So How Much Do Artists Make from Streaming Music Services?

Artists love to complain about how little they make from streaming music services. And while it’s true that streaming pays less than paid downloads, you can’t compare the two. Not even close. It’s a complete apples-and-oranges scenario.

Full disclosure: I do work with Rdio through Corus and Shaw, but that has no bearing on what I’m about to say.

Downloads and CD sales are retail transactions that put the music into the hands of consumers. By acquiring either a digital copy of a song (in the case of downloads) or a physical copy (in the case of CDs, vinyl and tapes), ownership of those copies reverts to the consumer. As a result, the rightsholder(s) and the artist deserves to be compensated at a higher rate.

(Okay, okay, so there’s a technicality regarding “ownership” and “digital downloads” that makes these retail transactions different from CDs or records, but it’s not worth bringing up in this particular case.)

Streaming royalties are similar to that of radio airplay. Whether it is heard by 100,000 people all at once when a radio station broadcast or heard by 100,000 on their own time is pretty much equivalent. In both cases, we’re talking fractions of a cent per play.

(Canadian radio stations pay out millions and millions and millions of dollars in pre-tax income every year for the privilege of playing music as part of their business plan. The US? That’s another story, but let’s not go there right now.)

A few other things to remember when it comes to evaluating the fairness of streaming payouts:

1. Rdio, Spotify and all the rest of them don’t just pay out what they want. They pay out at rates they negotiated with record labels, music publishers, performing rights organizations and copyright boards–organizations that are supposed to have the best interests of the artist/composer/musician in mind.

2. The major labels own equity positions in the big streaming services. Yes, a company like Sony owns a slice of Spotify.

3. Payout rates are different depending on whether or not music is streamed through a “freemium” tier (i.e. streaming with commercials or “ad-supported” tier) or if they are a full-on subscriber paying a monthly fee to rent the music for temporary off-line listening. (Stop paying and all the music from the service disappears from your stream and your devices.)

4. For all its bluster about being for musicians, Jay Z’s Tidal operates under exactly the same streaming rates that everyone else does–minus the “freemium” tier.

Bottom line is that if an artist wants to bitch about how little they’re making from streaming their music, their fight isn’t with the Rdios of the world. It’s with everyone else associated with their music.

Got all that? Now feel free to click on this this story from The Guardian.