Streaming Shakes Up Music Industrys Model for Royalties. Late last year, Zoe Keating, an independent musician from Northern California, provided an unusually detailed case in point. In voluminous spreadsheets posted to her Tumblr blog, she revealed the royalties she gets from various services, down to the ten thousandth of a cent. Even for an under the radar artist like Ms. Keating, who describes her style as avant cello, the numbers painted a stark picture of what it is like to be a working musician these days. After her songs had been played more than 1. Pandora over six months, she earned 1,6. On Spotify, 1. 31,0. In certain types of music, like classical or jazz, we are condemning them to poverty if this is going to be the only way people consume music, Ms. Keating said. The way streaming services pay royalties represents a major shift in the economic gears that have been underlying the industry for decades. From 7. 8 r. p. m. Tunes, artists record royalties have been counted as a percentage of a sale price. On a 9. 9 cent download, a typical artist may earn 7 to 1. One industry joke calls the flow of these royalties a river of nickels. In the new economics of streaming music, however, the river of nickels looks more like a torrent of micropennies. Spotify, Pandora and others like them pay fractions of a cent to record companies and publishers each time a song is played, some portion of which goes to performers and songwriters as royalties. Unlike the royalties from a sale, these payments accrue every time a listener clicks on a song, year after year. The question dogging the music industry is whether these micropayments can add up to anything substantial. No artist will be able to survive to be professionals except those who have a significant live business, and thats very few, said Hartwig Masuch, chief executive of BMG Rights Management. Spotify has 2. 0 million users in 1. In a recent interview, Sean Parker, a board member, said he believed Spotify would eventually attract enough subscribers to help return the music industry to its former glory that is, to the days before Mr. Parkers first major enterprise, Napster, came along. I believe that Spotify is the company that will make it succeed, said Mr. Parker, who is also a former president of Facebook. Its the right model if you want to build the pot of money back up to where it was in the late 9. This is the only model thats going to get you there. As the largest music market, the United States has been a critical proving ground for streaming companies, but competition is also quickly spreading globally. Deezer, a French on demand service, has announced plans to be in more than 1. Learn how to Record Music from Napster with Replay Music for PC. Software recommendations and best practices. Like plenty of music fans, Sam Broe jumped at the chance to join Spotify two summers ago, and he hasnt looked back. Spotify, which began streaming music. Bob Seger 15 Songs You Can Stream Now. After long holdout, select tunes from legendary rocker finally available on Spotify and other streaming services. How Streaming Napster Songs Wonu0027tAnd localized streaming services have also sprouted up Anghami, for example, serves listeners in the Middle East, and the Indian music market has Dhingana and Saavn. For the biggest pop stars, hit streams can provide substantial revenue. Last week, a Google executive said in a company earnings call that Psys viral video sensation Gangnam Style had generated 8 million from You. Tube, where it had been watched 1. How Streaming Napster Songs Format' title='How Streaming Napster Songs Format' />Many musicians whose work does not reach the top of the charts, however, are not as sanguine. B S Manke Control System Pdf. Complicating the issue, each type of service pays different rates. Pandoras are set by law. Spotify declined to comment on its rates, but according to a number of music executives who have negotiated with the company, it generally pays 0. The companies behind streaming are ballooning quickly. Pandora, with 6. 7 million regular users, is publicly traded, with a market capitalization of nearly 2 billion, and Spotifys investors have reportedly valued the company at 3 billion. Yet so far they have contributed relatively little to the American recording industrys 7 billion in annual revenue. In its last four reported quarters, Pandora paid 2. Spotify recently announced that it has paid 5. Downloads, by comparison, had 2. Recording Industry Association of America. For those whose income depends on royalties, the biggest concern has been whether streaming cannibalizes CD and download sales by offering a cheap or free alternative. Cliff Burnstein, whose company, Q Prime, manages Metallica and other major acts, said that even if streaming hurts sales, all is not lost as long as the number of paying subscribers continues to climb rapidly. There is a point at which there could be 1. Mr. Burnstein said. We calculate that point at approximately 2. Metallica recently announced an exclusive deal with Spotify. If those subscriber ranks grow, royalty rates will also climb, recapitulating a process seen whenever new technologies have been introduced, said Donald S. Passman, a top music lawyer and the author of the book All You Need to Know About the Music Business. Artists didnt make big money from CDs when they were introduced, either, Mr. Passman said. They were a specialty thing, and had a lower royalty rate. Then, as it became mainstream, the royalties went up. And thats what will happen here. Correction January 3. An article on Tuesday about the royalties paid by streaming music companies like Spotify gave an incorrect estimate of the potential earnings of a song on Spotifys paid tier. Spotify generally pays 0. The article also described the 7 billion American recording industry incorrectly. That figure was its annual revenue in 2. Continue reading the main story. Subscribe to read. Subscribe to read. Financial Times. How streaming saved the music industry. Read more. All the benefits of Standard Digital, plus Unlimited access to all content. Instant Insights column for comment and analysis as news unfolds. FT Confidential Research in depth China and Southeast Asia analysise. Paper the digital replica of the printed newspaper. Full access to LEX our agenda setting daily commentary. Exclusive emails, including a weekly email from our Editor, Lionel Barber. Full access to EM Squared news and analysis service on emerging markets. Other Subscription options. 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