Radio Stations Have Never Paid Performers in the U.S.
J Thoendell stashed this in Music
More info on music business economics in article.
Step 1. Lowery and his royalty reports clearly state he only owns 40% of the songwriting. As he says, this means the total fee to the songwriters was $16.89 x 2.5, or $42.23.
Step 2. Songwriters actually only get about 43.5% of the songwriting/publishing rights. The publisher and the songwriters split the fee 50/50 after the rights administrator’s (BMI in this case) operating expenses, which appears to be about 13%. So the full songwriting/publishing fee was in fact about $97.
Step 3. Pandora also pays a separate royalty for the performance itself, distinct from the songwriting. In 2012, that royalty was $0.0011 per streamed song.2 For 1,159,000 plays, that works out to a total performance royalty of $1,274.90.
After the administrator SoundExchange takes its fee of 5.3%, the performance royalty is split, with 50% going to the recording owner (i.e. record company), 45% to the band/performer, and 5% to any session/backup musicians. So the band in this case received $543.30 for their performance.
Conclusion. By this math:
- Pandora paid a total of about $1,370.
- The band received a total of about $585.
- If Lowery received 40% of the performance royalty, “all he got" for the 1 million plays was in fact around$234.
Even more importantly, FM/AM paid him NOTHING for the performance of the song. Unlike most industrialized nations, terrestrial radio stations in the US have never paid performers anything.4 It’s hard to believe, but true: they can play John Coltrane’s version of “My Favorite Things" for decades and never pay him or his estate a single cent.
Lowery doesn’t disclose the Pandora performance royalty but he declares it “unsustainable."5 This is a fascinating perspective: apparently in Lowery’s view a performance royalty of $1,275 is unsustainable but the AM/FM world of $0 is totally fine?
AM/FM radio royalty payments are contractually capped at just 1.5% of revenues, meaning a measly 0.7% of radio revenues go to the actual songwriters – and 0% to performers.6 Pandora would indeed love to get down to those much lower rates that competitors like iHeartRadio already get to pay because they’re owned by a terrestrial radio conglomerate. Strongly implying that Pandora’s royalty rates are already far worse than AM/FM seems just plain misguided.
Hardly seems worth it....
I tried finding a youtube of this but couldn't. But it's somehow relevant.
Jim is later in the studio trying to record "Touch Me" for the Soft Parade album. Their producer, Paul Rothschild, tells Jim that his life of excess is affecting his performance and that Janis Joplin suffered the same fate and died of alcoholism. On a small television in the studio, Jim sees a commercial for a car that features a pop version of "Light My Fire." The band tells him that they decided to sell the song to the auto company during a time when Jim was in minimal contact with them. Jim becomes infuriated and hurls the TV across the room, nearly hitting Ray, and then cheerfully apologizing.