We Asked Grooveshark What They Pay Artists. And This Is What They Said…

It’s one simple question. But getting Grooveshark to answer it was a complicated affair – and ultimately, one that produced a very complicated answer.

Attempt #1: Email

Digital Music News (to Grooveshark SVP Paul Geller): How much does Grooveshark pay artists, labels, or other rightsholders per on-demand stream? On any song?

question-mark

[two attempts, no answer]

 

Attempt #2: @ Digital Music Forum West

Friday, Q&A session immediately following a presentation by Grooveshark SVP Paul Geller.

Digital Music News (Paul Resnikoff): “Right now Grooveshark has money coming in.  I’m curious to know on a granular basis – on a per on-demand stream basis – what is the rights holder receiving?  What is the artist getting, what is the label getting – per stream, per actual song?”

Geller (from stage): “So all of the contracts that we’re doing now are rev-share based, except for those with the PROs.  The PROs get their statutory rates, and so do the publishers for interactive.  And, the rest of them is just a pro-rata share.  So I think that’s the common way to go about it now, I think that’s the only way that you can subsist on this type of money.  And that’s why I think that we have to be creative about how to get more money into this ecosystem, because I don’t think anyone sees those numbers and is really inspired by them, I think people look at them and say ‘well this is a soft landing for the music industry,’ it’s ‘hopefully we don’t have to lay off too many people.’  And that’s why I think that Grooveshark is out there trying to be creative about how to infuse the industry with more money in ways that I don’t think are commonplace right now.”

Digital Music News: “But if I’m an artist coming onto Grooveshark, what should I expect?  What kind of check should I expect if I get – let’s say – 100 plays?”

Geller: “I think there are plenty of independent artists out there that can expect to be paid a good amount of money, if they’ve gone it alone or gone without a label and they’ve promoted themselves in a way that is effective and you know – they’re big.  So if you’re looking for a per-stream rate number…”

Digital Music News: “Yeah, something, some number.”

 

Geller: “Well I can’t give you a number because it’s really hypothetical.  But I can tell you this, though: moving forward, we’re going to be completely transparant about how people are paid.  And you can log in as an artist, you can see how many streams you’re getting.  And that artist payment system is going to be completely on-demand, so when we roll out this direct-to-artist payment system, you’re not going to need a label.  You don’t need a big label to claim your money, that’s not what we’re trying to do.  This is an open platform where anyone in the world can distribute their music anywhere in the world.  And I think the licensing question is a question – it’s complicated.  We’re aggressive about licensing and when we go directly to the artist, the artist has complete control.  You have complete control over what you put on Grooveshark and what you don’t.”

38 Responses

  1. Visitor
    Visitor

    “Grooveshark is out there trying to be creative about how to infuse the industry with more money in ways that I don’t think are commonplace right now”
    Umm… you’re selling cheap looking banner ads against music streams, 95% of which you don’t pay rights holders for.
    You want to ‘infuse the industry with more money’? Shut down your site and let music fans choose one of the services that has a grown up revenue model. Voila!

    Reply
    • Visitor
      Visitor

      To me, these companies have a business plan that doesn’t work and never will for artists, labels, etc. The only thing keeping them alive is venture capital. But the terrible effect is to make music freely available and of course the key word is ‘freely’. While I admire and respect Steve Jobs for many things, he did this same or similar thing to the music industry. Any other “real” business would never survive or even get started. I wish I could start my new business by using someone else’s property and in effect give it away. When is this going to be outlawed? And don’t tell me then the consumer will find other methods/websites to illegally download. They already are so I (and many others) will find an appropriate way to deal with that. BTW, I am starting a new website called “GrooveWhale”. It is exactly the same as “GrooveShark” except I am paying all artists, etc. the equivalent of what the publishers are paid with the same computation. How can I do this and stay in business you ask? Simple, all my website/back office software is “taken” from GrooveShark and I pay them a percentage of net income (after paying publishers, artists, etc.) from a pool of money that is shared with other software companies that I have also taken or used software from!!!!!

      Reply
  2. WILL
    WILL

    Aren’t these debates about artist payment per stream a bit academic in that unless you’re a signed artist or a prolific DIY artist getting high 5 figure or 6 figure streaming listens per month (week?) then for the rest it’s just a few leftover crumbs.
    Are stream rates the same for signed artists (especially major label artists) and unsigned ones? If being signed and having the marketing muscle makes the difference then things haven’t changed from previous decades..it’s the same story, just different formats and landscape.

    Reply
  3. HansH
    HansH

    Paul, the series “We asked….” seems rather pointless to me. All these services will never disclose their payouts.
    The only ones who know what is being paid out are the artists. Ask them!

