Deconstructing: Pandora, Spotify, Piracy, And Getting Artists Paid

“Who the hell is this guy and why is he trying to sell me a warm sack of shit?”

This question lit up my mind last week, as I sat in the audience for the Future of Music Coalition Policy Summit in Washington, DC. The guy in question was, in fact, a US Senator — Sen. Ron Wyden (D-OR) — while said warm-sack-of-shit was the Internet Radio Fairness Act (IRFA), which Sen. Wyden is sponsoring in the Senate.

The IRFA has the stated goal of correcting inequities in royalty rates that are paid to songwriters and musicians based upon type of radio transmission. Real inequality exists in the royalty rates between terrestrial radio, cable/satellite radio, and Internet radio (like Pandora). Some rates, like those for Internet radio, are arguably too high while others, like terrestrial radio rates, are probably too low. “Fairness” for artists and businesses would mean taking all of these rates into legislative consideration at the same time: raising some while lowering others. But that’s not what Sen. Wyden was there to support.

The IRFA would instead lower rates exclusively for Internet radio. It is a wealth-transfer bill, taking money that’s going to artists and redirecting it to Pandora and Clear Channel — the legislation’s main backers and potential beneficiaries. In the bill’s resounding lack of balance, we may as well be calling it corporate welfare or trickle-down economics. It’s a funny theory advanced by IRFA supporters that by paying artists less, artists will then be paid more. (There’s this bridge I’m interested in selling. Care to hear about it?)

Of course, that reality of the IRFA doesn’t make for a great populist pitch. Sen. Wyden was there last week, standing before the large conference room, to massage the issue. He vilified record labels, like a stock character from a Cory Doctorow novel, portraying them as against the interests of artists and even “shackling” them (glossing over the basic truth that labels, imperfect as they are, wouldn’t exist if musicians didn’t choose to partner with them). He spoke in vague, Orwellian terms about making sure “the past doesn’t get a leg up on the future” — whatever that means. He spoke of “adequate” compensation for artists, even as he cheered a bill that would continue the decade-long digital tradition of slashing such compensation and methodically devaluing artistic work itself.

But Sen. Wyden said one thing that was unequivocally true: “…the reality is that there is no functioning market here.”

If you needed a reminder that digital music is woefully broken in its current form, all you had to do was read Pitchfork the day after Sen. Wyden’s speech. Last Wednesday, Damon Krukowsi (Galaxie 500, Damon and Naomi) published a column that illustrated just how dire the payouts are from digital streaming services, so often hailed as the future for music. Krukowski wrote, “To put this into perspective: Since we own our own recordings, 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.)”

This set off the usual internet media cycle for these types of articles: some bloggers and commenters offering basic sympathy, others offering arrogance and blame.

The “blame” contingent was expressed by a Detroit blogger who wrote, “If [you] want to get paid for music my suggestion is that you should play it for us in person, instead of just whining about the old days” — to which Maura Johnston called, “bullshit!” In her own reality check of a Tumblr post, she not only lambasted the tired excuse that touring is the magical tonic for every music industry affliction, but took the opportunity to diagnose a deeper existential problem in what we talk about when we talk about music, culture and money:

Why are we letting geek-defined Darwinism (and the destructive hypercapitalism that comes with it) take over every goddamn aspect of culture? Why can’t the system be criticized for not working for people who create culture, even though it “works” for shareholders and executives? Why is it only appropriate to celebrate those at the top of the heap, or those who have pandered successfully to the “thought leaders” (I’m putting that in quotes because I basically mean the Reddit-beloved likes of Jonathan Coulton and Am*nd* P*lm*r here), when tech people and executives are deified? Why can’t musicians who make records that people enjoy speak out about how the revenue model for that enjoyment has changed, and how it might affect not just the way they make music in the future but the way others will?

Yet the problems remain. Johnston asks some of the right questions, but for many this issue of streaming payouts is already becoming a bit tired. So what? What is the proposed solution to all this? We can place David Greenwald of Rawkblog/Uncool somewhere within that category. In his own post on Krukowsi’s piece, he labeled the original link, with an implied sigh of fatigue, “Another article on Pandora/Spotify,” and made a good observation. “The false expectation,” he writes, “that a handful of specific tech start-ups were going to make artists a living overnight seems deep-rooted and pervasive and I’m not sure why.”

