Subscription Radio - Radio Week


photo by Michael Kooiman

Even in the age of Internet radio and virtual downloads, the war between artist and salesman wages on, in brand new forms and with more secretive weaponry. First, big labels were the enemy, blamed for taking too much money from artists and using their music to profit more. Now, digital services like Spotify, Rdio, and Rhapsody are taking a hit for undercutting artists as well, but how do they really make their pay outs? How could a subscription-based platform that is largely dominated by free users possibly benefit the artist?

It seems everyone would like to know the answer to this question, from Rolling Stone to Wired Magazine, and it may be even more pressing now that mainstream music royalty Coldplay and Adele have decided not to release their new CDs on Spotify. It’s a bold move on their part, and considering the apparent success of both these albums, perhaps more artists should look into whether they’re actually profiting from these partnerships or not.

Not that these companies aren’t great and don’t help music at all, because they certainly do. It’s fairly well understood that the music industry is not likely to return to the booming economy it felt in the ‘70s and ‘80s, but there is a way to harness music fans attention- and money- through these new avenues. Spokespeople from Spotify and Rdio defend their model by pointing out that they pay the record labels and rights holders whatever they’re owed and from there, payment to the artist is out of their hands.

But how much actually leaves their hands? How much do artists get? And, how does it compare to more traditional ways of distributing your music.? Digital Music News did a quick breakdown of an artists pay books, specifically a band called Uniform Motion who released their earnings for assessment. Spotify paid them $.04 per album, eMusic gave $2.60, a direct download was $3.09, buying the physical CD earned $5.93, and a sale on iTunes would garner them $8.59. Those numbers only become profit once they pay off the production costs of the CD and all the middlemen it took to get it to these platforms.

A representative from RightsFlow, a licensing and royalty service provider, explained that while these subscription radio stations may not be getting much money to the musicians, they are simply following the licensing and copyright laws. “We’ve all seen how the business has changed,” he said in an email, “selling CDs for 15 bucks to .99 cents a track, but hopefully this will be many more pennies adding up to real money. Everyone is figuring out how to maximize in the new industry.”

In Rolling Stone’s much closer look at how these payouts are breaking down, artists get dramatically less than the label or platform, except in the subscription radio field. Even the most knowledgeable experts in the online marketplace do not understand how it balances out, or how they make profit at all, and many artists like Coldplay and Adele do not believe it’s worth their time.

Ultimately, it takes organizations like RightsFlow to ensure that everyone is being paid according to law and contract, even when that means defending the big guys. Any artists could reinterpret the low income generating sales from these platforms as bringing in listeners and potential fans for the future, but thanks to the confidence of major artists, there may be another revolution in online music listening right around the corner.