Proof! Songwriters Should Be Collecting 14.3 Cents For Every 100 Streams

Proof! Songwriters Should Be Collecting 14.3 Cents For Every 100 Streams

It has been my desire for several years to make a simple apples-to-apples comparison that would prove precisely how much songwriters should be making from streaming. At last, I finally have enough data to do precisely that.

Figures released by the Recording Industry Association of America (RIAA) last Thursday indicate the amount of revenue generated by streaming music in 2016 grew to 51% of total music sales, more than all other forms of music sales combined. This is a leap of 17 percentage points from 34% in 2015.

Drilling deeper, we learn the total revenue from streaming in 2016 was 3.9 billion. The number of paying subscribers more than doubled from 10.8 million in 2015 to 22.6 million in 2016. Those 22.6 million subscriptions generated 2.5 billion in total revenue, which translates to roughly $110 per subscriber or a little more than $9 per subscriber per month. The other 1.4 billion came from ad revenue via services that are free to consumers and Sound Exchange distributions. Meanwhile, paid downloads (iTunes, Amazon, etc.) decreased 22% to 1.8 billion. Physical sales (CDs, LPs, etc.) decreased 16% to 1.7 billion.

If you are a songwriter, this shift in how music is sold is not rosy. Some songwriters claim they have received less than $20 in royalties for multiple MILLIONS of streams! Even after you allow for a song publisher’s share, co-writers, and so forth, and also allow for the fact that perhaps this example was an odd exception to the norm, it’s still obvious that songwriters are being underpaid. $20 for a million streams after being divided 10 ways is still far off the chart from what compensation should be, and now we can know by just how much.

Consider the sale of a 99-cent download. The songwriter’s share in those sales is fixed at 9.1 cents due to standard licensing, or roughly 9.2% of EVERY sale (split with co-writers, and split with a publisher if they don’t own their own publishing). It doesn’t matter how many times the song is played after the download or CD is purchased. Total revenue earned is fixed at that rate.

Based on that model, Apple proposed last year that songwriters should receive 9.1 cents for every 100 streams. This has been viewed by some as a move by Apple to drive Spotify and Pandora out of business, but Apple’s number is actually a bit low.

Here is what we now know when we combine information from the recent RIAA report and a January Nielsen report on the total number streams in 2016:
1. Individual songs were streamed more than 250 billion times in 2016 according to the Nielsen report.
2. 250 billion streams generated 3.9 billion dollars, assuming the Nielsen data and the RIAA reports are both correct.
3. 3.9 billion dollars divided by 250 billion streams is $.0156 dollars per stream, or 1.56 cents.

Let’s compare that to download royalties. If a download sells for 99 cents and generates 9.1 cents for a songwriter, that same share for the songwriter applied to 1.56 cents in streaming revenue should generate .14339 cents; 9.1 cents divided by 99 cents equals a percentage of .09191919, times 1.56 cents equals .14339394 cents). Converted to dollars, that is $.0014339394.

Therefore, 100 streams should generate 14.3 cents.

1000 streams should generate $1.43.

One million streams should generate $1433.94.

Some songwriters believe they should receive the same 9.1 cents per one-time stream they receive from a download that a customer can enjoy over and over. If streaming services are only collecting 1.56 cents per stream, they can’t very well pay six times that much to songwriters.

14.3 cents per 100 streams is fair, considering the total revenue available and the same ratio of payment vs. physical formats and digital downloads.

David Bruce Murray

David Bruce Murray is a church music director in Ellenboro, NC. He is the author of Murray's Encyclopedia Of Southern Gospel Music and the owner of both SGHistory.com and MusicScribe.com. David plays piano for Southern Sounds Quartet and the Foothills Community Choir.

MusicScribe Comments

We love comments

8 Comments

  1. JSR
    Reply April 04, 01:47 #1 JSR

    How much is a songwriter paid for a radio play?




    0



    0
    • David Bruce Murray
      Reply April 04, 15:20 David Bruce Murray Author

      It’s difficult to say, because the split is not equal at radio. Taylor Swift will collect a good bit more per play than Rodney Griffin.

      I have given up on doing an apples to apples comparison to radio, because it’s not really possible to know how many ears are hearing a song when it’s played on a radio station. It could be ten people, or it could be ten thousand.

      I should mention that I’ve been told in that past that there ARE reports generated that provide some rather precise details about how many people hear a particular radio station, how much they pay, and so forth. I’m not privy to those reports. I don’t have the wheelbarrow full of money it would take to subscribe to those reports, so unless someone who does subscribe chooses to share them with me, I will continue not knowing.




