Royalty Rip-Off
Its on rare occasion that my spotify app goes unused-- for even a day at most-- and I never miss an opportunity to plug in my headphones and pull up a playlist or radio on this popular music app. It has become a norm in today’s society to rely on music streaming apps such as Spotify, Pandora, Itunes Radio, Soundcloud, and more as a main source of music. In the past, you could find your favorite artist at a Barnes and Noble or Best Buy for around ten dollars, and after that you could pick and choose your favorite songs for ninety-nine cents a piece. Now, however, as I write this I’m listening to The 1975 absolutely free through an app on my smartphone. The opportunity cost for buying music is much greater than for simply streaming it online, so it seems as if apps like this are the obvious choice for everyone, yet artists and songwriters are left with the short end of the stick as minimal royalties leave them searching for income.
A whopping 63% of this sample of Americans now stream their music through these various apps
There is a wide gap in how much artists are paid for songs played on the radio versus songs played on streaming music sites. For example, in a three month period, A popular artist’s song had been played 1,159,000 times on Pandora, and he only received $16.89. On Spotify his song was played 116,280 times, and he was paid $12.05. However, on the radio his song was played only 18,797 times, yet he received $1,373,78, a much greater amount for much less playing time (Wolk). With an unlimited supply of any particular song on an app like Spotify, plays of artists’ music can rack up to the millions, however each time only a fraction of a cent is given to record companies and publishers, and a fraction of that is given to band members and songwriters (Sisario).
This isn’t to say that no revenue comes to any and all artists off this medium. For music giants such as Beyonce, One Direction, Coldplay, or any other group with a massive fan base, pay from these apps aren’t too shabby. In 2013, when “Gangnam Style” was at the height of popularity, Psy earned $8 million off of 1.2 billion views on Youtube, which works out to be only .6 cents per view (Sisario). However, for the thousands of artists that haven’t reached that height of success, they make close to nothing. This online oligopoly makes it next to impossible for artists to survive by these means alone, especially when they don’t have CD sales or radio to bring in additional income.
The demand for physical copies and downloads of music have decreased, while subscriptions and streaming sites take off in popularity. However, revenue stays low.
There is still a chance for royalties to grow as subscribers to Pandora One, Spotify Premium, and similar programs increase. As the number of paying customers rises, the royalties to artists will also rise, and make up for the decrease in CD sales or song downloads. If streaming music were to totally wipe out sales from any other source, these apps could still make money and make artists money if the amount of worldwide subscribers totalled 20 million (Sisario).
Next time you fall in love with a new band or indie single, think about spending $1.29 to actually buy the song, and in turn support the artist with more than just a fraction of a penny, because the marginal benefit outweighs the marginal cost for any dedicated fan or music lover.
Works Cited
Sisario, Ben. "As Music Streaming Grows, Royalties Slow to a Trickle." The New York Times. The New York Times, 28 Jan. 2013. Web. 01 Dec. 2014.
Wolk, Douglas. "Spotify Pays Peanuts to Artists. That’s Not Necessarily a Problem." Slate Magazine. N.p., n.d. Web. 02 Dec. 2014.
This is an interesting topic to pursue but the money collected by the app for every song played is also extremely small. Most sites/apps you can stream for free from and there is normally an option to purchase a full account for a moderate price. We don't purchase that extra service because the opportunity cost is too high so the website hardly makes any money but it has to keep some of it to pay employees and the rest of it is divided by how many times a song has played. Radio on the other hand is funded by all those adds between songs so the radio station can afford to pay its employees and give more royalty for every song played.
ReplyDeleteThat is quite interesting considering I listen to Spotify everyday. It is how I listen to most of my music and I thought that the artist was paid more for what people listened to that the small amount they are actually making. Musicians should get paid for the music they create and this can be done through actually purchasing the song instead of streaming it so I might just have to do that.
ReplyDeleteReally good job! I’m always using either pandora or spotify for my music because purchasing songs doesn’t really make sense. You can easily put songs in a playlist for free and stream it. I use Grooveshark when I’m at school because it’s so convenient. So, buying songs wouldn’t be that logical since you can easily access songs for free on so many apps and websites. I don’t have any subscriptions to any of the music stations so I can just listen for free.
