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It seems like a simple question. But these are the email exchanges we had with Rdio to find out, "what do you actually pay artists, labels, and rights holders?"
Digital Music News: How much does Rdio pay artists, labels, or other rightsholders per on-demand stream? On any song?
Sue Ellen(PR): Artists get paid differently for downloads versus
streaming content. The record labels determine this rate of pay when they make deals with companies like Rdio. While we can't discuss our actual negotiated rates with the labels we have licensed music from, we can say that artists are getting paid by Rdio every time their songs are played.
Digital Music News: But how much? Is there a payout range? Certainly every song gets paid something, within some range?
Sue Ellen: Rdio makes deals with the labels so I'm not sure how much the labels are compensating their artists. Unfortunately, that's not information the pr team has been given access to.
I can set up a call with yourself and [Rdio CEO] Drew [Larner] but I honestly don't think you would have your question answered. Have you tried asking the labels?
Digital Music News: Sue Ellen suggested I contact you directly on this. I'm trying to figure out what Rdio pays rightsholders - artists, labels - per on-demand stream. What is that number?
Drew Larner, CEO: Hey Paul, not really much detail I can share here but happy to chat if you'd like.
Digital Music News: Just curious as to why you can't share any detail? Why is the payout range such secretive information?
Larner: All of my deals contain confidentiality clauses.
Digital Music News: Let's speak more generally then, without disclosing specific deals. Do major labels receive more revenue per-stream than indies? And how does that compare to an unsigned artist payout?
[NO RESPONSE]
Comments Closed
Roger Bixley Thursday, October 06, 2011
I know you're trying to do some investigative journalism here, but you're wasting your time. Nearly all of these contracts between labels and distributors include non-disclosure clauses.
DJ Thursday, October 06, 2011
I don't see why it would be so surprising to you that these license agreements contain confidentiality clauses. And even if not, doesn't it go without saying that the bigger fish probably get better deals than the littler fish, and why would the licensee (like Rdio) want to trumpet that fact?
Food For Thought... Thursday, October 06, 2011
Paul, your recent series of emails with streaming service execs - like this one - about what royalty rates they're paying labels/artists is PRECISELY why there is a need for a Merlin and why all indie labels (and artists who own their own masters) should join Merlin. Merlin is free to join and obligates members to nothing. Each member is free to opt out of any deal they don't like, but at least they know they're being offered the same deal terms as the next Merlin member.
It isn't surprising that Rdio, Spotify, Mog, etc. don't make their negotiated rates public. There is no statutory rate so each rate has to be negotiated and it is standard to not make those terms public. Of course different labels/artists do better than others. That's nothing new...it's capitalism at work. But Merlin can change this game to the benefit of all indies who partake: having all indies represented by one party gives each indie the best chance to get better terms.
I do not work for Merlin and get no personal benefit from spreading their message (I'm already a member). It's simply something I believe in. In the "old" days labels didn't need anyone other than their distributor but today's "distribution" is different. It's less about distribution - to the strict definition of the word distribution - and more about the negotiation of royalty rates. These negotiations are often dictated by market share and the more fragmented the independent sector is the less likely they are to get favorable terms. Distributor A comes with their 5% of the market, distributor B comes with their 3%, etc,. etc., on down to the stand alone indie artist who has his 0.0000001% share and each gets less from the service.
As you've reported, A2IM has succeeded in getting Billboard to begin reporting market share based upon master ownership which will help retailers (digital service providers) understand that independents comprise the biggest market segment which should make Merlin's job easier but they can't represent ALL indies, they can only represent their members. Every indie should seek to benefit from this more clear definition by aligning with this single (not for profit, indie label run) licensing organization to insure they get the best terms. Frankly, I think TuneCore, CD Baby, IODA, The Orchard, etc. should all align with Merlin also to make sure they get the best deal terms possible for their clients. Once that is done, those digital distributors could dispense with the nuisance of licensing negotiations and focus on providing marketing support and other services that their distributed labels and artists need.
Thanks.
Maxwellian Thursday, October 06, 2011
Welcome to digital transparancy.
Ben Patterson Thursday, October 06, 2011
I own and operate DashGo.com - and if Rdio waives their confidentiality clause, I'd be happy to share the rates our artists receive as indies from Rdio. Suffice to say in generalities - pretty much all of the streaming services are in the same range, it's not much and requires volume. Right now YouTube is the runaway winner, but Spotify and Deezer are solid as well, especially thanks to exchange rates.
