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Editor’s Notebook: Bette Midler’s rage against the stream is a case study in confusion

bette midler tweet 638w

Bette Midler is the latest high-profile musician to launch a complaint about revenue from music streaming, a meme that we refer to as the Spotify Debate. Spotify and Pandora bear the lash of musicians’ anger more than most other services — and suffer the resulting confusion, too.

Music lovers have no responsibility to understand the intricacies of music licensing and statutory royalties that are applied to Internet listening. Many musicians have trouble with the subject, too. When they receive a royalty check and lash out publicly, music stars have the reputation clout to sway public opinion against streaming businesses in a wave of viral confusion, incomplete perspective, and outright misinformation.

Last week Bette Midler posted one declamatory tweet that set one of those waves in motion.

“Spotify and Pandora have made it impossible for songwriters to earn a living: three months streaming on Pandora, 4,175,149 plays=$114.11.” –Bette Midler on Twitter

Midler’s tweet was amplified by over 800 retweets. Tweeted comments whipped up further outrage and implications that Spotify is illegal.

Pandora stepped in quickly with a statement:

 “We love Bette’s music and certainly respect her advocacy for fair compensation for artists, but we must clarify an important fact: Pandora paid more than $6,400 for those 4+ million plays, based on our 2014 rates which are published publicly. In terms of compensation to the creative community Pandora remains by far the highest paying form of radio. Pandora pays songwriters a greater percentage of revenue than terrestrial radio.”

Aside from the discrepant figures between Pandora and Bette Midler, which might signify multiple songwriting credits or an unfavorable publishing contract, the comparison to terrestrial radio is important and often overlooked by songwriters and performers alike. (Songwriters are subject to different royalty regulations from performers. Better Midler’s attack tweet mentioned only songwriting royalties.) Pandora pays 1.85% of its revenue in publisher/songwriter royalties, while broadcast radio stations enjoy a lower rate of 1.7%.

Comparing the two mediums also puts the 4-million plays in perspective. That number might seem high for a one-to-one service like Pandora, but would not be stratospheric for three months in the one-to-many medium of radio, where a single spin in a single market can deliver many thousands of impressions. If Bette Midler’s songs got 4-million terrestrial spins (multiplied by impressions) during Q1, she presumably made more money — despite radio’s cheaper royalty rate.

One lesson from this comparison is that streaming, while clearly influential to consumers, is still a young business model in the early days of scaling, with unknown potential. Streaming is a piece of a successful musician’s revenue puzzle, and the cost-of-content is regulated by the government in the U.S., generally at a higher rate than radio pays proportionate to business size.

Debate is good. Confusion, not so much.

Brad Hill

17 Comments

    • Thanks for the comment, David. Respectfully, I think your comment is too sweeping. First of all, SoundExchange collects royalties for performers and labels, not songwriters. I hope you don’t mind this observation, but that’s an example of the confusion this article points out. Songwriter royalties are collected by ASCAP, BMI, SESAC, and independent publishers. Also, if Pandora pays too little to songwriters, what do you think about broadcast radio, which pays a lower percentage rate? Why is radio not the target of criticism? Spotify pays a higher rate than both, as an interactive service. Are you aware of these differences, and do you think they *make* a difference? If there is one point I hoped to make with this article, it is the complexity of music licensing, and the importance of making correct comparisons.

      • Brad,
        We have our whole catalog (over 100 Albums) on cdbaby, iTunes, etc.
        http://cdbaby.com/all/dynamic14616
        cdbaby, iTumes and Amazon pay us and our Artists very well.
        We get nothing from Pandora and very little from Spotify.
        Broadcast Radio pays over Eight cents per play to the songwriter.
        Sound Exchange only pays performers who have the money to go after them. We have been trying to get paid for three years now.
        Dave

        • I’m sorry for your problems with SoundExchange.
          Broadcast pays a percentage of revenue to songwriters; if that comes to 8cents per play for you, remember that each radio play makes thousands of impressions, unlike a streaming play which makes one impression. Radio play is inherently more valuable.
          Comparing streaming royalties to album sales is really apples to oranges. I realize that the displacement of album/track sales is disruptive.

    • Thanks Jim. Understood — but not SoundExchange if Midler is complaining about songwriting revenue, which is all she mentioned in her tweet. SoundExchange collects performance royalties, not creative royalties. Complex business!