    Reply
    • neil harri
      neil harri

      Hans – I don’t think this is pointless at all. why shouldn’t these services disclose this info? Itunes does.
      The artists only know what they’re getting paid if they do a direct deal with these services. If not, there is a middleman (label, digital distributor) taking a cut, and I think it would be very informative to know what the source money is, as often these middlemen are about as transparent as these services.

      Reply
      • HansH
        HansH

        Not every distributor. I have a small label and know exactly what I am getting from my distributor Zimbalam: Everything Spotify pays minus 10% . CD Baby does in the the same way. The information is available you just have to ask the right people.

        Reply
  4. a
    a

    sixty percent (60%) of the Grooveshark Ad Revenue multiplied by Your proportional share of
    the Streams on the Eligible Grooveshark Services (“Your Stream Proportion”). Your Stream
    Proportion shall be equal to all Streams owned or licensed by You divided by all Streams on the
    Eligible Grooveshark Services during the quarter.

    For illustration purposes only, if the Grooveshark Ad Revenue for the quarter was One
    Hundred Thousand Dollars ($100,000.00), and of the thirty-five million (35,000,000) Streams
    originating from Eligible Grooveshark Services for the quarter, seven hundred thousand
    (700,000) Streams were owned or licensed by You, then You would be entitled to
    (($100,000.00*0.60)* (700,000/35,000,000)) or One Thousand Two Hundred Dollars
    ($1,200.00).

    Reply
    • Maxwellian
      Maxwellian

      a,
      Where are you getting this breakdown from? is there a link?
      I think it might be easier to look at 1MM streams, which is about $1,700. But 1MM seems pretty huge.

      Reply
  5. Qsdc
    Qsdc

    “So all of the contracts that we’re doing now are rev-share based…” So, basically nothing. Sharing ad revenue usually equals effectively nothing, except for the people who run the site who can make a living since they are skimming from eveything that comes in. Ad rev models are also bs because they take pressure off of the site to figure out how to make real money, like they would if they had to pay a set amount.

    Reply
  6. kenneth
    kenneth

    So those who are not “PRO” & making products in harmony with the major label system— are relagated to the creative underclass. Spotify might pay you a fraction of a penny & profit from your songs. Grooveshark, might pay you nothing at all.
    Are independent songwriters Worthless to theses corporations?? Clearly Non-“PRO” music is a major part of their streaming services. Yet the compensation to these artists is a far cry from be equitable.
    This debate is really about principles and transparency. These businesess are capable of accountability, yet as Paul has shed some light on, many choose Ambivalence when it comes to their dealings with the larger independent artistic community. Afterall, most DIY artists aren’t going to get a larger slice of the pie. That is the reality.
    But $0 or a Fraction of a Cent isn’t even going to buy us new guitar strings…. 5¢ streams might add up in time. (Deezer???) Moreover, 5¢ is a figure that actully shows a little respect to creators as it drops into the virtual guitar case.
    If streaming is going to be a lasting, profitable, and sustainable paradigm, the industry needs to move beyond the exploitative accountability practices that were all too common in this Business during the 20th century.

    Reply
    • snolan
      snolan

      PRO stands for Performance Royalty Organization, not whether or not you make music for a living or are signed to a major. Just a clarification to help you make your argument.

      Reply
  7. topper8054
    topper8054

    Grooveshark’s model is a slap in the face to artists and songwriters everywhere. Geller tries unsuccessfully to baffle us with bullshit — but it doesn’t work. Grooveshark is NOT an artist’s friend, ally or advocate. They’re opportunistic, in the worst sense of the word. Geller, Sam Tarantino, Jack DeYoung — they’re on the wrong side of history.
    Who steals from artists? Grooveshark.

    Reply
    • gerdy
      gerdy

      100% agree. from personal experience i can say that grooveshark do their best to ignore your requests to remove your music from their service (uploaded by someone who had no rights to do so, i may add).
      absolute pirates of the worst kind. all artists should avoid these systers.

      Reply
    • Jason Miles
      Jason Miles

      I have a Grooveshark story that is too long to even tell-I met these kids when they were’n’t even 20 years old in Gainsville Florida after I performed there-They put me on their advisory board and For awhile total respect from them and answers.I have now tried to contact Sam Tarrintino for a year and no return of calls or emails. It sends a message out to me and it’s not a good one
      Trust?-I get my BMI checks from all these services and I get lots of play but the sum isn’t enough to buy a pizza

      Reply
    • Henry Rollins:
      Henry Rollins:

      Henry Rollins: “There is one thing that many who download music for free will never understand, and that is how damn hard it is to write songs, record them and get an album released. It really doesn’t matter who the band is, big or small, great or terrible — it is hard, hard work. This is the part that rubs me raw at times, when I think of someone downloading a record for free. It’s not the money lost, it’s the crass disrespect to the time and life force expended.” http://blogs.laweekly.com/westcoastsound/2011/10/henry_rollins_the_column_coppi.php

      Reply
      • HansH
        HansH

        Welcome Henri,
        Great post, but how do you feel about streaming? You have some tracks on Spotify but not all.
        Henry Rollins
        Can you explain your position?