Food For Thought... Thursday, October 06, 2011
Ben, when you say that YouTube is the runaway winner are you saying that YouTube is paying you (and by extension your labels and artists) a per stream royalty? I was under the belief that YouTube doesn't pay a per stream royalty at all (making them the runaway loser, I suppose) but instead does an ad-rev split with the content creator/owner only.
HansH Thursday, October 06, 2011
Ben,
I am working on an overview of streaming services and their payouts. Would love to get some additional details.
If you want to help me ou please contact me at hans[at]spotidj.com
And of course any other artist or label who can provide details is invited to contact me.
Deke Thursday, October 06, 2011
Try contacting Kurt Hansen who publishes an excellent blog called RAIN ... Radio And Internet Newsletter. http://kurthanson.com/
He's also written extensively on this subject and as an internet music provider, knows about it first hand.
Econ Thursday, October 06, 2011
Kurt also runs AccuRadio and probably won't disclose what HIS rates are.
BigChampagne Thursday, October 06, 2011
Here's how the story ends: streaming music services will pay billions to rightsholders, but VERY little per stream.
HansH Thursday, October 06, 2011
For anyone interested in this subject I recommend reading the article:
Spotiwhy? : Are Subscription Music Services a Sustainable Business Model?
"After exploring the various scenarios, the conclusion that can be drawn is that there is significant revenue that can be generated by the services as a whole, but the individual stream payments will remain in fractions of a cent and will only decrease as the services become more popular."
fan of streaming Thursday, October 06, 2011
Unlike some labels, I get that these streaming servcies are tapping into a market of people that either will not buy CD's or buy alot of downloads and want to access music like they access movies via Netflix, or subscribe to HBO or Starz.
Spotify does pay out lower than the others and it's annoying. It may become disturbing for me soon. I like Rdio and MOG's discovery attributes a lot and find them to be a much more enriching experience than Spotify, which just looks like an iTunes client that I've never been in love with, and thought Ping is hideous.
Can't blame the people representing these servcies for not engaging in this type of exchange over email with a journalist. If you're someone who is suprised at the rates, than you obviously have no experience with these stores, which lets one believe that you're not terribly experienced.
HansH Friday, October 07, 2011
@ fan of streaming True! Streams appeal to another audience and create additional revenue without cannibalizing downloads much.
Side-Line.com investigated this in the Industrual music scene and published the results a few moths ago. Click the pic below for the article.
So both downloads and streams grow.
People who are used to buying music keep on buying because they want to own things. People who are or were in to illegal downloading are switching to streaming gradually.
Visitor Friday, October 07, 2011
If streaming did not exist everyone would use the download model, which pays better and revenues would not be limited to $10 per month per subscriber who can afford more per month.
The subscription model gives a financial break to the wealthy because they are able to spend more on music but are limited to $5-$10 per month with unlimited access.
Doesn't make sense unless you believe the wealthy should get more financial breaks as a percentage of their income. It is an inefficient business model for labels/artists, major and indie alike.
Another bad mistake by the majors.
/yves villeneuve
jbedbus Friday, October 07, 2011
If streaming did not exist, everyone would NOT use the download model. I don't now and wouldn't then.
I use streaming (Spotify and Rhapsody) to decide what CDs I want to buy. I have no use for lossy downloads... a completely pointless middle ground. Either I like you and buy your CD, or I don't like you and never stream your music again.
If streaming weren't an option I'd buy far fewer CDs. I would not look to downloading as an option.
Visitor Friday, October 07, 2011
Numbers don't lie. You don't represent the vast majority of online music consumers.
Most consumers don't care about lossy digital music files. It takes a special breed or tremendous training to have that rare hearing capability. The evidence is in the widespread piracy of these lossy files, usually less quality than iTunes music files.
My music is only available through download only, no streaming and no CDs. If you are a fan of my music you will buy good quality sound files in the iTunes store, my only retailer. If you are a fan but don't want to resort to lossy music files, I can't help you with your requests.
/yves villeneuve
jbedbus Friday, October 07, 2011
I agree with your theme and most points, just took issue with the "everyone" assertion. We may be a minority, but there are others like me out here.
