Thread: Digital vs. Physical Royalties

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  1. #1
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    Default Digital vs. Physical Royalties

    Up until the era of digital distribution, royalties were*

    50% went to labels (master)

    50% was split between songwriters and publishers


    Now, under Spotify's regime it's (supposedly)

    45.6% goes to labels

    10% is split between songwriters and publishers

    ("naturally" Spotify gets more than twice that)


    So songwriters and publishers get an 80% reduction


    Anyone care to comment on this?






    *and still are for physical sales

    [edit] I acidentally wrote "mechanical" before when I meant 'master'
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  2. #2
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    Default Re: Digital vs. Physical Royalties

    Enjoy a monopoly. Until somebody has enough power to challenge Spotify (legally or via direct competition) there unlikely would be a change of policy.
    When in doubt, mumble!

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  3. #3
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    Default Re: Digital vs. Physical Royalties

    Shame the labels don't seem interested in negotiating for better income for their artists.

    I thought they were supposed to be representing the artists who sign with them?
  4. #4
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    Default Re: Digital vs. Physical Royalties

    Shame the labels don't seem interested in negotiating for better income for their artists.

    I thought they were supposed to be representing the artists who sign with them?
    In the current situation, labels are in the same position as the artists. They have better negotiation power because they have back catalogs to sell, but they are solely dependent on the distribution monopolists to get any profit out of digital.
    This is similar to how bigger artists get more money per play than smaller ones.
    The crux of the matter is that digital distribution is not interested in artist development and promotion at all! Previously, there was an incentive to get a name out for people to talk, because of production and distribution overhead
    of a physical copy, there was a minimum sales number to turn any profit. Now server space for a song costs next to nothing, so it is pretty much irrelevant if you have one artist with a million plays or a thousand with a thousand plays each.
    When in doubt, mumble!

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  5. #5
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    Default Re: Digital vs. Physical Royalties

    In the current situation, labels are in the same position as the artists. They have better negotiation power because they have back catalogs to sell, but they are solely dependent on the distribution monopolists to get any profit out of digital.
    This is similar to how bigger artists get more money per play than smaller ones.
    The crux of the matter is that digital distribution is not interested in artist development and promotion at all! Previously, there was an incentive to get a name out for people to talk, because of production and distribution overhead
    of a physical copy, there was a minimum sales number to turn any profit. Now server space for a song costs next to nothing, so it is pretty much irrelevant if you have one artist with a million plays or a thousand with a thousand plays each.
    Evidently, looking at the splits, the labels are not in he same position as the artists.

    Why is there no push to trickle-down some of their percentage points?

    The labels must have some sway, because Spotify are starting to cave to more distribution pay-wall requests from the labels.
  6. #6
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    Default Re: Digital vs. Physical Royalties

    Evidently, looking at the splits, the labels are not in he same position as the artists.
    What is mean is that labels are also (if not more) dependent on Spotify as artists. But they have more to sell as well.
    When in doubt, mumble!

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  7. #7
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    Default Re: Digital vs. Physical Royalties

    This isn't correct. Go back and read "Knowledge is Power."
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  8. #8
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    Default Re: Digital vs. Physical Royalties

    If the Nintendo power glove has taught us anything, its that the power us in your hands.

    You dont need to do either really. Signing up with Spotify or with a label isn't gonna get you anywhere, unless you have a genuine hit on your hands. Its breadcrumbs either way.
  9. #9
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    Default Re: Digital vs. Physical Royalties

    This isn't correct. Go back and read "Knowledge is Power."
    I read it before the first post. I accidentally put 'mechanical' next to 'labels' when I meant 'master'.

    There might be something else that isn't correct, in which case it would be helpful if you could be a little more explicit
    Man! You have GOT to try a hit of this RANGE SUNSHINE!

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  10. #10
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    Default Re: Digital vs. Physical Royalties

    In the old daze labels and artists got nothing from airplay. Songwriters and publishers split the performance income.

    Record sales paid around 50/50 of net income after recording costs, manufacturing and promotion. Songwriters and publishers split mechanical income which was set by the government. For decades it was two cents. Today it's 9.1 cents.

    In Europe, everybody shares airplay income which ought to be the model used for streaming. In the '90s Radio Sweden was paying $7.00 a play!
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  11. #11
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    Default Re: Digital vs. Physical Royalties

    In the old daze labels and artists got nothing from airplay. Songwriters and publishers split the performance income.
    I was under the impression that that was still the case in the US.

    Record sales paid around 50/50 of net income after recording costs, manufacturing and promotion.
    50/50 labels/ artists? Is this after costs are recovered for records that stiffed also?

    Songwriters and publishers split mechanical income which was set by the government. For decades it was two cents. Today it's 9.1 cents.
    I believe this is how Spotify gets away with paying 10% to combined songwriters/ publishers while paying themselves 30%.