ReplyDeleteGood choice of topic as many high schoolers can relate to bypassing the traditional way of purchasing music from iTunes or Google Play and instead downloading it from a free music downloader or listening to it from free radio apps that can be downloaded for free or for a small price, ranging from 0.99$ to 1.29$. I think that the music industry is rapidly changing and growing into something that is very different from what it is right now. Good job on the post overall.
ReplyDeleteFirst off it's cool that you like The 1975, I like them also. Back to the point I would argue that the artist should make more of that money. They are the ones with the original material and songs that create the fans in the first place. If music didn't exist then apps like Pandora and Spotify wouldn't exist. But as long as the convience of streaming is still around you will see people continue to use apps vs buying the actual songs or album.
ReplyDeleteI agree with Dan that the artists should get more money since they are the one's creating the music, however they do make enough money and sometimes even though the itunes is cheap the cost still adds up over time. These apps are helping people that love music but can't afford everything too.
ReplyDeleteI know I’m a big Pandora listener. I can’t stand radio with all he remixes and commercials. So it’s not a surprise that streaming has become increasingly more popular. But I have noticed that Pandora has been slightly increasing their commercials hoping that listeners will buy Pandora One so that revenue will increase. It could possibly be a good investment, but I would take regular Pandora with a few commercials/ads over listening to bad remixes on the radio with a ton of commercials. I feel that the marginal benefit outweighs the marginal cost for listeners.
ReplyDeleteI think that you bring up a good point and if, in addition, you added up all the people that illegally download music from other sources, I’m sure the amount of people paying nothing for their entertainment would rise. However, I don’t think that songwriters are really being affected too badly by this shift in popularity. In fact, I believe that most songwriters primarily make their money through consumers paying through the nose for concert seats and fan apparel rather than for the music itself. There are so many different facets of revenue for these artists that it is hard to make the assumption that just because these artists are making less for their actual music, they are not going to be able to survive. I would even go so far as to say that these apps really help a songwriter by reaching out to fan-bases that might not have previously listened to this artist, but who do so simply because it’s free. I would say that these apps seem to be a perfect way to advertise. If a listener were to hear a song that he or she liked, then maybe they would invest in actual copies of the song- thus making money for the artist rather than losing it.
ReplyDeleteI usually try to buy music that I really enjoy because I do believe in supporting artists who may not have a huge fan base. However, I too am a huge Pandora listener and I will have it on for hours when I am doing homework or am just at home doing nothing. I knew that the artists would get paid less for everyone listening to their music for free, but I didn't know that it was that much less. It is shocking to me that popular artists can have substantial money problems because of all these streaming apps that don't give the artists their fair cut of the profits. I definitely feel that the marginal benefit of keeping my favorite artists in business greatly outweighs the marginal cost of $1.29.
ReplyDeleteI am a huge Pandora listener for the soul purpose of being able to plug in and then be able to listen and not have to worry about changing the song or anything. I also like that I can find new music. And if you really think about it, the music artist are making a lot of money from YouTube and all these other sites, along with the extra money they make from concerts. So although I do believe artist should get the most money possible, I also think that it isn't always necessary to pay $1.29 for each song.
ReplyDeleteSophie, I thought that this was a very interesting blog post. I often times wonder how much money artists and bands make off of music streaming apps such as Pandora, and to see that this profit is very is kind of sad. Although I definitely like the that I don’t have to pay a penny to listen to the music that I love, I don’t think that it’s fair for the artists to receive such low profits by allowing pandora and other apps to play their music. Perhaps, an incentive to collaborate with these apps is to increase the their number of fans. Personally, I listen to pandora all the time, and always find new songs from upcoming artists. This has definitely broadened my list of favorite artists, but now I agree that it’s a good idea to start supporting them by purchasing their songs and albums, since they do put a lot of time to their work.
