Tag: Streaming royalties

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Soundcloud Announces ‘Fan-Powered Friday,’ Shares Stunning Payout Data

Soundcloud royalties

In a time when everyone is arguing over streaming royalties, Soundcloud offers a forward-thinking solution that fans and artists love.

The problem with music is not the access that streaming allows but the deals made by those controlling streaming to minimize what they pay artists. For example, you give Spotify $10 a month to stream as much music as possible. Spotify, in turn, takes that $10 and takes a cut for themselves before dividing the remaining money between every artist you stream, right?

Wrong.

Calculating streaming royalties is no easy feat. Each platform has a specific formula, and no two systems are alike. Spotify may pay $0.004 per stream one day but $0.006 another, and there is no way to know which day has what rate until they’re already underway.

But Soundcloud has a different approach. Starting in 2021, Soundcloud began using a fan-powered method for calculating music streaming royalties. Whenever someone pays Soundcloud for streaming, that money is divided among the artists that person listens to during their subscription period. In other words, if you give Soundcloud $10 a month and only listen to two artists, each artist gets half of your total subscription.

To celebrate one year of their fan-powered platform, SoundCloud is launching ‘Fan-Powered Friday – a one-day event on Friday, April 29th that invites fans to stream music from their favorite independent artists all day long, and SoundCloud will double the artist’s payout — matching 100% of the revenue earned that day. 

Think about that for a second. Soundcloud will match every cent earned by artists on its platform this Friday, April 29. Such an undertaking would be crazy for any label to attempt, let alone a streaming service boasting thousands of artists. Nothing like this has been attempted at such scale previously, except for Bandcamp Fridays, and even that isn’t a far comparison.

In addition to announcing Fan-Powered Friday, Soundcloud shared several data insights from the first year of their new royalties system:

  • On average, independent artists earn 60% more through Fan-Powered Royalties v. the traditional pro-rata model 
  • Communities are feeling the love from fans: artists from scenes like Tribal House and Neo-Soul, and the collective Soulection, earned 2X more 
  • Fans are making an impact by supporting the artists they love: there was a 97% increase in fans contributing more than $5 to a single artist 
  • Fan-Powered Royalties contributed to the growth of the number of independent artists monetizing on SoundCloud by 30% (March 2021-present)

What remains to be seen is whether or not another streaming service will follow Soundcloud’s lead and offer fan-powered royalties. Send us a tweet and let us know your thoughts.

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How The Pocket Gods Fought Streaming Royalties And Won [Video]

A clever marketing decision from UK rock band The Pocket Gods has launched the group into the global music spotlight and brought much-needed attention to concerns over streaming royalties.

Spotify finds itself in a lot of hot water right now. The streaming giant is currently embroiled in a battle over misinformation and free speech centered around controversial podcast host Joe Rogan that has, to date, involved multiple rock legends and even earned a response from the White House. In addition to this, the Daniel Ek founded platform is battling several protests from artists worldwide concerned over the minuscule royalty rate offered by Spotify. While Joe Rogan earns $100million, musicians earn roughly $0.004 per stream before splitting that money with their team.

Longtime Haulix clients The Pocket Gods have developed a unique solution to their problems with Spotify. The English rock band is currently making headlines with plans to record and release a 1,000 track album comprised entirely of 30-second songs. The tracks are long enough to be counted as legitimate streams by Spotify but run much shorter than the average song.

The Pocket Gods were inspired to attempt this undertaking after reading an article in The Independent from professor Mike Errico. He said that Spotify’s methods surrounding what constitutes a song—otherwise known as their decision to count plays after 30-seconds—could signal the end of the three-minute pop song.

“I saw the article, and it made me think, ‘Why write longer songs when we get paid little enough for just 30 seconds?’” The Pocket Gods frontman Mark Christopher Lee told i News.

The new album – ‘1000×30 – Nobody Makes Money Anymore’ – directly references Spotify’s business model, and as such, Lee says that it means the band “run the risk of being thrown off the platform.”

Of the process of writing the album, he added: “We wrote and recorded 1,000 songs, each a shade over 30 seconds long for the album. The longest is 36 seconds. It is designed to raise awareness about the campaign for fair royalty rates.”

