Three billion reasons for musicians to celebrate this week, as digital royalties distributor SoundExchange confirmed it has paid out in excess of $3 billion since the not-for-profit organization was formed. Better yet, the vast majority of that amount has been collected and distributed in the past three years; a significant acceleration, given that SoundExchange came into existence way back in 2003.

Okay, that’s not really that long ago, but in online years it’s a lifetime.

A stack of the iPods I now own... included are...

An evolution of iPods (Photo credit: Wikipedia)

To put things in perspective, consider that in 2003, CDs made up 96% of the music market and the iPod was a brand new device. The biggest artists were still selling millions of albums and single tracks were considered more of a promotional tool than a core product.

The bottom line is that music’s own bottom line has shifted rapidly in just a decade, with sales of physical records decimated, the rise – and current fall -of digital downloads very much in effect, and streaming services carrying increased market dominance with every passing month.

All of which sets the stage for the next crucial evolution of online music: setting a fair rate of pay for music that is streamed via online radio.

 

Fair Pay Is Fair Play, Online and Off

Although the resounding popularity of digital music is worthy of celebration, the way in which royalty payments are calculated is still a work in progress for artists.

Criticism of streaming services like Spotify, Pandora, and Apple Music is a regular occurrence at all levels of the industry, from completely independent musicians and all the way up to chart-toppers like Taylor Swift and Radiohead. Concerns range from the provision of free tiers for users, which tend to pay poorly, to unlicensed use of classic recordings and upcoming changes to the royalty rate, which ensures artists are paid when their songs are player online.

It’s on the latter point that things are becoming especially caustic, as artists attempt to secure a better deal from the Copyright Royalty Board, which is currently mulling over arguments regarding rates for the next five years. With a decision due at the end of the year, leading online radio service Pandora continues to lobby for lower royalty payments, despite making more money than ever before and driving the lion’s share of the collections reported by SoundExchange.

We’ve been over and over the arguments in support of fair pay for fair play, so there’s little need to rehash those points.

Put simply, this is an ideal moment for music services and the Copyright Royalty Board to do the right thing by artists.  The demand is there, the platforms are working, and the money is clearly flowing. 

Although artists are always the last to see the money in a new system, assuming they see it at all, this is still relatively early days for streaming music consumption. There’s still plenty of space to ensure that musicians are paid fairly for all that online play.

Services like Spotify, Pandora, Apple Music and others need to step up and acknowledge that without artists, they would have no business. That’s not to say they haven’t brought value to listeners by ushering in this new era, but they do need to value the contributions of those on whom they base their business model, in a much more tangible way.