  1. 4 million spins on traditional radio would pay about 100 times what the streaming sites pay. most songs are collaborations of several writers/producers/artists- a fraction of 1/3 to 1/4 is typical- if a writer has a hit every few years and makes 100-150k for a hit then he can survive and continue- if he makes 1,000 dollars every few years for a huge hit song he’ll be asking you if you want fries with that. It is a complex issue, but not so complex to see that you are trying to take one mathematical look at things. There are thousands of small radio stations paying a small percentage of revenues for their music- but those % were arrived at because there are thousands of them. There are but a a very few VERY LARGE steaming sites that are designed to service the entire globe and not just a county area. It is a vastly different concept with vastly different money streams. To come in and single out one aspect is mis leading in my opinion. If you want to single out one rock hard truth?????? 4 millon plays on traditional radio- bands can survive and live on to be the next beetles, songwriters can go on to be the next Dr Luke. 4 million plays on streaming sites???? the death of music.
    Pretty damn simple.

    • Thanks for the comment Craig. I think we might be making the same point from different angles. You are correct — very few large streaming services. But they service very small audiences compared to radio. Streaming has barely begun. You (and Ms. Midler) seem to be treating it as a fully-grown, mature business model. 4M plays on streaming is small because the audience is small, and the market has just starting migrating. this is a transition time, with all the uncertainty and disruption we should expect.

  2. I just left a lengthy point that disappeared after an hour. But, Brad if you were involuntarily chosen to have your income go to 100 th of what it is in order to support some ” new business model” how would you feel.? Ford, Apple etc….. Those are business models that that created not stole. They didn’t need to drive one of Americas greatest cornerstones , intellectual property, to the brink of ruin to see if they had a viable idea.

    • Craig — I’m sorry if there’s been a problem with your comment. I welcome all your thoughts and opinions, and would never remove a comment. 🙂
      I recognize the disruption which has affected music and musicians. It is tough to deal with and I sympathize with musicians struggling with sudden change. But your use of the word “steal” seems plainly wrong to me. Streaming sites are legal, and in the U.S. their cost of content is regulated by the government to a large extent. Your comparison to car companies is interesting, and you’re correct about the difference between creating value and acquiring value created by others. But that doesn’t make music services illegal, or essentially different from any other media distributor.
      Thanks for your comments! Keep ’em coming!

  3. I’m not on either side here, but I read with interest. In the days before digital, radio was the only way to get your song heard, and let’s face it, there were way more songs than could possibly fit on radio, so someone chose the winners (the record companies and to some extent the radio stations themselves). And back then, radio showed you the songs, and if you wanted to hear them – when YOU wanted – you had to go buy the album. the sale of the album had generous royalties. But of course you made that same royalty whether that album was played once, or 1,000 times. Same goes for an iTunes download really. Streaming means you never have to listen to terrestrial radio, and you certainly don’t have to go buy an album to hear a certain song more or less when you want to. Times are changing, for sure. It should probably be noted that no artist is under any obligation to provide their works to streaming services, but of course most are.

    • Paul, thanks for your comment. One note — In non-interactive services like Pandora (where the music is not on-demand), compulsory licenses prevail, which means that artists do not have a choice of inclusion. It’s like radio in that way; the broadcaster/webcaster plays whatever it wants, and pays later based on compulsory rates. On-demand services like Spotify are different, and require negotiation for performance rights, but the big labels handle those negotiations on behalf of their artists, and sometimes the artist contract has unfavorable terms for streaming revenue. Complicated!

      • I guess what I mean is, if I write or perform a piece, before I hand it to the distributor or performing artist I can very well have them sign a form saying how and how it can’t be used. At the very basic form, I’m still in control. But 99.9% of artists cede that control to the record companies etc. Then they complain to the wrong people when their royalty check arrives.

  4. Thanks for the good comment, David. I agree that Internet radio is additive to broadcast radio. I think many musicians are disappointed at how it seems to be causing a reduction in album/track sales via iTunes, CDBaby, and other outlets.

    • BTY: Pandora is NOT Radio. It is a Glorified Jukebox, that gets to keep all the money. My wife and I were in a restaurant last night that plays only Pandora. The restaurant has a great Touchtunes Jukebox, that doesn’t get played much anymore. We have our catalog on Touchtunes and Ami. They pay us per play. They also pay BMI, ASCAP, etc. So does the restaurant. But they get Panadora for free. Think about it.

  5. So, now they can’t get the solid gold bidet to match their toliet? Can’t seem to cut it for ceramic coating for their rolls Royce? Next they won’t get free $7k shirts/blouses from the hottest designers! To have so much they certainly don’t seem to be thankful to anyone. To hell with all of them, especially Bette midler, one who has no self confidence – live with that.

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