The logic behind Errico’s original story and The Pocket Gods’ new material is sound. If an artist stands to make the same amount of money for a 30-second song as they do from one that runs several minutes in length, then what is the value proposition of making longer songs? When it takes the same amount of time to consume one modern pop song in full as it does to hear 4-6 tracks of The Pocket Gods’ record, any artist hoping to make money will see the value in writing shorter material.

“Spotify is a great musical resource, and it allows indie bands like us to upload our music without record companies,” the frontman added. “I also believe in free speech even though I’m a massive Neil Young fan, so I don’t support the boycott. We just want to raise awareness of the royalties issue.”

This week, Music Biz host James Shotwell connected with Pocket Gods’ Mark Christopher Lee for a quick chat about the album, the response, and where the band goes from here. Check it out:

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3 Major Record Labels Now Earn $2.56 Million Every Hour

Despite the global pandemic, the three biggest record labels on Earth are still generating serious revenue in 2021.

A new report from MBW finds UMG, Sony, and WMG on course for one of the most lucrative years in music industry history. After reviewing the Q2 financials of each of the three major music companies, the leading industry platform found each label in an impressive growth period. Combined, the recorded music arms of the three major music companies generated $4.63 billion in the three months to end of June – up by an incredible 40.1% (or +$1.32 billion) on the same period of 2020. When you add global publishing revenues to recorded music revenues at UMG, SMG, and WMG, the three majors generated $5.60 billion in calendar Q2 2021, up by $1.53 billion (or +37.6%) on the same period of last year

That $5.60 billion turnover equates to the three majors cumulatively generating $61.5 million per day in the year’s second quarter – or, in turn, $2.56 million every hour.

Based on the current numbers, UMG, SMG, and WMG should finish the year generating more than $20 billion. That’s still a few billion short of the industry’s early 2000s high, but it’s closer than any other year this decade.

To put this figure further into perspective, a recent review of royalty rates from leading streaming services finds that independent solo musicians need at least 101,000 monthly streams to earn the equivalent to the minimum wage in the United States ($1256.67 per month). That number is much larger for a group featuring four or five members. It’s even larger when you have to account for label cuts, management cuts, etc.

When considering how many artists complain about their income level compared to the money music generates, one inevitably asks: Where does all this money go?

The answers are endless and (mostly) obvious. There are staffing costs, taxes, office costs, travel, promotion, and so on. It costs a lot of money to be among the biggest entertainment companies on the planet, and as rapper T-Pain revealed earlier this year, many people don’t realize how much labels spend to break and support talent.

Not found in the MBW report is any information on what portion of the money generated by these record labels will reach the artists on their roster.

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How TikTok Royalties Are Calculated

TikTok is the premiere music discovery platform on the planet, but how are artists making money?

Exposure doesn’t pay the bills. As much as musicians enjoy any promotion they receive from a site or platform, money talks. Money makes the world go round, and it plays a role in the music business. It seems every other conversation in entertainment these days involves streaming royalties or a lack thereof. But what about TikTok royalties? The social media giant welcomes over 100-million users every month, most of whom spend hours on the app watching videos that include sound. Do artists get paid? If so, how?

For starters, yes, TikTok does pay artists for use of their music.

In comparison to other major platforms such as Spotify who pay per total number of streams, TikTok operates differently when calculating royalties and bases calculations on the number of videos made using your music, as opposed to the number of times the video is watched. That can often become confusing if you are measuring the way royalties are worked out against othersservices, so it’s important to understand the main difference here is that big view counts don’t equal large royalty payments.

To put it another way, the quantity of videos matters more than the total view count. One hundred videos with no views using a specific sound will generate more money than a single video with one million views. The views don’t matter.

TikTok royalties are based on market shares rather than metric views. To calculate the market shares, TikTok uses what is called “a creation.” A creation is when a user selects a release from TikTok’s library to make a video. Users can then make their own creations inspired by existing creations, all amounting to new creations. So, to put this simply, every time a user decides to use your music to make a video, this generates royalty.

And how much is a video worth? According to estimates online, TikTok royalties were close to $0.0067 per video using your music in 2018 and moved to $0.030 per video in June 2019. Based on these figures, ten thousand uses of this music would generate approximately $300.

