OR:   Decimal Point, 122 Zeros, One

I was listening to a really cool “Ted Talk” the other day.  It included interviews and comments from people doing SETI research, physicists, and scientists who know about quantum physics and all kinds of cool stuff about the nature of the universe.  The discussion turned to “dark matter” as the fabric of the universe.  It turns out this “dark matter” has an actual physical weight.  One scientist was particularly fascinated by the fact that the number that expresses this weight is so small it’s beyond the comprehension of most research scientists, let alone the layman.

So the number in grams that expresses the weight of a particle of dark matter is: decimal point, 122 zeros, 1.  It’s smaller than most of us can imagine, right?  Not so for the professional songwriter, trying to figure out his royalties from services like Pandora and Spotify.  We recently calculated that over 600 million streams on Pandora in one recent quarter added up to about $600 for five hit songwriters.  So we have the “right” to a share of ad and subscription dollars, which is good, but the division of royalties, (1/17th of what labels get for songwriters on Spotify, 1/14th of the label share for Pandora) is so absurdly skewed, it’s nearly irrelevant.  It’s like setting the federal minimum wage at a nickel an hour.

It’s clear to most predictors and pundits that “access” is the music model of the future.  We want any music we want any time any place we want it.  And we can have it.  So let’s do a quick “divide the pie – 101.”

There are two copyrights, the Sound Recording and the Underlying Work, also called (p) for artists and record labels, and © for songwriters and publishers.  In decades past, the © got a decent buck from physical sales, despite the fact songwriters and publishers are under a federal statutory maximum wage and their two largest PRO’s are handcuffed by archaic consent decrees that encourage federal judges to set low performance royalty rates.  The (P) (labels), on the other hand, makes its own marketplace deals, grants both copyrights to digital services and then usually passes through the ©’s little government set taste.  The labels also OWN 17% of Spotify, a fact which doesn’t enter the royalty equation, but that they worked out as part of letting Spotify do business in the USA.

So today, essentially without that “big” mechanical,  (the songwriter who’s not and artist, on a 3-way write, with a co-pub makes $22,750 on each MILLION copies his song sells.  Without radio play, that’s IT!) Here’s how it breaks down:

Artist and Label have a double platinum album.  Artist writes 7 of the ten songs on the Album, Artist tours, sells merch, gets Artist performance royalties from digital performances. His artist label royalty is between 12% and 18% per unit sold.


Songwriter, on a DOUBLE Platinum album: $45,550 in mechanicals.  IF he gets a single, since he gets performances for terrestrial radio, another $50k to $250K.

That means if I write a big hit with an artist, I might be looking at $300k – $400k in publishing royalties.

The artist I wrote the song with gets the same publishing royalties, which is only fair.  But wait, he ALSO gets digital artist royalties, add $200K, and Artist Label royalties, @ 16%, which, 2M albums is $320k per song.

On the strength of the songs, His touring and merch for he and his label can add up to another $10M to $20M a year for a mid level artist.

Songwriter / Pub with one hit that year (tough to get) ——————————–$244.5K

Artist (one song) – pub, $244.5K, Sound Exchange, $200 K, 1/10 of album artist royalties, $320K, 1/10 (one song) of touring & merch, $1.5M so for the SAME song,

Artist / Label ————————————————————————- $2,264,500.00

If you asked the person on the street if the creative work for an artist and label to make a sound recording for Spotify is worth 17 times more than the creative work the songwriters put in to creating the music and lyrics, what would he say?  I really doubt that he’d agree with that huge difference in value, especially when you consider all the other income streams the labels and artists have available that the “stand alone “ songwriter doesn’t have.

Why can’t we put all the RECORDED MUSIC money into one bucket and divide it more like the iTunes model?  ITunes pays about 2/3 of a  $.99 download to the label, $.65.  That seems fair to start with, but then the artist might get a dime, the songwriters and publishers split $.091 and the label gets the rest ($.40) If iTunes is happy with 1/3 of the take, why can’t this be the model for all digital payments going forward?  The record label today has access to and takes full advantage of all the artist income streams mentioned above.  The songwriter / publisher doesn’t touch any of that.

Digital Recorded Music Payment structure:

Content Provider: 1/3

Artist and Label: 1/3

Songwriter and Publisher: 1/3

This would not affect the publishing income of an artist /writer.  In fact his publishing money would increase.  The artist who doesn’t write would benefit from a thriving songwriting / publishing business with more great songs to choose from. America and the world would reap the cultural benefits of a larger more incentivized creative class.

Such a restructuring will require massive licensing reform and legislative changes.  The music industry would have to play nicely together and do most of the work themselves.  Most importantly, it would require a true appreciation of the men and women who actually make up the words and music that mark the moments of our lives.


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