ReplyDeleteI am not a big Pandora listener but I know that my family listens to Pandora a good amount. I know that they have been complaining about the commercials, and the music quality. I think that you will see that customers will begin to go back to iTunes and YouTube to listen to music. The marginal cost and benefit just won't be worth it in the end.
ReplyDeleteThis was a very interesting post. I never thought that online music streaming could have this kind of effect. Personally I don’t think music streaming is the main culprit of the decrease in revenues. I think it is more people who download songs for free rather than stream them online. In many cases streaming music takes a fair amount of data on phones when there is no wifi and I think many people, after they have fallen in love with the get the song on their phone however instead of buying the song they illegally download. If there was no way to illegally download I think there would be a major increase in revenue. One good thing about online streaming is that it exposes people to more music, music that is less popular. This extra exposure allows musicians who are not as popular to gain followers, and if there wasn't a way to illegally download things these musicians would most likely make more money than they do.
ReplyDeleteAlthough musicians are making less money from streaming than buying songs, they won't fall below the poverty line from this decrease in pay. These musicians are still being paid excessive amounts from performances and videos (as you mentioned Psy) and certainly won't be hurting financially from the music streaming on the internet. Although it might hurt the artist, it helps the consumer to be able to listen to a song without spending any money before deciding if they would like to buy it.
ReplyDeleteI have never really thought of this concept before. Sure, I listen to music all the time, but I must admit that I am a user of Pandora, and free music apps. I didn't know that the artist doesn't get as much earnings when their songs play on apps such as Pandora, and Spotify. I would think that they would earn more because their music is reaching more fans, but the app companies do have a good set up as they are probably making a lot of money off of this system. If anything I think that consumers should buy songs to support the artists, or there should be an app that costs a few dollars that donates more money to artists because they deserve to get paid for what they produced.
ReplyDeleteI think the artists are doing fine. I get what you're saying but Pandora and other websites like it didn't get the songs for free. They paid a lot of money to get the songs and even though we use it for free, the advertisements are what pay for the songs. The artists are still getting paid and they are still more rich than we are soooo..... I will forever take the "cheap" way out
ReplyDeleteEven as people continue to stream music online with music apps such as Pandora or Spotify, I don’t think it will negatively affect the profits of the artists. Even though less people are buying the physical or downloaded copy, this only increases the amount of listens on the online sites which, though smaller, creates a profit for the artists. These online streaming websites also help artists trying to make it in the music industry, especially on Spotify which dedicates every Tuesday to playing new music from unknown artists. I think that while many people will lose jobs from the lack of physical copies of albums being bought, the music industry and music artists will be just fine economically.
ReplyDeleteThis is a good point with people listening to music via streaming online rather than directly buying artist's albums, which is what everyone was used to before. So how will these artists get paid? I think this area of marketing will have to experiment with some things to make sure these artists are getting paid fairly. Maybe branching out to these online corporations such as pandora by the number of times a certain artist gets played by the public. Perhaps adjustments should be made to fix this situation, and hopefully soon with our nation's technology advancing further! Overall, this was a good topic to bring up, and good job!
ReplyDeleteI believe that internet streaming will make it harder for people who are new to the music industry to make any money. While the bigger names are somewhat affected by the lack of records sales their money is mostly made through performances. Although it is an issue, it is not that big of one, nor is it one that can be totally fixed.
ReplyDeleteIn my opinion I think this is insane, even though I myself am guilty of only online streaming. I feel as though in order for the streaming app to obtain the song they must pay a high fee with an addition dollar for every time that it is played, considering that the vast majority of us no longer buy music at all. The worst part is now you can download these songs without even paying for them, and soon major artist will be losing large sums of cash. Music is a way of expression and sometimes for others it is an escape, but for the people producing it and singing it is life, and just like any career what they produce should have a cost especially if it is in high demand. I believe that music is an inelastic good, and people will always be willing to pay for it because if they really want to listen (which they always will), they will pay up -seeing that they have no other option.
