Songwriters continue to say they’re getting screwed by digital streaming services.
I previously reported that, according to his publisher, Pharrell only received $2,700 in songwriting royalties from 43 million Pandora streams of his hit song "Happy."
Now, the co-writer of last year's summer smash "All About That Bass" is making a similar claim.
At a Nashville event that was part of a congressional campaign to evaluate intellectual property law, songwriter Kevin Kadish told Music Row's Eric T. Parker he has earned just $5,679 from 178 million Pandora streams of the title.
Who’s to blame?
For pure songwriters — those who don’t also perform — the answer is straightforward.
Songwriter royalty rates for Pandora, along with any other form of radio, are set by U.S. district court judges in Manhattan. That has been the case since 1941, when the U.S. sued The American Society of Composers, Authors and Publishers (ASCAP) and Broadcast Music, Inc. (BMI), in an antitrust case. ASCAP and BMI are nonprofit performance-rights organizations (PROs) that track whenever a song is played on behalf of songwriters and their publishers (the only cut they take are for their expenses).
The Pandora rate has been fought over since the streaming service came into existence, but the company currently pays 1.85% of its total revenues to ASCAP and 2.5% of revenues to BMI. Songwriters can belong to either or both groups, but each song is represented by one.
As a result of the consent decrees, performers are typically paid much more than songwriters. That’s because performers are paid on an entirely different system, one based on direct deals negotiated between labels and the streaming services. Here’s a chart breaking down royalty splits by tech blogger Michael DeGusta for the ‘90s song “Low” by the band Cracker; you can see how small the slice has become for songwriters (in green).
Casey Rae, a musician and the CEO of advocacy group The Future of Music Coalition, describes the info here as “quite solid.”
As the event in Nashville showed, and as my colleague Kelsey McKinney has written, lots of people believe this system is way outdated.
The question is what to do about it.
Last summer, the Department of Justice opened up a review of its consent decree that continues to this day.
Meanwhile, many songwriters are backing a piece of legislation introduced in Congress called the Songwriters Equity Act. According to Rae, this would allow the Manhattan judges to accept more evidence than they are currently allowed to when they set rates.
But in a Game-of-Thrones-esque wrinkle, some music publishers have been threatening to remove their catalogues from ASCAP and BMI altogether. While that would allow them to negotiate direct agreements with Pandora and other streaming services that could net higher royalty rates, the current ASCAP-BMI system guarantees songwriters automatically get a direct 50% payout of the songwriting royalty revenue pot, after expenses (the publisher gets the other half).
Thus, if the catalogues are pulled, the songwriters would be at the mercy of their publishers. That could result in deals closer to the ones enjoyed by labels and performers. But as dysfunctional as the ASCAP-BMI is, Rae said, there is at least a degree of transparency there. Labels, on the other hand, are under no obligation to disclose the terms of the deals they’ve signed with streaming services, even with their own artists.
“How’s a major-label artist doing on Spotify? You’ll never know,” he told me.
Talking Heads frontman David Byrne recently outlined this same royalty transparency problem in a piece for the New York Times:
I asked Apple Music to explain the calculation of royalties for [its] trial period. They said they disclosed that only to copyright owners (that is, the labels). I have my own label and own the copyright on some of my albums, but when I turned to my distributor, the response was, ‘You can’t see the deal, but you could have your lawyer call our lawyer and we might answer some questions.’
It's important to keep in mind that Pandora is not the only source of revenue for a smash like "Bass." The song was certified 9x platinum, and has been played at untold live events that also pay out royalties.
Still, for Kadish, the inequity in the case of digital services is apparent.
“No one is trying to put Pandora or Spotify, out of business,” he told me in an email. “We just want a fair market value for our blood, sweat, and tears.”
But how to get there seems trickier than ever.
This post has been updated.
Rob covers business, economics and the environment for Fusion. He previously worked at Business Insider. He grew up in Chicago.