courtesy of HOWSTUFFWORKS.com

Internet Radio Isn’t Ripping Off Artists

It’s one of the few things helping them

Full disclosure: I interned at Pandora in college in 2006-07 and have released music on a variety of different platforms since 2005. These opinions are entirely my own and don’t reflect the thoughts of any company or other person, because if they did, then their name would be at the bottom.

A couple of pieces on Internet radio royalty rates popped up today — first, indie musician David Lowery’s post hit the front page of Reddit (“My Song Got Played On Pandora 1 Million Times and All I Got Was $16.89"), then a Venturebeat article on Pink Floyd’s thoughts.

I’m friends with a number of indie musicians who are generally thoughtful and insightful, so I was disappointed to see my Facebook and Twitter feeds with people jumping onto the “Internet radio is screwing artists” dogpile. This notion that Internet radio is ripping off artists is fundamentally flawed, and I believe that many artists’ feelings on the issue are the result of a couple of misconceptions.

1. First misconception: total listeners != total plays. This somehow gets overlooked: Internet radio like Pandora, Spotify, Rdio, and Google Play is unicast — you’re the only one hearing that exact track at that time. Here, one play=one listener. Satellite radio and terrestrial radio are broadcast, so each time a song is played, that could be ~100,000-plus people that heard that track, or 100,000 listeners for that one play. You can’t make an apples-to-apples comparison on number of plays; it’s number of listeners that you should be comparing. Thus, David Lowery saying his song was played for a million people on Pandora isn’t the equivalent of being played a million times on terrestrial radio — it’s more like it was played a handful of times. Internet radio pays the highest royalty rates of any radio medium — more than terrestrial, more than satellite.
2. The second misconception is an unfortunate knee-jerk reaction to hearing “digital music” and “free” together, along with our instinct for word association kicking in and adding “piracy” to the mix, and artists being on high alert for how they may be getting ripped off. Especially for services like Pandora that aren’t on-demand (Spotify, Rdio, and other on-demand services should be the artist’s call if the economics work out for them), it’s hard to argue that Pandora is cannibalizing sales. I have yet to hear of anyone saying, “I would buy that album, but I’m counting on a couple of the tracks randomly coming up on my Pandora station.” People aren’t using Pandora as a substitute for buying music — at least no more than anyone uses FM radio as a substitute for buying CDs. To the contrary, Pandora has a link right on the song to make a purchase, and Pandora users buy more music once they start using Pandora.

Radio has never been seen as a direct, primary income stream for artists. That’s not to say that it shouldn’t be, but as far as history goes, if an artist was played all over pop FM radio, they’d see it as a great opportunity to expand their fan base, sell more records, and get more people to come to their shows and buy their merch. Internet radio provides this same benefit, only much, much better — if you’re a mid-range artist playing shows to a couple of hundred people, your chances for getting regular play on major radio are pretty close to nil. But with Internet radio, you can reach thousands of fans that just ten years ago would have been nearly impossible to reach.

While it’s true that on the whole, record sales are down and top artists aren’t going triple-platinum anymore, I’d posit that it’s a better time than ever to be an indie artist — your distribution and promotion have gone largely digital, and you can reach fans around the world instantly. With Internet radio, you can submit your music, and it’s targeted to thousands of potential fans who enjoy music similar to yours. In another context, this would be a service you’d pay for by number of impressions, but instead, you as an artist get paid on top of this.

I love music, and it’s not easy out there for artists — I think they should be paid more (at least those not already making millions). If you’re an artist creating great work that people appreciate, you should be making money off of that. But that money has never come from radio — radio has traditionally been free advertising for artists’ other revenue streams, and that’s what Pandora is (and on a per-listener basis, it’s really good at it).

I can understand the argument that with the new music economy, maybe it is time for artists to be compensated more for radio plays — but if that’s the argument being made, start with where it’s likely artists haven’t been seeing any money directly for years: terrestrial radio. Internet radio is already paying the highest royalty rate and provides the most benefit per listener (all of the artist information and one click to purchase music ) of any radio medium. Internet radio isn’t ripping off artists; it’s actually one of the few things in recent years that’s really helped them.

Scene from a show I played at Giants Stadium in NJ, 1 year after self-releasing my first album online.