Perhaps now we are getting somewhere. Where did these expectations come from?

In fact, stemming from those halcyon days of Napster, a strain of conventional wisdom took hold among New Media prophets that digital piracy wasn’t really a problem. The real problem was the lack of convenient, legitimate alternatives to piracy. This line of thinking had a few consequences. 1. It offered consumers a rationalization for their own freeloading ways — they weren’t part of the problem, rather it was the record labels’ dragging their feet and foolishly fighting “the future.” 2. By implicitly portraying mass piracy as acceptable, the baseline value of music was set (and remains) at zero — this skewed the entire legitimate digital marketplace and still does. 3. This thinking communicated to artists to just be patient, because the solutions, in the form of better digital services, were indeed coming.

Now, what do people say about the mistake of Napster? They say that the labels should have figured out a way to license the service. This is really just wishful thinking — closer to opportunistic mythology than history — but for our purposes, a licensed Napster (though a contradiction in terms) was the solution in front of everyone’s faces back then: a missed opportunity to save the music industry.

What would a licensed Napster actually look like? It would look like Spotify. And, as everyone can see, Spotify isn’t working for artists. Artists know this better than anyone.

So, to Greenwald’s observation, arguably ridiculous expectations have been placed on these streaming services for many years as a counter-argument to those who saw piracy as the primary threat. You don’t have to kill Napster! License it and adapt! And now, here we stand, with piracy as popular and socially accepted as ever, and streaming services clearly unsustainable in their current form.

And why are they unsustainable? Because for most users they are fucking free — and online advertising revenues will always be a limited source of income. Netflix and SiriusXM have well over 20 million paying subscribers in the US. Spotify has something like three million…worldwide. Pandora also won’t release its number of paying US subscribers, but you can bet it’s a relatively low number and, anyway, their subscription amounts to about $3 a month! And now, rather than try to corral customers into the paying model, they are trying to fix the system in their favor (in favor of free) through the IRFA.

The only free model that works on a commercial scale is also an illegal model: piracy. Unlike Pandora or Spotify, file-sharing sites needn’t balance their advertising revenues against royalties or licensing costs. They don’t pay artists royalties. They don’t pay artists anything. The Pirate Bay or poor, poor Megaupload’s Kim Dotcom made their businesses work by exploiting loopholes in the legal system and serving as black market distributors, charging advertising on content that they never invested a penny in.

What is “the problem,” exactly? Here’s one example: As an experiment, I recently used Google, one of the most celebrated and richest corporations on the planet, to see how easy it still is to pirate music: I searched for an unlicensed copy of the new Kendrick Lamar album. It took about two minutes to find and download the “iTunes Deluxe Edition” for free. I scrolled through page after page of Google results, clicking through these unlicensed downloads on pages that all contained commercial advertising. It was easy as hell.

That is the problem.

The digital revolution has brought about a great many things. However, the obvious exploitation of artists — in knowing denial of their basic rights — remaining at such an industrial scale in 2012 is an embarrassment to that revolution; it is the cancer at the core of its lofty talk of “openness”; it is what child labor was to the Industrial Revolution.

But nothing will change until more people find ways to make demands, making clear that the future of the Internet lies in amplifying the value of human creativity, rather than sucking it dry or cheering it along a futile race to the bottom.

The funny thing is, artists, the labels they partner with, and legitimate digital services like Pandora and Spotify ought to be on the same side of this issue, pulling in the same direction. The digital black market siphons demand from all current and future legitimate services while plainly undercutting the opportunities (and bargaining power) of artists in that same marketplace. Can these interests be aligned? Can we build a digital marketplace of basic fairness and opportunity, where artists and services alike have a shot to succeed and the value of creativity isn’t being artificially anchored down by piracy?