      1



      0
  2. Lee
    Reply April 04, 12:52 #2 Lee

    I just looked at YouTube plays on my last BMI statement and did the math on two songs. One paid $0.00021154 per play. The other paid $0.00021735 per play. So I’m assuming all of my songs on YouTube pay similarly. Those are total payout per play. (So divide those figures in half for writer/pub splits. Then divide those halves by two or three depending on number of writers.) I’m not coming close to your figure with YouTube. I’ll do the math later on for other streaming services when I have more time.




    1



    0
    • David Bruce Murray
      Reply April 04, 15:11 David Bruce Murray Author

      Thanks for the information, Lee. If Apple’s proposal goes through, you’d be getting $.091 per 100 plays, or $.00091 per play. It sounds like for the moment, you’re getting just under 1/4th of that. If you’re paid as much for streams as you are for downloads, it should be closer to the figure I arrived at. Either way, it would certainly be a boost over what you receive now.

      Would you agree that my rationale is sound?




      1



      0
      • Lee
        Reply April 04, 16:49 Lee

        OK… here are real world examples. I took one song… it went to #3 on the Singing News monthly chart… and calculated its earnings in different media. These are from the 3rd quarter of 2016, payout of March 17, 2017. These are SONG earnings, not just my share. Again, this is one song. I do not pretend to understand the voodoo that goes into calculating radio spins. This was when the song was in heavier rotation. So I assume that rate would go down later. I also assume the streaming rates are fairly standard over time.

        Commercial (terrestrial) radio – $.06 per spin
        Apple Family – $.09 per 100 streams
        Apple Individual – $.13 per 100 streams
        Apple Trial – did not show up on report
        Pandora – did not show up on report
        Rhapsody – $.09 per 100 streams
        Spotify Free – $.03 per 100 streams
        Spotify Premium – $.06 per 100 streams
        YouTube – $.02 per 100 views
        Aircraft
        Jet Blue – $.02 per play
        United – $.04 per play
        And… drum roll, please… the grandaddy of all payouts and the reason the SG artist community lost their collective mind a couple of years ago when its existence was threatened:
        Sirius XM – $5.15 per play

        So, as far as streaming goes, the only thing that comes close to your $.14 is the Apple Individual account.

        You’re basing the streaming rate on the statutory mechanical rate. I would tend to agree with you in principle IF the statutory mechanical rate is increased. That rate is criminal. The copyright act of 1909 established the rate at $.02. It is ONLY $.091 NOW! If… big IF… we only calculated based on inflation, that would be about $.51 now. The law has not kept up with the times and certainly didn’t take in to account a streaming world.




        2



        0
        • David Bruce Murray
          Reply April 04, 17:17 David Bruce Murray Author

          Yes, that Sirius payout is mind-boggling. Of course, their market is all of North America, so I expected it to be higher, but not that much. Thanks for the real-world examples.




          0



          0
  3. Greg
    Reply April 05, 22:02 #3 Greg

    Thanks David for this article. We’ve been doing a lot of digging on streaming ourselves, and though the rates are not what we wish they were, there is a way as you have explained to at least make it viable. As Lee stated, YouTube is not a format to judge anything by. Apple Music, Spotify and Pandora are paying better rates. One way to look at it too is when a customer purchases a CD the writer gets paid once, no matter how many times the purchaser plays. So you make .091. The streaming rates are lower, but you have to look at it that the writer is getting paid a smaller amount every time that song is played. We have to understand the format before we toss the baby out with the bath water. I am in 100% support for the government to raise the digital rates to writer / publishers on streaming.




    0



    0
    • David Bruce Murray
      Reply April 05, 23:25 David Bruce Murray Author

      Yes, I realize the CD model is Pay Once/Play Many, while the stream model is Play Many/Pay Each Time.
      I’m taking a completely different approach to come up with an appropriate figure, though. I’m not basing it on YouTube or anything anyone else is currently paying.
      If the total take for songwriters is around 9 or 10 % of total CD sales, streaming services as a whole ought to be paying the same percentage. They aren’t by a long shot, as Lee has demonstrated. Whether one format is played many times after purchase is irrelevant in my model, because I’m basing it on a typical songwriter’s share of the total sale price. Now, of course, it varies in the real world some, since the songwriter’s total royalty is always 9.1 cents regardless of how many other songs are on that CD or what that CD ultimately brings at retail. I’m just using a 9.1 cent share of a 99 cent sale as a way to calculate the percentage, then applying that percentage to the total income streaming services receive when the stream just one song.




      1



      0

Tell us what you think!