We Create Music Blog
January 17, 2013

What Music Creators Should Know About Streaming Royalties

Music Cloud

When Spotify stopped offering European users the option of paying to download music in early January, it came as another piece of evidence of a sea change that many have predicted for a long time: music is migrating to the cloud. Over the past two years, we've seen a four-fold increase in streaming music subscriptions in the US.

The ability to stream any piece of music at any time is of course great for consumers. But as we usher in new technologies, we have to think about the way they affect the songwriters and composers that make those technologies possible. As noted entertainment attorney Don Passman recently told us, "Advertising dollars are migrating online in a big way, which means traditional media is earning less, and they're squeezing down the public performance license fees. Digital isn't yet making up the difference."

Tackling that problem will involve more than just bumping up the advertising rates for subscription music services. It means addressing major inequities in the way that rights holders are paid when their music is streamed. We also need to stop streaming services' deliberate efforts to lower the rates they pay to music creators. Things to keep in mind:

  • Major streaming services pay a far greater percentage of revenues to SoundExchange (which pays streaming performance royalties to artists and master owners) than to ASCAP and other PROs (who pay songwriters, composers and publishers), by a factor of 12 to 1.
  • Undervaluing songwriters, composers and publishers in streaming royalty rates runs contrary to global practice.
  • The H.R. 6480 or "Internet Radio Fairness Act," backed by Pandora and other tech giants, tried to minimize payments for streams for artists/labels. It also ignored how music writers and publishers are paid altogether. Last year, ASCAP and other songwriter organizations protested in a letter to Congress. Our allies in Congress acknowledged our concerns in a subsequent hearing. However, we anticipate a new bill being introduced by this year's Congress and the debate will continue.

The music industry is in transition. It's an exciting time, but ASCAP members can't stand on the sidelines while revenue streams you've counted on for decades are gradually eroded. Being an ASCAP member is a great first step - the collective power of 450,000 ASCAP members and their music is a huge advantage when we make our case, in the courts and on Capitol Hill.

But ensuring that streaming rates are fair for music creators also involves individual action. Stay vigilant. Voice your concerns to your congressional representative. Pay attention to the copyright developments in Congress, and keep up on how streaming business models develop. The only way to keep your livelihood is to help us protect your livelihood.

Here are a few ways to stay in the loop:

  • Click here to sign up for more information on how you can help with our grassroots initiatives.
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  • Visit our Advocacy/Legislation page to find out how all the action in Washington can affect you.