Pandora Reveals Artist Royalty Payment

Here at Sage Audio, we spend a lot of time focusing on music industry news that relates to indie artists. That’s because the majority of the artists that use our online mastering services are not on a major label, and we want to make sure we know what issues and trends in the music industry are affecting independent artists.

One of the biggest issues currently facing the music industry as a whole is the role that digital music will play in the future of the business as it continues to evolve. I’ve written before about how many independent artists and labels say they make very little money from the popular digital streaming music services. For just one example, here’s a twitter conversation from New Pornographers frontman Carl Newman (@ACNewman) and a fan recently concerning Newman’s new solo album:

“How about I send it to you, you send me $0.001 (US), cut out the middle man? ‘@matthewpennell: Will your album be on @Spotify any time soon?”

But in a recent blog post, Pandora founder Tim Westergren wrote that many artists are making money, and for the first time offered some actual figures about how much musicians are bringing in from the use of Pandora.

As you would probably expect, the big winners are the household names. Westergren points out that Drake and Lil Wayne make nearly $3 million each from the service each year, while artists like Coldplay, Wiz Khalifa, Jason Aldean and Adele each make more than $1 million per year.

But what about the artists not quite as integrated in the mainstream? Turns out many also are doing very well. Here’s a brief list of what artists will make from Pandora for the year from the blog post:

• Mumford & Sons: $523,902
• Iron & Wine - $173,152
• French Montana - $138,567
• Bon Iver - $135,223
• Donnie McClurkin - $100,228

Of course, most artists do in fact make far less than this kind of money from digital streaming services, which is the actual point of Westergren’s blog post.

Westergren writes that, “We think artists could and should ultimately earn even more. But all of this revenue is coming from a single company. A predatory licensing fee orchestrated over ten years ago by the RIAA and their lobbyists in Washington has devastated internet radio. Few now deem it worthy of major investment, including most notably, virtually every major broadcaster.”

So essentially Westergren puts responsibility for the low royalty rates paid to artists by his company on the major record labels. Independent record labels and indie artists have also claimed that the major labels are the only companies profiting from digital music under the current structure.

Though this topic comes up time and again, it is important that royalty issues regarding digital music be solved as quickly as possible. As noted above, it seems clear that digital music will be how most people listen to music in the future, and as more and more musicians are making livings as independent artists, it is imperative that the payment structure be fair.