ReplyDeleteI agree that we should support our favorite musicians, but most of our favorite musicians are already plenty wealthy enough. The people who really get the short end of the stick when it comes to free music apps are those who haven't quite made it yet, like the example you gave before. It almost makes me think we should have to pay for apps like Pandora, but then again I'm also very happy we don't have to. So maybe just pay the $1.29 for bands you know aren't quite as big as the Beyonce's of the world, because the Beyonce's of the world already kind of have it made.
ReplyDeleteThis was a very interesting piece. I use many of these apps myself to listen to music and have never thought about it in this way. I agree with some of the previous comments that the marginal cost of adding commercials does not outweigh the benefit. Many people will get sick of these adds and refuse to pay the premium price to remove them and ultimately will find other ways to listen to music.
ReplyDeleteAs a current Pandora user I would say that while it is unfortunate that I would have to pay for an ad free station, I understand why the company had to include a small cost. The ads in general are about 30 seconds or less and occur after every 5 songs or so; this is a minor price to pay for the music I love to listen to. However, for a business to run it needs funding, and this cost is very low compared to what is could be such as mandatory pay to listen to stations or even a higher fee. I love that Pandora keeps fees low for those that are willing to pay, yet still allows those who don’t pay to listen. Overall, I would agree with the company’s decision to include a small, optional fee to make money.
ReplyDeletesomething you failed to take into account is that with the online streaming services, the users who chose to listen to music also get subjected to advertisements, which is an additional source of revenues, in fact most of the revenues come from advertisements rather than subscribers. With the opportunity cost of buying music so high, and the rather simplistic ways one can find music online for free (although sometimes illegal) the only way that artists can provide music in the modern era and make large quantities of money is to provide concerts. This however is not a new concept, as people have been sharing their music files for over 15 years.
ReplyDeleteAlthough online streaming can be more convenient for us, it's probably not fair for the artists. However, they also already have a lot of money, but either way it's not very fair. Also, getting music illegally doesn't help them either, but it might be better for you. Support your favorite artist, they probably put in a lot of hours.
ReplyDeleteThis piece was very interesting, I never thought of the music industry through the economic lens before, and you make some good points. However, with youtube being optimized for free music, how are other firms going to compete?
ReplyDeleteStreaming has provided more convenience to the music listeners who can't afford to buy every single song they want to listen to, even if it's just to get it out of their head once. However, because of this cheap opportunity for listeners, there is the creation of more starving artists. Yet there is no middle man that will satisfy the artists who want to get rich off of their music, or the listener who wants to listen for as little as possible. Though it would be nice to start giving the artist more credit where they are do, it might not be possible especially as music can easily be illegally downloaded.
ReplyDeleteThis was a really fun post to read. I don’t listen to music often, but when I do, I prefer YouTube. It’s free and it’s easy to use, plus it’s on demand. I enjoy listening to music because it increases my utility. My mom is a musician, as well as my brother. I think it’d be swell if they made money, so I’m all for media that give a lot of money per view. Excellent post!
ReplyDeleteWhat an interesting post, I definitely never really realized the difference in benefits for the artists in spotify, pandora, and iTunes. However, streaming music allows for a lot more variety than just having set playlists; it helps with the interest while listening. Like Morgan says, it provides convenience to those who can't afford to buy everything on iTunes. I definitely cannot afford to spend $10-12 on every album I enjoy, and downloading pandora is a cheaper, better alternative for me, so I can relate to those users.
ReplyDeleteThis was a really interesting post to read, because I have always wondered how artists have been affected by the recent increase of free downloading. But a frustration of mine, along with many others I would assume, is that a lot of these music playing apps have ads, unless you pay for the full version. So customers may start to go back to the traditional method of buying music off iTunes, and finally give these artists the revenue they deserve.
ReplyDeleteThis post really interested me due to the fact that I use YouTube and Pandora on a daily basis. I never thought about how this would benefit the artist itself. In our society today we are focused too much on our own marginal private benefit rather than the marginal social benefits. The people who bring us the music we enjoy so much deserve a payback, and I will think twice before using Pandora from now on.
