… by my calculation it would take songwriting royalties for roughly 312,000 plays on Pandora to earn us the profit of one– one– LP sale. (On Spotify, one LP is equivalent to 47,680 plays.)
Curiously, he neglects to mention his terrestrial FM royalty rates in what is essentially a lament on Internet radio.
What Krukowski misses is the real danger of these services being on-demand and therefore supplanting most purchasing desire. Traditional radio also has very low royalty rates, but given its scheduled nature (off-demand) serves artists big and small as an advertising platform without cannibalizing sales.
What’s most worrisome about Krukowski’s logic are the positions drawn about the upcoming royalty rate debates in Congress:
Pandora in fact considers this additional musicians’ royalty an extraordinary financial burden, and they are aggressively lobbying for a new law– it’s now a bill before the U.S. Congress– designed to relieve them of it.
Sadly, Krukowski’s financial self-interest has him on the wrong side of this debate; if you’ve ever wondered why we’re bereft of amazing Internet radio stations — why we don’t find the same satisfying application of niche and micro-focus in Internet radio as we do on many websites — look no further than the current royalty rates.
Spotify and Pandora are not traditional radio and should not be rated as such. They’re new age rental services which should reward musicians and labels by charging rental rates. It’s not clear whether that’s a viable business model, but at least it’s honest.