        Reply
      • BLACKboot
        BLACKboot

        I guess Hank ain’t a fan of “The Grooveshark”.
        Rollins has always had integrity. Kids should hear that Rollins thinks Grooveshark are bottom feeders.

        Reply
  8. Sam (not Sam T)
    Sam (not Sam T)

    Ask them how much they pay any major label artist for the tens of millions of streams per month coming from those catalogues… other services either pay artists or quickly takedown artists or labels who don’t want to be on it.

    Reply
  9. mpinc
    mpinc

    None of these services matter until they have 10M paying subscribers. That’s why they don;t take the time to figure out there own accounting.

    Reply
  10. Sara Tiemogo
    Sara Tiemogo

    Hhmm…doesn’t look good for us artists. Luckily, there are lot of other companies to choose from, and we can choose not to work with Grooveshark. I know I believe in the music I am making, and would not risk working with a company like Grooveshark that may diminish the music’s worth.

    Reply
  11. dhenn
    dhenn

    Paul – thanks for pursuing this. We all know the answer – not what they should be paying – but I think it’s great to get it on record that these guys are full of it!

    Reply
    • Chris Daniels
      Chris Daniels

      Hey Paul
      Glad you asked and I’m truly dissapointed that you got such mumbo jumbo from these and others you have asked. I believe that one of your articles said that it takes about 330 streams on Spotify to have them pay $1.29 — the same as a DRM free download off iTunes. What I KNOW from my Spotify payments via CD Baby is that I get 1 cent for each stream as an indi artist who owns all his masters. If somebody streams 3 songs, I get three cents and on and on. CD Baby would be your BEST source for looking at artist royalty statements and letting you know exactly what indi artists are getting paid.

      Reply
      • HansH
        HansH

        Chris are you sure?
        Look at this CD Baby statement of an other artist who owns all rights.

        I have seen a lot of CD Baby statements but haven’t seen a single one where Spotify pays 1 cent per play every month.

        Reply
  12. Jon b.
    Jon b.

    Grooveshark offered us a ‘settlement’ for using our music without a license and that settlement amounted to roughly 1/10 of the amount that Spotify is paying. We couldn’t understand the compensation terms of their contract based on the example in an email which was sent to us in late March 2011 and asked them to remove our content. We never heard from them again, they continue to provide our content with no payment to us or our artists, and they did not respond to several subsequent emails. We realize now why our digital distributor doesn’t have an agreement with them.

    Jon b.
    Valley Entertainment

    Reply
    • The Insider
      The Insider

      PR,
      No surprise you’ve gotten little or no response from posing this question. You’ve asked them the wrong question sir.
      This discussion re; streaming revenue, payouts, etc. is redundant. We’ve already seen the ad model tried previously with companies like Spiral Frog; it saved neither them or the industry. One major difference presently is the level of cash investment both individually and across the sector as a whole, cash that has rarely found its way to artists or content creators upon whose backs these services are built, operate and profit. Ironically, while of many these companies can tell you what kind of funding they’ve raised or their valuation,Not one service could tell you what they actually pay to artists/labels as a flat fee payment per stream. Classic.
      On the other side of the table, there’s Vevo. As a lone specialized service (think special screening room), Vevo has managed to achieve higher CPMs for music videos. Whether artists actually see better payouts raises the question of whether there are in fact too many music streaming services to choose from. Too many choices often leaves the customer to choose none.
      There are over 100 streaming services currently. Too too many to support any type of realistic sustainable revenue model or viable revenue stream for labels and artists alike based on ad share across the board. Choose one at your own risk

      Reply
  13. JoeB
    JoeB

    Here’s the bottomline on Grooveshark:
    * How much lower can a company go than to have a business model that revolves around stealing from artists? Maybe child labor? Dog-fighting?
    * Grooveshark hides behind the DMCA. The DMCA was never, ever intended to facilitate the rape of songwriters.
    * Grooveshark’s investors are fools. The Grooveshark organization has none of the earmarks of companies that are successful in the long-run. The guys running the company (when sober) are book smart and charming — thus, the Shark reference. They lack wisdom and ethics. Again, the shark reference.
    * Luminaries like Bob Dylan, Bruce Springsteen and John Lennon would spit in the faces of the likes of Paul Geller, Jack De Young, Sam Tarantino, etc.
    * My advice to artists and songwriters: run like the plague from Grooveshark. They’re taking advantage of artists. They’re no better than the least reputable major labels. Further — sue them. Join the writers in Nashville that are currently suing them — support them. Speak up. Like any wrong, education and awareness are crucial.
    * Let your friends know the truth about the kinds of people that run Grooveshark — people that steal from artists.
    The pride of Gainesville? Wow — Gainesville must be a pretty shitty place (apologies to Mr. Petty)…

