How the streaming-music boom is screwing over recording artists

$0.000014 per song? Sign me up!

Photograph: Spotify

Musician David Lowrey, formerly of the bands Cracker and Camper Van Beethoven, has been on the warpath against the modern music industry – that of Spotify, Pandora and iTunes – for a while now. His blog, the Trichordist, catalogues the exploitation of artists by the new overlords, and acts as a call to arms.

But sometimes, that exploitation is less severe than it looks on first glance.

Yesterday, Lowrey posted a piece titled "My Song Got Played On Pandora 1 Million Times and All I Got Was $16.89, Less Than What I Make From a Single T-Shirt Sale!". It recounts Lowrey's quarterly earnings for the song "Low", a 1993 hit by Cracker which has had an unexpected renaissance due to being featured in the Emma Watson film The Perks of Being a Wallflower.

From Sirius, 179 plays netted him $181.94; FM/AM radio paid him $1373.78 for 18,797 plays; Spotify gave him $12.05 for 116,260 plays; YouTube gave him $1.95 for 152,900 plays; and Pandora paid $16.89 for 1,159,000 plays.

That's a massive difference for Pandora, and it's no wonder that Lowrey writes angrily that:

Right now Pandora plays one minute of commercials an hour on their free service. Here’s an idea! Play two minutes of commercials and double your revenue!

But the story is actually more complicated than that. For one thing, as Lowrey writes, he only owns 40 per cent of "Low", so the numbers are artificially, er, not-high. For another, the royalties schemes Lowrey is discussing only cover songwriting credits. The performance royalties come through a different channel, and can be quite a bit higher.

But the most important difference is that, although all those services are technically "radio" – which is why they are covered by blanket licensing schemes – they are used in very different ways.

Take a look at the price per play:

Sirius 101.6424
FM Radio 7.3085
Spotify 0.0104
Pandora 0.0014
YouTube 0.0012
Service Price per play (¢)

That runs the gamut alright; but there's three clear categories of service in there. The top end plays the same song to thousands of people at a time. Assuming the average commercial radio station has 5,000 listeners, then the price per listener is actually better than it is on Spotify. Sirius pays much more, but it's also national; and so requiring 73,000 listeners to equal Pandora's price-per-user isn't that big of a deal.

The next most valuable is Spotify. That only plays to one user at a time (theoretically), but lets them choose what they can hear. That leaves it more likely to cannibalise record sales, but also offers the chance for an artist to earn more from their die-hard fans.

After that comes Pandora, which is a real internet-radio service; you can't choose what songs play, nor can you skip through too many you don't like. You can, however, adjust the playlist by giving it an artist or genre to focus on, and it will play things like that.

With all of that considered, it's pretty clear who the real rip-off is: not Pandora, but YouTube. It pays less per play than Pandora, even though it lets you pre-select the songs that will be played. And if you spend enough time with children, you'll know that it's perfectly possible to use YouTube as a jukebox, with judicious use of the playlist function.

But the real problem for artists like Lowrey isn't really the exploitation by the music services at all. Instead, it's that it's getting ever harder to get the millions of listeners required to make a living. To get $1,400 for one song on terrestrial radio, Lowrey probably had to win over ten, maybe twenty people who set the playlists for nearly every commercial radio station in the country. To get that much from Spotify, he would have to get 100,000,000 plays – and even if people love the song, that still requires convincing a good million people to click play.

The economics are against him on that one.

Sirius 101.6424
FM Radio 7.3085
Spotify 0.0104
Pandora 0.0014
YouTube 0.0012
Service Price per play (¢)