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.