Of course, this information is likely to change, TikTok is an evolving platform, and the conversation around royalties is unending. The company could easily choose to approach artist payments from a different position or price point overnight. When they do, we’ll cover it, so make sure you’re following Haulix on Facebook and Twitter.

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Sony Music Stuns Industry, Writes Off Unrecouped Balances For Heritage Catalog Artists

Sony Music is the first major label to forgive unrecouped advances for heritage artists publicly, and the industry will likely follow its lead.

It sounds crazy to anyone outside of the entertainment industry, but there are musicians walking the Earth in 2021 who have never seen a penny of their streaming royalties due to unrecouped advances from two decades prior. Many artists with deals prior to 2000 have fought for years to see streaming revenue for their major label releases, but labels have been slow to act. Instead, many consider any revenue generated from new mediums of consumption as payment toward outstanding advances from when that artist’s material was originally released. You may have a thirty-three year old album that never put a dime in your pocket because the advance was never repaid, and until this week, every label seemed okay with taking what they felt was owed to them.

In a letter sent to thousands of artists today and obtained by MBW, Sony Music Entertainment (SME) has announced the launch of a new initiative called “Artists Forward”, which it says focuses on “prioritizing transparency with creators in all aspects of their development”.

SME’s landmark new policy under “Artists Forward” is called the Legacy Unrecouped Balance Program. The letter confirms: “As part of our continuing focus on developing new financial opportunities for creators, we will no longer apply existing unrecouped balances to artist and participant earnings generated on or after January 1, 2021 for eligible artists and participants globally who signed to SME prior to the year 2000 and have not received an advance from the year 2000 forward.

“Through this program, we are not modifying existing contracts, but choosing to pay through on existing unrecouped balances to increase the ability of those who qualify to receive more money from uses of their music.”

To put this in simpler terms, Sony is writing off any outstanding balance for catalog artists with the label before 2000. That action means that those artists will now receive a cut of all streaming revenue from their material. It also means that they will be applicable to receive money from any future revenue streams.

Music has a long history of record companies taking advantage of artists. Our industry needs musicians, and yet, we treat them as second-class citizens. We act like they should be grateful for the opportunity to perform rather than being happy they chose us to work their release. The latest action by Sony shows that trend may finally be changing, and we hope others do the same.

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Spotify Will Not Offer Penny Per Stream Royalties To Artists

Following massive global protests at the company’s many offices, Spotify has responded to demands that they make a significant increase to their per-stream royalty payments.

Artists everywhere rely on streaming revenue to pay their bills. That is more true now than at any other point in time. With touring still on hold for most of the world, streaming revenue makes up the bulk share of an artist’s earnings from recorded music. Demand for higher royalty rates will probably always exist, but recently, one such demand actually received a response from the leading music streaming service.

In March, the Union of Musicians and Allied Workers (UMAW) organized the protests for higher royalty rates and additional transparency, including a demonstration outside of Spotify’s World Trade Center offices. Many individuals turned up at the latter event, photos and footage show, with the vast majority of the participants appearing to have either played an instrument or carried a sign.

Among the many demands being made, the loudest and most widely shared is a drastic increase in per-stream royalty payments. The current model offers musicians roughly $0.004 per stream, which many believe is too low. Artists present at the protest want that rate raised to $0.01 per stream. It’s a rate anyone can understand, but it would mean a significant hit to the streaming giant’s revenue.

In a response to UMAW, Spotify denied the request. 

The UMAW detailed the company’s formal follow-up in a lengthy chain of tweets, indicating first: “Spotify has issued a response attempting to address some of our demands. We are pleased that Spotify has recognized the legitimacy of UMAW and the artists around the world who are demanding better payment and treatment.

The union’s response continues: “However, Spotify has failed to meet any of our demands. The company consistently deflects blame onto others for systems it has itself built, and from which it has created its nearly $70 billion valuations.”

Spotify also responded with the launch of a new site aimed at increasing transparency. That site — Loud And Clear — provides insights into how the company works and how many artists earn a livable wage through the platform. 

