Why I Support Spotify And Streaming Services And You Should Too

For the past several months I’ve been watching and participating in the “Spotify” debate and have been saddened and annoyed by all the anti-streaming rhetoric and misinformation. As a lifelong independent artist & musician I am completely in favor of Spotify and its brethren. Here’s the arguments and why I support streaming and why you should, too.

Streaming Cannibalizes Sales

One argument posits that by having your music available on a streaming service like Spotify, Last.fm or Pandora people won’t buy your album. The services, by nature, encourage exploration and introduce millions of people to music they normally would not be exposed — in many cases complete with links to the artist website, links to purchase, and artist information. For an independent, with the doors to commercial radio firmly shut, this is gold. This is where the active listener is. And for us independents this does translate into sales. It’s not one-to-one, but sales are generated and fans are made.

I’ll admit that having your entire album available for streaming on a service with a model similar to Netflix isn’t smart. And yes, maybe the casual listener won’t buy your record, but the fan will. The casual listener wasn’t going to buy the album anyway. And, it’s your fault for putting the whole thing out there. Give that type of service a couple of tracks and make the listen buy the rest.

Streaming Royalties Don’t Pay As Much As iTunes Royalties

Yup. You got. Streaming pays less. They’re a completely different thing. Let me break it down real simple.

Streaming = radio = performance.
iTunes = sale = mechanicals.

Got it? It’s that simple. I don’t understand why people don’t get this, or refuse to get this. Performance royalties are paid out of a huge pool of money distributed to a huge number of songwriters and publishers based on some magical algorithm. Mechanical royalties are a fixed rate you negotiate with your record label. If you are on a label or are with a publisher, they each take a cut off the top, making the payout smaller. I’m an independent that owns and controls my own masters and publishing, along with my independent band mates and songwriting partners. We get 100% of performance royalties to split amongst ourselves, and 100% of mechanicals to split amongst ourselves. This is good for us.

Streaming Doesn’t Pay Fair Royalties

This is again because people are mistaking a performance of a song with a sale of a song. Let’s assume I’ve cleared that up in the previous section and you understand the difference. Let’s look at the royalties comparing streaming to so-called terrestrial radio.

As an independent, I love streaming royalties. They are simple. Each streaming service counts the exact number of times your song was played and applies the magic algorithm to determine how much is owed to you and provides this to the performing rights organizations (in this case SoundExchange). SoundExchange collects the licensing fee and the data from each service, takes a small administrative fee, and pays you the rest.

Radio works much differently. I hate radio royalties. They could be so simple, but they aren’t. Each radio station counts the exact number of times your song was played on the radio and provides this to the performing rights organization (in this case ASCAP, BMI, OR SEASAC). The PRO collects the licensing fee and the data. They then pick a sample period (typically 2 weeks) from each quarter and count only the songs played during that time. If you’re outside the sample period you’re out of luck. The PRO then applies the magic algorithm and if your song was playing in any of the sample periods you’ll get paid your royalty. (BTW-this is often true for TV, too.)

I’ve had songs from over a dozen releases played on commercial and college radio all over the States, some of which have made CMJ, Gavin and Hits! charts and have never received a single royalty payment from radio. Since the advent of streaming I’ve had songs from less than a dozen releases played on a dozen streaming services and I get paid royalties.

Radio has, and provides the data, but the PROs that support radio refuses to modernize. Sampling made sense when everything was done by hand. But not any more, it’s all digital, and the PRO that supports streaming, supports this and does pay fairly.