Internet Streaming Radio and Play Counts

At first glance, it appears that the online streaming music services like Pandora and Spotify, despite being very popular, are not paying artists that produce the music they play very much. Pandora isn’t available in Germany. Spotify is and it’s awesome. I hope that artists are getting a fair deal. It certainly seems better than Napster or BitTorrent clients.

Dave Lowery is annoyed by Pandora because one of his songs was played a million times and he got only $16.89 (or about $1 paid out for 59,000 listens). On the other hand, 179 plays on XM Sirius radio garnered him $181, which sounds much better. YouTube paid him a similar pittance, which no-one seems to mention, whereas from what I can see Spotify paid him about 10-fold higher rate. The same song was played about 15,000 times on commercial radio, for which he got about $1400 dollars, which sounds great. As a reference, a highly played song on Spotify gets ~50 million plays a month (e.g. Daft Punk’s “Get Lucky (Radio Edit)”) , or about a 150-fold higher rate of plays than “Low”.

These pay rates seem wildly different, and make it look like streaming music services are rapacious, but it’s important to compare them properly. How many people heard the song in each instance? Plays on streaming radio are per user. On radio (satellite or otherwise), they are not. We need to multiply by the audience for each play to compare them fairly.

What is the average audience for each play on XM Sirius? 40,000? Might be, it’s across the entire US. I don’t know. Sirius has 24 million subscribers. Perhaps each subscriber listens three hours a day, and they have 135 stations, than would be 22,000 listeners at a given time. It’s not known how many listeners listen to music, and how many to talk. Sirius is also available on the Dish Satellite TV network, which might bring in a few thousand listeners. Anyway, 25k listens per play on Sirius would be equivalent to 4 million total user listens on Pandora (or about $1 paid out for 25,000 listens).

What is the average audience each time a song is played on a commercial radio station? Most of these are local, so, for a wild guess – 5,000?  That would mean 15,000 commercial AM/FM radio plays would be worth 75 million listens on demand (or $1 paid out for 53000 listens).

Put another way, the pay rates are similar in each case to that for Pandora. It just looks like robbery because the per listener play count provided by Pandora is a much bigger number, and more accurately reports the true audience. Pandora could also probably tell him how many times people skipped the song too, but he might not want to know that. Of course, my audience guesses could be way off, but probably only at the low end.

In the end, it doesn’t seem that unfair – the different payouts reflect the different audience splits for a given artist. Or did I miss something?

Original story from Daring Fireball

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