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Soundcloud Introduces ‘Fan-Powered Royalties’ Plan To Pay Artists More Fairly

Soundcloud is onto something revolutionary in the world of streaming: Give listeners’ money to the artists they listen to and not those they don’t.

Calculating the amount of money an artist is likely to earn from streaming is far more complicated than most would assume. No service, including Spotify and Soundcloud, pays based on stream counts alone, and none offer a consistent royalty rate per stream.

Generally speaking, subscriber money is traditionally placed into a large pool that streaming services then pay to artists by comparing their streams for a month to the total streams on the platform.

Here’s an example: If Taylor Swift gets 5% of all streams on Spotify in June, she and her label will get 5% of your monthly subscription fee, even if you never listened to one of her songs.

Soundcloud has a plan to change this, and it begins with fans.

According to an announcement made on Tuesday, March 2, Soundcloud will soon begin using what it calls a “fan-powered royalty” system to compensate artists on its platform.

Under the new model, if a user paying $10 a month only listens to five artists, those five artists will get an equal split of that $10 — after SoundCloud takes its cut — no matter how many times the user listens to each of them.  

Users paying to support the artists they listen to instead of every artist on a platform may sound like an obvious notion. However, Soundcloud is the first mainstream streaming service to attempt such an effort. Others may follow suit in time, but it seems unlikely to happen unless artists and labels work together to push for change.

Soundcloud’s “fan-powered royalty” system goes into effect on April 1.

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Calculating Spotify’s Per Stream Payout is Harder Than You Think

The most popular streaming service on the planet has a bad reputation when it comes to paying artists, and the math speaks for itself.

No one denies the need for artists to make a livable wage. If the COVID-19 pandemic has taught us anything, it’s that musicians cannot rely on tour revenue to stay afloat. Fans are often encouraged to buy music because it helps more than streaming, but who amongst us listens to physical media regularly? Opening Spotify on our phone or computer is easy, and more often than not, the easiest method of consumption is the one consumers prefer.

The per stream royalty rate at Spotify is mystery. Visit ten websites claiming to know the exact amount offered to musicians and you’re likely to find ten different answers, each more worrisome than the last. The reason for the confusion is in the math.

Spotify does not pay a flat rate per stream. Major labels and artists in a position to negotiate may get one price, but people using distribution platforms-which accounts for the vast majority of musicians on the platform-get another. The streaming company also factors in the total amount of plays on the platform in a specific timeframe against how many streams an artist receives during that time. So getting 100 plays in Q1 of 2020 could easily prove more or less valuable than 100 plays in Q2.

The two biggest factors, however, are listener type and location? Streams from premium users pay more than streams from listeners using the platform’s ad-supported tier. For example, streams from the United States pay more than streams from India because subscription rates and advertising levels are comparatively higher in the U.S.

Of course, Spotify doesn’t offer data related to the rates in each region or how payouts for streams from premium users compare to payouts from those using the ad-support free tier. Musicians, labels, and industry analysts often say they should, but Spotify has no reason to do so unless forced.

After gaining access to streaming payouts from multiple indie artists over the last six months, we’ve found that Spotify is paying, on average, between $.003 and $.005 (one-third of a penny to one-half of a penny) for each stream. Again, that number is likely higher for artists on major labels and other industry companies who have unique deals with the streaming giant. In some cases, that number could be much smaller. For example, premium subscribers from Indonesia pay roughly $3.51 per month for the service, so streams from that region earn less for musicians than streams from Denmark (where people spend more than $14 per month).

To put that figure into perspective, let’s consider that the minimum wage in the United States is defined at the federal level as being $7.25 an hour, which amounts to an annual salary of $15,080.40 when based on a full-time, 40-hour workweek. With an average payout of $0.004 per stream, solo artists need 3,770,100 Spotify streams to earn that amount. That figure is much higher for groups, especially when you factor in label splits, songwriter payouts, and management cuts.

The question now is what can we do? Streaming is here to stay, and even though growth may be slowing in certain regions, the fact remains that we now live in a digital world of on-demand listening that won’t be reverting to physical media consumption for anything less than an act of God.

Artists wishing for better pay need to band together. Not just on a national level, but internationally as well. The problem with streaming royalties effects musicians from all walks of life in every style of music. Just 10% of artists account for more than 3/4 of the total payouts, which means most creatives are earning next to nothing. That cannot continue, or at least, it should not. But who will be the first to take a stand, and what will make corporations like Spotify listen?

