This past week, there has been much debate about net radio royalties given out by companies like Pandora and Spotify. The importance of businesses like these cannot be overstated in today’s music business economy, as they use streaming services to give large libraries of music to millions of people. But even more importantly, they also are obligated to pay out royalties to thousands of artists whose music is streamed over and over again.
In two of the most respected indie music publications on the planet, the debate over the distribution of net rate royalties was highlighted to a tee. Hypebot.com and Pitchfork.com both featured stories on the issue, with Hypebot reporting on a proposal signed by over 100 major music artists (T.I., Keyshia Cole, Maroon 5, Britney Spears, Lupe Fiasco, Zac Brown Band, and Janelle Monae to name a few) in opposition to Pandora lobbying in Congress to have the Internet Fairness Radio Act signed into law, which could potentially cut royalties paid to musicians by 85%.
Similarly, Pitchfork features an editorial by Damon Krukowski of indie bands Galaxie 500 and Damon & Naomi, detailing how the plans of Pandora and Spotify to push for laws like the Internet Fairness Radio Act could hurt his income stream and contending that music itself is irrelevant to both companies and is essentially just another form of information and a tool for distribution.
This is a debate that definitely will not be settled any time soon. But the bigger and more important questions that need to be asked are these: If, in fact, Pandora is successful in lobbying for said bill, and similar companies like Spotify are able to jump on the band wagon of decreasing payouts of royalties, how will the thousands of artists that make a living off of these royalties that are not major music money makers or pop music sensations be effected? What if these artists truly make a big chunk of their living from these royalties? Will they need to replace one revenue stream with another, or several others, to make up the difference?
Be sure to read both of these pieces and try to coming to your own conclusion. The coming months should be very interesting in terms of this debate.