    Reply
  14. MDTI
    MDTI

    Independant artists make more money by playing in the street/metro/subway in half a day than having tracks on those streamers for monthes and years….
    Sustainable economic model: begging !!!!! it is proven to be an even older trade than the oldest trade of the world…

    Streamers are an evolution from the dinosaurs 🙂

    Reply
  15. stillgrowing
    stillgrowing

    I am typically uninterested in replying to stuff I read but this is getting a little carried away.
    I’m not an artist. I’m not an industry guy. Nor am I a guy with a music startup.

    I am a fan. But I am fan enough of music as a whole to have looked at how complicated the money flow is in the music industry.

    Now . . . I think its stupid that it is so complicated. But I also think its stupid to sh*t on the entrepreneurs who are playing the hand they are dealt with no friends of the old industry, few artist friends and now the fans are after them with pitchforks.

    THERE IS NO STANDARD WAY TO PAY ARTISTS. THERE CAN’T BE. Why? Because if you are Lady Gaga who writes her own music (and therefore get songwriting royalties on top of your performer royalties) vs Rihanna (who does not write her own stuff but may still get some songwriting credit depending on how much leverage she used on the actual songwriters) or have a song that is less than 5mins long (worth 9 cents per copy sold) vs a song over 5mins (less than 2 cents per minute per copy sold and likely rounded down) or have a sample in your song (which there is no formula for that – James Brown estate will take what they want or you can’t release the song) or if the song is played domestically or internationally (US PROs only collect in the US so if they are streaming your stuff in Japan, JASRAC has to collect and you are only likely to see that money if you have a sub-publishing deal because not all PROs share that data and the revenue they collect with each other) or if you have a publishing deal or not, with who and how well they administer your work to make sure that your name is affixed and spelled correctly on each registration of your work (ie. Jamie Foxx’s “government name” is not Jamie Foxx and so if his songs are registered with this name, no check will be paid out to the name for which he pays taxes) or literally dozens of other factors what determine who nets $70M+ in a year (Bieber) or who goes away broke and confused (TLC).

    I’ve never used Grooveshark and probably never will. My point is, how much do you pay artists is a pretty loaded question. I suspect you know that, Paul, given that most of my laymen education about the space comes from me rolling out of bed in the morning to read DMN. I think most of these companies are in way over their heads because this sh*t is way more complicated than they probably thought and now they have to deliver (the gift/curse or VC money). That and the fact that they have to manage this deliberately cumbersome process alongside innocently ignorant fans and artists who think 1+1=2. My evaluation is that somehow this because untrue in music a long time ago. 1M streams could represent thousands of scenarios, which generate a different dollar amount each time for which a person gets paid. So what if they aren’t lying and deflecting?

    Thieves? Crooks? Well . . . maybe . . . what do I know??? I do know that music royalties topped $10B worldwide last year. If these guys really are crooks then they REALLY suck at it . . . because, think about it . . . if there is a pile of money that high how in the hell does Spotify lose $68M?

    Seriously guys, I expected that I was part or a more sophisticated group of music professionals/fans.

    Reply
    • SongsInTheKeyofMakingALiving
      SongsInTheKeyofMakingALiving

      StillGrowing —
      Maybe you should change your name to StillLearning, because your statement (“THERE IS NO STANDARD WAY TO PAY ARTISTS. THERE CAN’T BE.”) simply shows how little you know about the business and law of of copyright, specifically music copyrights, as it has developed and evolved since the 1970s.
      Further, the “it’s so complicated” argument has long been a tactic of the good ‘ol major labels. Thus, their very nonsensical and confusing methods of accounting (aka not paying artists and copyright holders fairly). You’re in good company (if you consider the major labels good company) if that’s the argument you pose in defense of Grooveshark’s self-serving methods of business.
      You make the piont that Grooveshark are entrepreneurs. So what — I respect entrepreneurs who make the world a better place. They’re profiting by not paying artists and songwriters. It’s old school, and frankly, very ugly.

      Reply
      • stillgrowing
        stillgrowing

        LOL – so what was your answer???
        Look, I don’t think its impossible to figure out and I may just be inspired to try if so may people have their panties in a twist.
        By the way . . . there’s a alot that I don’t know but I know enough to know that if you knew more, then you would have said more versus coming up with clever puns for my username. LOL – knucklehead.

        Reply

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