    They've eliminated shipping costs but were shipping costs ever 30%? And that would be an apples to oranges comparison anyway since renting music isn't the same thing as owning a copy (although renting seems preferable to many people, statistically)

    Something I just noticed which is a bit perplexing in Spotify's split is that there is also an "artists" share of 6.8%

    I'm guessing that you can more or less combine Labels and Artists since the 6.8% is factored into the contracts and the label otherwise pays the artists?

    So Spotify's breakdown according to the tech dirt pie chart (shown below) whose veracity I can't vouch for, although it doesn't seem too farfetched, is:

    45.6% Labels
    20.8% Platform
    16.7% Taxes
    10% Songwriters/Publishers
    6.8% Artists

    I'd want to see a breakdown of the taxes also.

    My spidey sense is getting a whiff of shell game.

    Again, I can't verify that split.
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    Man! You have GOT to try a hit of this RANGE SUNSHINE!

    IMTBO = In My Thoroughly Biased Opinion
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    Never underestimate the amount of contempt a failed musician has for those of us who are still trying.
    If the party's good enough, you can actually suck to a remarkable degree.

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  12. #12
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    Default Re: Digital vs. Physical Royalties

    The labels ate the stiffs although the charge for recording expenses carried forward.
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  13. #13
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    Default Re: Digital vs. Physical Royalties

    Enjoy a monopoly. Until somebody has enough power to challenge Spotify (legally or via direct competition) there unlikely would be a change of policy.
    Spotify doesn't really qualify as a monopoly though. Much as it would love to get as close as possible without triggering the Sherman Antitrust Act, Apple and Tidal are direct competetors in interactive streaming.

    Spotify is heavily leveraged. The only way venture capitalists will risk other people's money with a company that's 9 years old and never made any money is under conditions that are very favorable if not outright bullet-proof for the investors.

    Successful IPO? Jackpot! Company goes belly up? Golden parachute!

    Apple, on the other hand, has very deep pockets and doesn't have Spotify's massive free tier to prop up. Apple and Tidal pay the artists a lot better because of that.

    And if Spotify can't make it to an IPO before going rudder up, Apple Music becomes the Facebook of this story and Spotify becomes the Myspace.

    The rotting buggy whip. The cattle skull. Tumbleweed.

    And Tidal does respectably enough to keep Apple from being considered a monopoly.

    I don't know if non-interactive streaming is legally considered to compete with interactive; there are different rules. If they are, Cable tv and satellite radio would also be streaming competitors and are here to stay, regardless of what happens with Pandora.
    Man! You have GOT to try a hit of this RANGE SUNSHINE!

    IMTBO = In My Thoroughly Biased Opinion
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    Never underestimate the amount of contempt a failed musician has for those of us who are still trying.
    If the party's good enough, you can actually suck to a remarkable degree.

    Greedle
  14. #14
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    Default Re: Digital vs. Physical Royalties

    The labels ate the stiffs although the charge for recording expenses carried forward.
    What was the 50/50 split? I'm still not following, exactly.
    Man! You have GOT to try a hit of this RANGE SUNSHINE!

    IMTBO = In My Thoroughly Biased Opinion
    CMIIW = Correct Me If I'm Wrong
    Never underestimate the amount of contempt a failed musician has for those of us who are still trying.
    If the party's good enough, you can actually suck to a remarkable degree.

    Greedle
  15. #15
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    Default Re: Digital vs. Physical Royalties

    In the current situation, labels are in the same position as the artists. They have better negotiation power because they have back catalogs to sell, but they are solely dependent on the distribution monopolists to get any profit out of digital.
    This is similar to how bigger artists get more money per play than smaller ones.
    The crux of the matter is that digital distribution is not interested in artist development and promotion at all! Previously, there was an incentive to get a name out for people to talk, because of production and distribution overhead
    of a physical copy, there was a minimum sales number to turn any profit. Now server space for a song costs next to nothing, so it is pretty much irrelevant if you have one artist with a million plays or a thousand with a thousand plays each.
    No, they're not. The major labels own 18% of Spotify (which is a MAJOR conflict of interest and should be illegal.)

    That means they cash in out of Spotify's share without having to split with either artists or publishers.
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  16. #16
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    Default Re: Digital vs. Physical Royalties

    What was the 50/50 split? I'm still not following, exactly.
    It's what the labels aimed for in a deal. The artist got more if they were a big star who self-financed and less if they only had a regional following and took big advances. I shocked a couple major label execs who were floored that their financial departments confirmed what I wrote.
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  17. #17
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    Default Re: Digital vs. Physical Royalties

    Something I don't see mentioned is how much of Spotify's revenue comes from ad space (in the free version)?

    otek
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