While artists have individually expressed quiet distate for the paltry royalties paid out by music streaming services such as Pandora or Spotify, a unified statement from a large group of allied musicians has been noticeably absent. At least until this past Wednesday, when over 100 notable artists signed off on a letter publicly criticizing the Internet Radio Fairness Act. The letter, publicized by the MusicFirst Coalition, a group comprised of musicians’ unions, artists, and record labels, demands that Congress refuse to “gut the royalties that thousands of musicians rely upon” by passing the bipartisan bill, which would dramatically cut the royalty rates that streaming new media services such as Pandora are required to pay.
Pandora founder Tim Westergren argues that the company has been unfairly penalized by legal codes that require them to pay comparatively exorbitant fees for rights and royalties of the music they stream. Westergren claims that 50 percent of company revenues go towards paying royalty fees, while other radio services, such as satellite and cable content providers, pay comparatively minuscule rates. ”In the long run,” Westergren states, “growth of internet radio is better for artists.”
Despite the company’s claims that artists unconditionally benefit from their services, musicians have remained strongly critical of the financial compensation that such streaming services offer. In a recent piece for Pitchfork, Galaxie 500 drummer Damon Krukowski breaks down the meager revenues that his band picks up from their streams on Pandora in stark relief:
“To put it in historical perspective: The “Tugboat” 7″ single, Galaxie 500′s very first release, cost us $980.22 for 1,000 copies– including shipping! (Naomi kept the receipts)– or 98 cents each. I no longer remember what we sold them for, but obviously it was easy to turn at least a couple bucks’ profit on each. Which means we earned more from every one of those 7″s we sold than from the song’s recent 13,760 plays on Pandora and Spotify. Here’s yet another way to look at it: Pressing 1,000 singles in 1988 gave us the earning potential of more than 13 million streams in 2012. (And people say the internet is a bonanza for young bands…)”
Krukowski does note that, by making money from online streams, his band is effectively earning money on a non-material good, which can be considered a boon for the artist. There are no albums to press, no manufacturing costs to incur. But what is more important, cites Krukowski, is the way in which this exchange reflects the mentality of streaming services as a whole; they are based upon speculation and immateriality. Even though Spotify and Pandora both posted net losses in the first quarter of this year, they have been sustained by a significant influx of speculative capital and investments. Effectively, Krukowski argues, these companies exist only to maintain their own growth, which is financed through the sale of “access” to music that they have not produced themselves. Considering this operation model, it’s not surprising that musicians would see the slashing of royalties paid out by streaming services as nothing more than a power grab for extra revenues from companies that are, as Krukowski puts it, “divorced from music.” Obviously, Marx would really get a kick out of this.
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