My song got played 1,000,000 times on Pandora and all I got was $17 sure makes a good headline. Spin ran with David Lowery’s extraordinary tale of meager payments for the song “Low” recorded by his band Cracker and did little more than repeat Lowery’s original claims.
But did Lowery get shafted so painfully?
The short answer is no.
In a well-reasoned retort, Michael Degusta of The Understatement used numbers and math do expose the misleading headline.
Step 1. Lowery and his royalty reports clearly state he only owns 40% of the songwriting. As he says, this means the total fee to the songwriters was $16.89 x 2.5, or $42.23.
Step 2. Songwriters actually only get about 43.5% of the songwriting/publishing rights. The publisher and the songwriters split the fee 50/50 after the rights administrator’s (BMI in this case) operating expenses, which appears to be about 13%. So the full songwriting/publishing fee was in fact about $97.
Step 3. Pandora also pays a separate royalty for the performance itself, distinct from the songwriting. In 2012, that royalty was $0.0011 per streamed song.2 For 1,159,000 plays, that works out to a total performance royalty of $1,274.90.
After the administrator SoundExchange takes its fee of 5.3%, the performance royalty is split, with 50% going to the recording owner (i.e. record company), 45% to the band/performer, and 5% to any session/backup musicians. So the band in this case received $543.30 for their performance.
Conclusion. By this math:
Pandora paid a total of about $1,370.
The band received a total of about $585.
If Lowery received 40% of the performance royalty, “all he got” for the 1 million plays was in fact around $234.
But, what about the royalty statement that only said $17?!
Even Lowery, himself, admits that wasn’t the whole amount he got paid for this track. Buried in his original piece is this nugget:
** I am also paid a seperate royalty for being the performer of the song. It’s higher but also what I would regard as unsustainable. I’ll post that later this week.
Um, David, if you’re going to make yourself a savior of artists, at least do the world a solid by releasing all pertinent info, not picking and choosing like a pol.
But, what about the $17?! It’s all about the $17!
So, here we go again. Johnathan Segel,
an ex-bandmate a bandmate of Lowery’s in Camper van Beethoven and an ex-employee of Pandora, really, really wants this to be about $17, and not the whole picture. In his nasty rebuke published on Hypebot, he refers to Degusta as a Pandora intern, in quotes, calls him piechart man, and goes all anti-math like a Republican in a budget debate with statements like, “Because we know that pie charts are data, and data is true.”
Segel is practically tripping over himself to bring the debate back to $17.
Piechart man says “apparently in Lowery’s view a performance royalty of $1,275 is unsustainable but the AM/FM world of $0 is totally fine?” I don’t know where David would ever think that. This whole issue is not about performance royalties.
So refuting a headline like “only $17 for 1,000,000 spins” is easy, but that wasn’t really his point. The point was that the songwriters’ royalties were only $17, not that there were other royalties. So the pie chart article is like saying, ok he only got $x for broadcast, but LOOK! he also got $y for performance, so he’s wrong! But of course, David’s point was that $x is extremely low.
And, the best one, yet, where Segel discusses the differences in performance and broadcast royalties between terrestrial and internet radio:
So what, I say. They may pay more in performance royalties, but they don’t pay more in broadcast royalties. Broadcast royalties go to songwriters. You are listening to songs. And yes, the performance royalty is indeed unsustainable. And again, so what if they pay out more money, that’s not relevant to the fact of how much money is paid out.
Are we now claiming how much money is paid out is not relevant to how much money is paid out?
This is complicated stuff, the likes of which is not suitably served by sensational headlines and willfully deceitful arguments. Terrestrial radio, satellite radio, and internet radio all pay different rates to songwriters and performers. In the case of traditional radio, they pay $0 in performance royalties.
Furthermore, no one is quite sure how one stream on the internet should be compared to one play on radio. Degusta tries to put it into perspective:
This is quite simple: those sources paid him a lot more primarily because a lot more people heard his song via those sources.3 For example, AM/FM paid him $1,373.78 for 18,797 spins. That’s 7.3 cents per spin. If only 10,000 listeners heard each spin, terrestrial radio is in fact paying just half the songwriter fee Pandora paid him per listener. And of course it’s likely to have been far more than 10,000 – even the intentionally miniscule South Dakota radio station Pandora just bought manages to average 18,000 listeners.
Even more importantly, FM/AM paid him NOTHING for the performance of the song. Unlike most industrialized nations, terrestrial radio stations in the US have never paid performers anything.4 It’s hard to believe, but true: they can play John Coltrane’s version of “My Favorite Things” for decades and never pay him or his estate a single cent.
Segal says, no, no math and no estimate:
The digital utopianist says that the value for internet radio is better, estimating that 10,000 people hear a song on terrestrial radio when it is broadcast, which his math puts at $0.007 per person, while the million legitimate listeners who each heard the song on Pandora amounted to $0.00014. I can’t check this math, because the numbers are entirely made up for terrestrial radio, we don’t know how many people hear, all we know is how much they pay in the end.
Stop it Segel! Unless you’re angling for a job with the RNC, you’ve gotta quit it with the anti-math, anti-reason, and purposefully misleading arguments. Your deception serves no one but yourself.
The reason why internet streaming rates have become so contentious is that no one really knows what a reasonable payout rate for streaming is. No one really knows how to compare streaming to satellite to terrestrial. Arguments based on sensationalism won’t get us closer to the truth.
Artists do need to get paid, no one is denying that point. Many also believe streaming services should pay more to artists. Again, as streaming becomes more and more prominent, it is reasonable for artists to publicly campaign for better payments from the likes of Pandora and Spotify. These companies are no longer start-ups. They are established players who should act like they value the ultimate source of their revenue — musicians.
All I ask from both sides of the debate is that we act like grown-ups. Pandora’s angling for lower rates, and their scheme to make themselves terrestrial by buying a station in South Dakota is a shifty, one-percenter move. Artists who hold back relevant data as they court the press are being equally deceitful. Starting today, let’s all agree on one thing: We need to have a fair and open debate so both sides, the artists and the broadcasters, can get a fair slice of the pie. Is that too much to ask?