How do you make money from your music?
That is the $64,000.00 Question. (Sorry -- old fashioned reference to an ancient TV quiz show)
There are many ways to get money, ranging from busking to having a mega-hit that is streamed, performed on TV and in movies and is covered by many other artists.
But the big money is only available if you are a member of a Performing Rights Organization (PRO) such as ASCAP or BMI (SESAC is another PRO but it is by invitation only.)
Since broadcast and satellite radio (and TV) are diminshing in popularity for music performance, the major medium today is streaming. The best known platform is Spotify, so I'll talk about them primarily.
How much money do you get if your song is played on Spotify (assuming you are registered with a PRO)?
There are variables since the different countries in the world have different rights and currencies. But the best estimate I've found for an average -- an estimate from Spotify itself -- is that the average "per stream" payout to rights holders lands somewhere between $0.006 and $0.0084. For those who slept through math class that is 6/1000 of a penny to about 8 1/2 thousandths of a penny -- each time the song is streamed.
That is peanuts compared to what royalties were paid in the days of 45 and 33 RPM records, cassette tapes, and CDs. Compare that to 20 years ago. As of January 1, 1996, the statutory rate was 6.95 cents for recordings up to five minutes in length and, if over 5 minutes, 1.3 cents per minute of playing time.
That is 1000 times what today's Spotify rates pay.
Let me shout this for the hard-of-hearing
According to Moses Avalon on his must-read blog Moses Supposes: Even if you are a PRO member, you only get paid if:
1. There is money to collect for your musical works and, more importantly…
2. That you meet their requirements to receive money after you join.
In other words, in some cases your music will make money for the PRO but they won't pass that money along to you unless:
* It was recorded by a significant artist and the album or single is to be released in the next few months.
* It was placed in a movie soundtrack that is about to be broadcast on a major TV network in the next few months.
* It was used as a theme for a series that is about to be broadcast on a significant TV network– in the next few months.
* It is currently getting a lot of play on a commercial radio station or podcast, or it has been tracked by a reliable service as being downloaded (legally) many thousands of times– now.
In pre-streaming days, songs were paid more if they were longer. But now all songs are paid the same measly rate no matter the length. There are some tracks that are a minute long and some that are 20 minutes long on the streaming service -- and they all sell for the same price (and pay the authors the same price if they qualify).
But if you only get paid if you "qualify" -- how do you get your songs on Spotify?
Unfortunately, a practice that has been a part of commercial music since the beginning (and has been banned several times) has appeared to take advantage of the new technologies.
PAYOLA -- the payment of fees for inclusion or for preferred positioning.
Payola on Spotify? Absurd! This couldn't happen in this day and age. Of course Spotify and Apple Music say that there is no “payola” on their services.
But if it looks like a duck and quacks like a duck ...
The laws against payola only apply to traditional broadcasters -- Radio and TV. The FCC ruled this long ago -- but there aren't any regulations on Spotify.
Spotify is largely a collaboration with all three major labels.
I've read tips over the years that pitching your tracks to playlist owners was the secret to driving streams. How niaive -- the major music labels have millions invested in Spotify and they get all the goodies. Even most of the crumbs left over.
Back in 2015, the Financial Times reported "Spotify is cracking down on a controversial practice known as “payola”, in which record labels pay people who control influential playlists on the music streaming service to promote certain songs."
Yet a few months later in 2016, this headline appeared in "Billboard" -- "Pay for Inclusion on Popular Spotify Playlists Is Definitely Happening."
Still, many people don't understand that the biggest playlists on Spotify aren’t organic, they’re paid for -- meaning no matter how great your song is, you probably won't get discovered.
To understand the depth of the music industry leverage on Spotify, browse to a playlist and look at its cover art. Up in the corner you will probaby see a logo. If you don't, look at another. If you check out more front covers you will see a tiny Spotify insignia or maybe you will see a logo for Filtr, Topsify, or Digster.
I the order I listed Filtr is owned by Sony, Topsify is property of Warner, and Digster is the Universal brand. On a lucky day, you might actually see an independent label or brand logo. But not very often.
Why do music labels own playlisting companies servicing Spotify? I know you are smart enough to figure it out, but it is even more complex than this.
"Spotify rents playlist slots to music labels" - (Headline at website Engadget)
In 2017 Spotify added “Sponsored Songs” recommendations
Do you think you can compete with the big players by paying for your own tracks to be recommended? Well, you USED to be able to. There was a marketplace called SpotLister where you could buy into more than 1500 Spotify playlists with more than 11.5 million collective followers. But -- Spotify cut them out of its API just a couple of weeks ago.
It is clear that Spotify is aiming to be the official gatekeeper of the music industry.
Keep this in mind the next time somebody poses the question "How to I get famous" or "How do I write a hit song" and the replies come back "Just write the best song you can."
That clearly won't work.