosing up on the reins of control. That's something the labels vehemently oppose.

    Until they are destitute, they will not change their business model one iota. The sooner they become broke, the better for the rest of us.

    If you wanna talk about how little the artist is being paid, then you should be talking about the labels, not the customer.

     

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    trilobug, Mar 4th, 2010 @ 7:13pm

    I work in radio and the record companies are trying to figure a way to charge us for playing songs.

    The rumblings are that they will probably be receiving some money from stations in the future, the rationale being, their music attracts listeners, we then take that audience and sell it to advertisers.

    Basically, without their music we wouldn't have an audience to sell to advertisers.

    Its BS because our listeners tune in for more than just music, but they don't get that.

     

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      Hephaestus (profile), Mar 4th, 2010 @ 9:10pm

      Re:

      Dark Helmet Came up with a great Idea ... "Indie Sunday" where you run CC and indie music at no cost.

      I like "Indie Hour" because you can run it at 10 PM and get a station manager to try it for a limited time. If it works ask to extend it. Then do "Indie Sunday".

      Set up a time based blog so when a song runs that songs blog shows up people can comment. Also have an band-artist blog link on the song blogs an vice versa. Instant feedback. Each songs blog would have lyrics and allow free download and a support the artist (pay for this song) link.

      Set up (and record) a chat room for whats currently playing.

       

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      Hephaestus (profile), Mar 4th, 2010 @ 9:19pm

      continued

      "Set up (and record) a chat room for whats currently playing." this way you can give your manager feedback on what people like and what they dont. Combine that with the blogs and download data and you have a pretty good indicator of whats hot and whats not.

      An hour or two a week, or a night is simple it wont break the budget of a radio station. If it works then it can be expanded.

       

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    identicon
    :), Mar 4th, 2010 @ 8:26pm

    It will be funny to watch when people start dumping those artists then I want to see how much they will make when nobody is playing them.

     

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    mike allen (profile), Mar 5th, 2010 @ 8:43am

    streaming music and internet

    The artists should realise as has been said before that this is a way to get music heard and get fans. Internet radio is being screwed in USA and UK with demands for pay per play in UK it is about 3pence per listener per play usa i not sure of but about 3 cents is probably about right

     

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    Anonymous Coward, Mar 5th, 2010 @ 10:40am

    You're missing a critical insight: People listening streams are countable. People listening to radio broadcasts are not.

    Imagine someone whipped up an unlikely gizmo that let radio stations know the number of people listening at any second. Do you honestly believe that a number of organizations would not have their hands out upon the creation of such a miraculous device?

    People want money for streams because they can be COUNTED. Before streamed music, there was no way to know -- hence you could sell the idea to folks that getting one of the artists on your label out there and listened to might be loosely correlated with sales. Why? Because it was the best you could do. A content owner lived with the fact that the radio station made money jamming in advertisements between their songs and basically had to hope that this resulted in sales.

    With something quantifiable, you know precisely how many people are listening to the station when your song plays and therefore you can pin a more realistic appreciation upon how much your content is worth compared to the advertisements adjacent to it.

    People want to charge on what they can measure.

     

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    S, Mar 9th, 2010 @ 3:01am

    Ugh...

    It's funny, because this value analysis is a wonderful way to exhibit the fundamental worthlessness of "recording industry associations" to begin with: artists have never profited much or at all for their songs being played.

    Even at the height of CD or tape sales, an artist only got a few cents for each physical copy sold -- most of their income still came from fan club memberships, ticket sales, t-shirts, etc. Yes, super-star musicians were exceptions, but I'm not really overly concerned about the well-being of eight-digit net worth people -- they're obviously doing FINE.

    Basically what is happening as distribution becomes easier -- or free -- is that artists, and the public, are realizing that the entire "content as a commodity" concept, and the industry based on it, is a phantasm -- an illusion, or a dream, and an expensive one.

    An artist's VALUE is his PERFORMANCE, not an individual reproduction of a specific SONG. Think about it -- ages ago, minstrels sang for their supper, and made a living by entertaining people day-by-day; more currently, street performers leave out cups or hats or guitar cases... none of these people expect to get paid over and over and over, for ever, simply because they played a single song once: if they want to get paid again, they have to play the song AGAIN.

    A musician's bread and butter is making people appreciate him as he performs his art; to make more money, an artist needs to get more people interested in watching him perform -- this is exactly like any other "product" -- if you want more money, get more people to buy it, don't try to get people to pay you for the same thing over and over again.

    Trying to get paid over and over for the same reproduction of a given song is equivalent to expecting kick-backs on second-hand sale of goods: greedy and insane, not to mention unrealistic and impossible. However, a second-hand item is still great ADVERTISING -- if I buy a used X widget and it breaks, I may buy a brand new one if I liked it enough -- same principle in music: if I liked a song I hear enough, I'll go to the concert and hear it live.

    A RECORDED SONG IS ONLY A SECOND-HAND COPY.

    Now that we no longer need to treat individual songs like physical objects, artists can use their recorded music to reach out to an unlimited number of people without the "help" of a greedy and controlling conglomeration of self-interested "associations" who, in the absence of any legitimate function, become a mafia expecting to be paid for "protection" in absence of any real "threat."

    I just hope it's not long before the majority of artists realize this and we can all laugh at how people used to actually PAY for second-hand copies of used songs.

     

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