As for numbers not lying... do you follow politics? Numbers lie all the time!
Visitor Friday, October 07, 2011
Ok, I'm guilty. I tend to exaggerate sometimes.
/yves villeneuve
Visitor Friday, October 07, 2011
There is evidence to suggest that those who were pirates are now downloading legally too, see your posted graph. Does not appear the download model is losing ground to the subsription model.
/yves villeneuve
Visitor Friday, October 07, 2011
The problem is, in the subscription model, major labels are deeply cutting into indie revenues.
This issue is not relevent in the download model, which makes it a fair marketplace for everyone, including consumers.
/yves villeneuve
In the business Friday, October 07, 2011
you are thinking like a consumer, not a business person. Think about it this way. would apple disclose to you the deals it has with all the carriers? would apple tell you how much of an advance it may have paid the labels for the cloud deals? would they tell you if they pay indies less? the same question can apply to any other media business, digital or otherwise, but i thought i'd throw in apple since they can do no wrong in consumer's eyes.
MisterSoftee Friday, October 07, 2011
In the business:
Well, really bad example! Because Apple has basically made their payouts public. We all know it's 70 cents a 99 cent track.
Any other questions?
Ignacio Friday, October 07, 2011
Rdio, Rhapsody, Spotify, all these are corrupt they have every interest in not disclosing and making secret deals. The less you know, the more power and money they make, and this is just like the old mafia biz folks.
fan of streamin Friday, October 07, 2011
Ignacio, comments like yours are ignorant, not based on any fact and really not helpful to the dialogue.
And visitor, the people streaming, if streaming were to magically go away tomorrow, are not going to suddenly go back and rescue the CD or will suddenly buy 5-10 albums a day that they can access through streaming. Those sales just won't exisit. Discovery of albums or artists they don't know of or don't get around to listen to will not occur. Spite yourself and your artists. The vast majority of labels that are successful have openly embraced streaming services. Why doesn't digital music news or other media outlets interview labels that might have a different take on it?
The streaming music services do not have boilerplate agreements or their model is not as simple as 70% of retail. If you don't understand that, you probably haven't had a contract in your hand. Go get an internship somewhere and possibly learn something.
The lack of understanding in here is baffling.
HansH Friday, October 07, 2011
I second that!
Visitor Friday, October 07, 2011
They won't buy 5-10 albums a day, but they will certainly spend more than $5-$10 per month if streaming were gone completely. Discovery can easily be accomplished via iTunes with their 90 second clips.
iTunes is transparent with royalty rates for indies whereas the subscription services are not. Indie artists receive a floor of roughly 70% of music sales depending on the iTunes store. Pay rates don't change all too much at iTunes.
It's all in black and white here.
I don't disagree that the major labels should receive a higher pay rate but not at the expense of indies. Major labels could be making as high as 90% while big indie labels could be making as high as 80%, in my opinion. iTunes is still making money with a 10% rake in the high sales volume category (major labels).
Is it possible to make a good guess what they receive under a subscription model contract? Unlikely, since we don't even know how much the small indies are getting paid and audited subscription revenues are not available.
/yves villeneuve
streetz_iz_watchin Saturday, October 08, 2011
Apple is completely public on what they pay. Everyone knows:
-- 70 cents for 99 cents download.
-- 7 bucks on a $9.99 album
etc. with some variations
So not sure if I'm understand the secret society here of sub services, mainly it seems like great for majors and the services and investors .
Leave y'all with this: When RDIO gets sold, artists will get this $0 of the acquisition cost. And artists on major labels are getting $0 of up front cost.
steveh Sunday, October 09, 2011
Apple makes it's payments to labels/artists public.
WHY CAN"T THESE STREAMING SERVICES DO THE SAME???
Are they all Ponzi schemes?
This is the $64,000 question!
iberia Sunday, October 09, 2011
I have decided to download Rdio's streams. it is very possible to do so in original quality (192kbps MP3) with legal download tools such as www.getflv.net and others.
Patrick bowsher Tuesday, October 11, 2011
The information on the subject of streaming payouts to major labels is here -
http://www.informationisbeautiful.net/2010/how-much-do-music-artists-earn-online/
@Lauren_Clinton Thursday, October 20, 2011
Lauren Clinton
And spotify has more selection and is upfront about how much they pay artists. Rdio is shady about it.
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