A few days ago, Aloe Blacc wrote an opinion piece in Wired. I love the subject, I'm a big fan of Aloe, and a big fan of Wired. It was passionate, well written, calls out an important problem in the music industry, and it was also factually incorrect.
Don't get me wrong, I love his music, I understand his hustle, and I know the pain he is feeling is real. It's just misdirected and that pains me because I'd desperately love for him and everyone else to have good information so that they can make good decisions in their careers.
I read this story, then dug through some numbers. Aloe is not my beef here, math is my beef.
First, the title of the article promises to tell us why "Streaming Services Need to Pay Fairly", but then it only presents numbers for Pandora, which is licensed and pays royalties like a radio station, not a streaming service.
Ok, that's fine. Wired went with a sensational headline. But, the point is that Pandora pays less than everyone else, right? It's a little murky, but it seems like normal radio stations pay 1.7% of their total revenue to songwriters and pandora pays 1.85%.
Higher? That's interesting, but they must pay less per listen. Well, if you dig into estimates of listening hours and revenue for both total US radio ($18.2B for 226B hours per year) and pandora ($892M for 18B hours per year) and factor in the above rates to come up with dollars paid per hour of music listened to, you see it's only by a little bit:
Radio pays $0.00013 in royalties per song, while Pandora pays $0.00009 in royalties per song.
(there's a margin of error here because I'm using estimates from various years and data sources on the web, so with the data I used these are essentially the same. They are inline with Aloe's own numbers and another estimation I link to below).
But wait, 168 MILLION streams is a REALLY big number!!
Well, how many streams are equal to one radio spin (since each spin is heard by a bunch of people and each pandora stream is private)? I didn't know either, so I looked. It seems for big pop artists, it's a little over 6000 listens/spin in the US. This means pandora paid $12,359 for 28,000 "spins" of this song.
Well.. that's still a lot of spins, right? It is, if you're talking about a single week of terrestrial radio play. But Aloe says the song got 168M listens in all weeks combined. This same song's best week alone had 32,632 spins (202M listens) on normal radio. Taylor Swift's (who Aloe references) "Shake it off" got 29,699 radio spins (177M listens) this week.
Here are my conclusions.
1) This article nails the symptoms, but misdiagnoses the cause. If anything it should be titled "Radio needs to pay songwriters fairly". I'm not saying there's not a problem, but there's no new problem. By all means get the pitch forks, just storm the right castle.
2) People get sweaty palms over big numbers. 1 spin = 6000 listens is a good number to keep in your pocket so we don't get confused again in the future (I didn't know it until I looked just now).
3) Pandora listen numbers are much lower than radio for the same track (I suspect this is the same for youtube vs tv). One obvious reason is that Pandora has 9% radio market share (which means that radio is 11x bigger still).
Another is that the total number of songs consumed on pandora is vastly higher than broadcast media. Instead of 15 songs per genre in rotation, people have a choice and they take it. The big songs are still in the heaviest rotation, they just aren't as big of spikes as they are in controlled broadcast media. Based on the numbers above for this one song (21 weeks in the top ten of the Billboard Hot 100), perhaps this is another factor of 2x or 3x for big songs.
This may be cold comfort for Taylor Swift, Avicii, and Aloe, but their loss benefits smaller artists whose songs get played between the hits. When you're small your small listens might only add up to $4 a month, but it's not about money at that point, it's about the opportunity to be noticed by people who only showed up to listen to the hits in the first place.
In the end, I'm with Aloe on this one. Why shouldn't radio pay more to songwriters? Pandora wants to lower their cut, why not raise theirs and radio's? The labels have regarded radio as a promotional loss leading for decades because they make money off of selling recordings. Here it is continuing into digital radio. Same symptoms, same cause.
I focused on Pandora, and didn't get into the Spotify side, but neither did Aloe. So perhaps that's for another day.
Here is the original article: Aloe Blacc: Streaming Services Need to Pay Songwriters Fairly
Co-Founder, Zoo Labs