Disastrous Performance Royalty

There is an agreement on the table that will specify royalty rates to be paid by internet radio stations. This article from AAJ is a little misleading.

The opening paragraph…

Songwriters, record labels, and webcasters have reached an agreement on mechanical royalties for songs played on web radio services. However, the “disastrous” performance royalty that threatens to drive Pandora and other webcasters out of business remains in effect.

“Disastrous performance royalty”; see, there is a performance royalty situation that will put a lot of internet radio out of business so, disastrous isn’t an exaggeration. If you are pointing the finger in the right direction, I’m OK with disastrous. Now look at paragraph two….

Webcasters will pay 10.5 percent of their revenue to songwriters and publishers minus any performance royalties already being paid to labels. The move comes as part of music publishers’ drive to start collecting mechanical royalties for compositions played online after giving online radio a free pass while business models developed.

See, that makes it sound like the songwriters and music publishers are the villains. Performance royalties were set up for songwriters. When a song gets played on the radio, the songwriter gets paid a small royalty. The artist doesn’t get paid because, they benefit from exposure. The artist sells records and builds interest for live shows. Nobody knows who the writer is usually so, they aren’t getting the added career benefit. The writer gets nine and a half cents when a record is sold. Generally, this is split, in at least half, with the publishing company.

The performance royalty is what can make songwriting worthwhile. If you write a song that gets played on the radio, every now and then, years after the record stopped selling, you get a nice little check every quarter. Meanwhile, the artist still capitalizes from the song by playing it endlessly in concert performances and continues with a career.

It’s the way it was done until internet radio. Somehow, the record labels hopped on internet radio from the git go and horned their way in to getting a performance royalty for the artist/label. So, whenever a song gets played on the internet, the artist and label get a little piece. On top of that, the artist and label still get exposure that helps sell records and enhances a performing career.

There aren’t a whole mess of people making a rat killing from the internet. One way to drive traffic to a site is to feature music. If a site uses music to gain revenue, the writer should get paid. When the performer or, artist or label gets paid that, right there, is the “Disastrous Performance Royalty”.