Not Created Equal: An Honest Conversation about Pandora and Music Streaming Royalties

Since going viral, a lot of you have seen the now-infamous Huffington Post article about my good friend and label-mate Blake Morgan very publicly calling out Pandora’s founder Tim Westergren for their unfair and unbalanced musical artist royalty rates.

Because I run my own artist-controlled record label (Hook & Ladder Records) through ECR Music Group, I’ve had a number of musicians ask me—what are the differences between the different kinds of royalties? ASCAP, BMI, SoundExchange . . . it’s confusing, right? Allow me to explain it here, and also shed some light on why Pandora is lobbying Congress to exterminate the SoundExchange music royalty.

SoundExchange. SoundExchange is an non-profit organization that collects “artist” or “performer” royalties on behalf of musicians for the fair use of their recorded work.

PROs. Performance Royalty Organizations (PROs), including BMI and ASCAP, are organizations that collect royalties for the compositions themselves. If you write a song and someone else records it, ASCAP or BMI would still collect royalties for you as one of the “owners” or “shareholders” of the intellectual property that is the song itself in any form.

The Huffington post piece reports that Blake got $1.62 over a three-month period for 27,900 plays on Pandora. This is for the composition—which means Blake got paid $0.00005806 every time Pandora used one of his songs during that period. Outrageous.

So is that “other” SoundExchange performer royalty massive and burdensome for Pandora?

I see similar numbers as the ones Blake reported at my own label, and for an artist getting 25,000 to 30,000 plays on Pandora in a fiscal quarter, I consistently see them net an extra $3 to $4 dollars per quarter—ONLY, that extra comes from Pandora through SoundExchange on behalf of the recording.

So under the best circumstances, Blake might get a whopping $5.62 per quarter for nearly 28,000 plays . . . roughly what a busboy makes in an hour.

And don’t forget . . . if Pandora gets its way in Congress, he won’t get that at all. You know, because obviously, it’s way, way too much.

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