Michael Bailey Deputy editor

Michael has been a business journalist for 12 years. He has extensive experience editing magazines covering funds management, commercial property and the travel industry. In 2011 he won a Citi Excellence in Financial Journalism award for a BRW cover story on economic indicators.

View more articles from Michael Bailey

Internet radio royalties strike a bad chord with songwriters

Published 05 December 2012 05:32, Updated 06 December 2012 05:28

+font -font print
Internet radio royalties strike a bad chord with songwriters

Jimmy Jam (right), pictured here with hip hop artist Nelly in 2003, argues that internet radio operator Pandora is not paying fairly for the music it exploits. Photo: Reuters

The world’s largest internet radio provider, Pandora Media, is backing a bill now before the US Congress to reduce the royalties it must pay the performers and writers of songs it streams. Standing against this is producer Jimmy Jam, who has testified passionately against it on behalf of record companies and artists.

Jam, who co-wrote The Best Things In Life Are Free for Janet Jackson, among 20 other US Billboard No.1 singles, is chair emeritus of The Recording Academy, a US trade association representing performers, songwriters and studio professionals.

He said that for every Janet Jackson there are “dozens of middle-class artists” for whom music is a livelihood “and as with any job, we hope to be paid fairly for our work”.

Jam argued in detail that Pandora was not paying fairly for the music it exploited.

“If a consumer downloads a song from Amazon’s MP3 store for US99¢, Amazon pays the rights’ holders and creators about $US70¢. If a consumer streams that same song on Pandora radio, Pandora pay (royalty distributor) SoundExchange about one tenth of 1¢,” he says.

“Or put another way, the listener would have to hear that song on Pandora for every single day for nearly two years to equal the payments earned from that one download.”

Slightly more generous royalties were paid by services that allow users to stream tracks on demand. A song has to be played 140 times on Spotify to earn the same royalty for a single download. For Rhapsody it’s 54 plays, according to artists’ testimonials and royalty reports tendered to the Congressional hearings.

Stark evidence for the paucity of Pandora royalty payments was given by Desmond Child, who co-wrote the Bon Jovi smash Livin’ On a Prayer alongside Jon Bon Jovi and Richie Sambora.

That song was played 6,021,402 times on Pandora between January and March 2012, for which Child was paid the princely sum of $US110.42.

For it’s part, Pandora says it will pay artists and labels a combined $US250 million of royalties in 2012 and claims profit is impossible at the prevailing royalty rates. Chief executive Joe Kennedy points out that traditional US radio stations pay no royalties, under laws going back to the 1940s when radio play was considered free promotion for the physical record industry.

Several artists not signed to major labels have also supported Pandora, claiming it is the best way for their music to get exposure.

The body which collects royalties for songwriters in Australia, the Australian Performing Rights Association, is “happy” with the deals it has done with Spotify and other streaming services, according to head of policy, Richard Davison.

The share that songwriters receive for a stream generated in Australia is the same as that for a download, he says. While both record companies and song creators think the massive revenues so quickly generated by the likes of Pandora and Spotify are “repugnant”, they are also squabbling over their share of this relatively new action.

Davison says it’s too early to tell whether internet radio and streaming services are simply cannibalising the download market, as Spotify and co. are “growing fast but off a very low base” among consumers in this country.

Comments