ReplyDeleteLike many individuals, I rely on YouTube and other music sites to get my "fix" of music of any kind. Nowadays its not surprising that musicians are getting under-paid for the labor that put into their music. The music industry is always changing and if you haven't figured it out by now the music industry is very formulaic and very monopolized. Due to this, the industry will charge the same price for everything much to the dismay of listeners. And so, music streaming sites are gaining in popularity because if gives the listeners to get their musical fix in without having to pay a price for it. While the plight of the musician is sad, at the end of the day it all starts at the heart which is the music industry.
ReplyDeleteThis is a very relevant post considering Christmas is right around the corner. It is very obvious that Christmas has an extremely positive impact on the nations economy. Families across the country buy loads of not only gifts, but food, decorations and much more. Overall, Christmas spending is a great way to kick-start the money flow with in the nations economy.
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ReplyDeleteWhile I have never used Spotify I am an avid Pandora or Youtube user, these are free of charge unless you wish to pay a minimal fee for ad free listening on Pandora. I had always wondered how artists make money and how companies sustain themselves if everything is free to the consumer; based on the information you gave where an artist made only $16.89 and their song was played hundreds of thousands of times I feel it is unfair to the artists producing music. They put in hours of work and thousands of dollars to produce a single song with an extremely small pay off, unless you’re Beyonce of course and a single song would make you millions of dollars. For the small time artists the market puts them at an unfair advantage and I think that Pandora should give them money if they want to play the artists songs or increase the fee on consumers.
ReplyDeleteIt's funny how I was actually listening to Pandora as I read this. These facts were really interesting about how music streaming sites can ripoff performers. But I believe this only affects a small portion of artists. Many artists' main means of income comes from concerts, tours, and promotions on TV commercials. Although artists may not get paid as much as they should when their song is on Pandora or Spotify, that's not their only means of income. Also, I would have to agree with John Selfors in that when consumers are listening to artists on these websites, they're being heckled with advertisements after every song.
ReplyDeleteI agree that the cost to the 'unknown' artists is pretty high in terms of revenue from streaming sites, we all seem to be forgetting some of the major opportunity benefits that artists can get from allowing their music to be streamed for free. For instance, one is much more likely to come across the music of an artist they've never heard of before on a free streaming site, and MUCH more likely to listen to it when they don't have to pay first. I've come across some of my favorite bands that no one's heard of by just browsing YouTube. (Seriously, look up Five Iron Frenzy, they're awesome). If lesser known artists charged for their music, they'd miss out on a ton of free exposure, without which they'd have a lot less fans to buy their music in the first place, or buy tickets to a concert, or t-shirts, or spread the word that this artist exists. (Like I just did, haha.) There are actually plenty of artists who are now rich and famous because their music was streamed for free on the internet. Justin Bieber was one of them. So was Carly Rae Jepsen, who wrote Call Me Maybe. And Soulja Boy, who was one of the highest earning hip hop artists in 2010, having made $7 million. I'd say that's a pretty good profit for a song that anyone could have just gone to YouTube and listened to, since that's where Crank That was originally published. No one would have ever heard of any of these people or any of their songs if people didn't have free and unlimited access to them on the internet. So I'd say that whatever opportunity cost free music streaming has for artists money-wise is pretty well balanced out by the opportunity benefits that it gives them exposure-wise.
ReplyDeleteThat is quite interesting considering I listen to Spotify almost everyday. It is how I listen to most of my music and I thought that the artist was paid more for what people listened to than just that small amount they are actually making. Musicians should get paid for the music they create and this can be done through actually purchasing the song instead of streaming it. Yet if companies gave the artist more money for trading, would the cost of using the app go up for the consumer? Cause then maybe consumers would diminish.
ReplyDeleteIt is amazing how they get paid so little for what they do. It really puts the profession of being a celebrity superstar into a real idea. With all the new technology, there is no CDs or anything of that nature to be sold as albums for them to make money as well. There only ways of making money have been cheated because people give it out basically for free on Pandora. They put in so much work and time to not be paid what they deserve. Putting myself in the shoes of a singer, which I am not, I would hate it and try to find a way to make a lot more money. Considering i listen to Pandora everyday, I am one of the lucky people basically stealing music from these such talented singers and songwriters.
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