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How Coronavirus Is Changing Music Consumption [Video]

With every artist unable to tour for the foreseeable future due to coronavirus concerns, all eyes are on music streaming and the revenue it (hopefully) produces.

Coronavirus has left countless musicians off the road, out of work, and struggling to make ends meet. The dependency on album sales and streaming has never been as high as it is now, but startling data brought to light by Rolling Stone (and other sources) say that music streams are declining.

According to numbers from Alpha Data, the data analytics provider that powers the Rolling Stone Charts, streams in the United States actually fell last week, failing to offset a far more grim downturn in digital and physical album sales.

During the week of March 13 through March 19, the same week most businesses and restaurants were forced to close, streams dropped 7.6 percent, to under 20.1 billion. Programmed streams on services like Pandora dropped 9 percent to just under 3.5 billion, while on-demand streams (audio and video) dropped 7.3 percent to 16.6 billion.

The sales side of music did not far any better. Digital song sales dropped 10.7 percent to 3.9 million, which is the lowest one-week total since Alpha Charts began tracking the sales. Physical album sales plummeted 27.6 percent and digital album sales dropped 12.4 percent. Album sales declining is nothing new, but these changes are closer to jumping off a cliff than rolling down a hill.

What the charts fail to reveal, however, are the likely reasons for these changes. With businesses closed and more people working from home, commutes have temporarily dissipated. The vast majority of listening time for individuals can be attributed to time spent in their cars, but most have nowhere to go right now. People also have limited time to themselves at home, as everyone (spouses, partners, kids) is home together. Finding time to listen to an album in full or even music in general, is difficult.

But fear not! As host James Shotwell explains in the latest episode of Music Biz, there are still reasons to keep hopes high. Some areas of music are thriving in the streaming age, and there remains a huge audience of devoted music fans who are constantly seeking the next song that makes them feel good. Your music may very well end up being the soundtrack to someone’s quarantine, and that possibility is all the reason anyone should need to keep going.

More importantly, the panic and existential dread people feel right now is temporary. As people come to understand and accept our new reality they will once again turn to music. It’s music, not film or television or video games, that offers hope for a better tomorrow. You have a role to play in the recovery, and we are going to be with you every step of the way.

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What are Neighboring Rights and Royalties? [VIDEO]

Neighboring rights and royalties are one of the least understood aspects of the music business in the US, and unfortunately, the reason for that is mostly out of artists’ control.

In today’s music business, knowledge is power. Understanding the various ways people or companies may use your music and how you can earn from their use matters more than ever. Neighboring Rights is a term that relates to the royalties earned from the public performance of a sound recording. The performing artists on the recording and the copyright holder of the master recording are entitled to receive royalties every time it is broadcast on TV, radio, or any other live performance.

In short, neighboring royalties for performing artists and master owners are the same as the performance royalties are for songwriters and publishers.

All that will make sense to some of you, but others probably need a little more insight. We certainly did. Thankfully, our friends at The Modern Musician have a new video that further explores neighboring rights, and the royalties artists can earn through them. Check it out:

Perhaps the most interesting piece of information from the video above is that the US does not recognize neighboring rights. Broadcasters in the United States are exempt from paying license fees to performers and labels when a sound recording plays on terrestrial TV. As a consequence, the US does not have a traditional organization for the collection and distribution of neighboring rights royalties.

But why? Why doesn’t the US have a group responsible for this?

The answer goes back to 1961 and the Rome Convention for the protection of Performers, Producers of Phonograms, and Broadcasting Organizations. Only countries that are signatories to this convention recognize and pay neighboring rights and only performers who are permanent residents of these countries — or if the musical recording was made in one of the countries that signed — are eligible for these royalties. The United States is not a participant.

One consequence of the US decision to not recognize or pay neighboring royalties is that it hurts an artist’s ability to profit. In an era where physical media is declining, and competition for ticket sales is fiercer than ever, artists need as many revenue streams as they can find. Neighboring royalties would not change every performer’s life in a significant way, but it would put more money in their pockets.

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