Musicians: Streaming will sweep us into poverty

Technology has changed few industries as thoroughly as the music business. But the ballooning increase of convenience for consumers has rapidly become a bust for musicians trying to make a living. A number of prominent names have published their actual incomes from streaming, and the money doesn't even match what they'd get from a paper route.

For example, Bette Midler has written some popular music. She recently tweeted that she made $114.11 on 4,175,149 plays of her work.

Grammy-nominated composer, keyboardist and recording artist Armen Chakmakian, once the keyboardist for the band Shadowfax, tracked his earnings from 14,227 plays. He received $4.20 from songwriting royalties, and because he was the recording artist, he also made $11.50. The record label is also his, and it took in $19.39. The total was $35.09, which works out to about a quarter of a cent per play.

"Someone's making money, and in true fashion with the music industry, it's not the artists," he wrote. "Business practices like this are one of the reasons I jumped ship and only write for television now."

The problem seems to be in the mechanics of how the streaming is structured. Royalty rates are tiny for all types of music. Cellist Zoe Keating, who releases her own music, regularly tours and has a strong following, told Salon that only 8 percent of her earnings on recorded music came from streaming.

Life isn't any better working with the big labels, according to composer and musician David Byrne, of Talking Heads fame. He wrote that the royalty rates are "miniscule" and that the labels "usually siphon off most of this income, and then they dribble about 15-20% of what's left down to their artists."

Another musician, Damon Krukowski, estimated that it would take "songwriting royalties for roughly 312,000 plays on Pandora to earn us the profit of one -- one -- LP sale." He went on to explain that the royalties he would see from one CD sale is the equivalent to 47,680 plays on Spotify. He'll get additional payments for his work as a performer with the two other members of the band Galaxy 500. The group registered 64 recordings with Pandora. For one fiscal quarter in 2012, that came to an additional $64.17.

Is there more money to share in this branch of the sharing economy? Publicly held Pandora (P) has some numbers available. For years the company has lost money. In 2013, the loss was $38 million. The net loss in the first quarter of 2014 alone was $29 million. In its latest notice that it would raise its subscription rates, Pandora mentioned the price of royalties as one reason subscription fees had to jump.

As Byrne notes, some musicians can still make significant money in other ways, like live concerts to large numbers of people or through licensing. But he said the current structure could hurt up-and-coming performers, composers and writers who won't have those alternatives for extended periods. And, as jazz pianist and music historian Ted Gioia told Salon, because the terms of deals with labels aren't publicly available, it could be that young musicians are in an even bigger bind:

"The record labels could make a case that they don't need to share royalties with artists whose sales don't cross a certain threshold. If you're Lady Gaga or Justin Bieber, you have no problem. But otherwise, you would get no royalties. The nature of these deals are that the rich get richer and the poor get poorer."

Streaming music can be a great deal for the avid listener. The question is whether we'll continue having an emerging supply of new musicians if streaming takes over, or will everyone have to get accustomed to one oldies station after another?

Correction: An earlier version of this story included incorrect financial information for Pandora. The numbers have been corrected.

  • Erik Sherman On Twitter»

    Erik Sherman is a widely published writer and editor who also does select ghosting and corporate work. The views expressed in this column belong to Sherman and do not represent the views of CBS Interactive. Follow him on Twitter at @ErikSherman or on Facebook.

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