Some artists and labels (like Projekt Records) have already taken their music off of Spotify on account of the low payouts and, no doubt, many others are considering doing the same. In addition to announcing their grievances about streaming payouts, what if these same artists and labels united to also demand greater digital reform that protects their cardinal rights against mass piracy? Since legitimate digital services like Pandora, Spotify, iTunes, etc. also would benefit from the marginalization of pirate sites, perhaps a few key artist voices could cajole them to also get on board for digital reform… For instance, in pressuring the government to make sure US payment processors and advertising networks aren’t doing business with overseas torrent trackers, cyberlockers, and websites everyone knows exist only to deny musicians their common rights. Perhaps search engines could also be more effectively compelled to filter results that lead to black market distributors like the Pirate Bay.

It shouldn’t have been so easy for me to pirate that Kendrick Lamar album, or for the site that distributed it to make money from somebody else’s hard work. Can we look at that specific example and devise ways to make piracy less convenient for fans and less profitable for distributors, because such reform is better for our cultural health over the short-, medium-, and long-terms? Where there’s a will there’s a way. We would end up with a different Internet, in the sense that it would be a better regulated, fairer Internet of expanded opportunity for artists and legit businesses.

As has been true throughout this ugly debate, the success of any effort to establish fairness will come down to the attitudes and choices of fans. Will we as individuals recognize that we’re not entitled to free music; that if artists want to release their work for free, it is quite easy for them to do so; that we all will benefit from a fair digital marketplace; that we may already have missed out on great third or fourth albums by artists who, logically responding to the lack of investment and fan support, now approach music as a part-time hobby, because they need to make a living doingsomething?

It’s up to artists, fans, and labels to push for such fairness. It can most certainly be achieved with a bit of focus, clear communication, and effort. Then, perhaps, we will have built the Internet and the creative culture we all deserve. Maybe then we can turn our attention to reforming unfair radio royalties or unfair copyright provisions. And maybe people like Sen. Wyden, who has yet to show much consideration for artists or their basic rights, will be able to lecture us about digital “fairness” without sounding like a goddamned fool.


[Chris Ruen is the author of Freeloading: How Our Insatiable Appetite For Free Content Starves Creativity, which dissects the ongoing issue of internet piracy, and discusses it with musicians such as Craig Finn of the Hold Steady, Ira Wolf Tuton of Yeasayer, and Kyp Malone of TV on the Radio]

Tags: ,  
Comments (77)
  1. Michael_  |   Posted on Nov 20th, 2012 +8

    Stereogum, I love these Deconstructing pieces, but there’s been like three or four just in the past week. You’re forcing us to read and think a bit too much lately. I’m going to refrain from even doing that this time around, especially for this subject since it’s been beat to death and there’s never an answer to the age ol’ issue of how to pay artists fairly.

    I will say this, however: I fully support physically buying music, and as passé as CDs are, you really have no reason these days to steal music given how cheap they are (unless you hate things taking up space in your house.) Don’t tell me you can’t spend $4.99 for Frank Ocean’s Chanel Orange this week during Amazon’s flash sale or that Grizzly Bear’s Shields for $3.99 a few Saturdays back as Best Buys Deal of the Day is too expensive, especially when digital copies for those albums you can’t even hold and don’t even technically own probably cost more.

    • We may not be able to change the ease of illegal downloading, but we can at least try to make it unfashionable. I mean, look at the vitriol, derision, and general “informed snobbery” flung all over the comments section of the Mumford and Sons thread. We’re experts at denouncing bands we don’t like and defining the fans of those bands as inferior — why not use that same ethic to actually affect some sort of helpful change toward the artists themselves? Scoff next time someone mentions stealing an album, pretend like they just told you their favorite band was Phillip Phillips or Nickelback.

      • sorry that wasn’t meant to be a reply. : (

      • You make a good point, but here’s the thing. I don’t feel bad about stealing music on the internet. No amount of tsking at me is going to make me change my ways. I may be an exception but there ya go.

        The one problem I have with this very good and thoughtful article and possibly your comment is that it seems to assume some golden age when artists made secure livings from royalties on records sales. Other than a very small elite of artists, most musicians mostly got screwed by their labels and never saw a dime in royalties because they could not cover the recording costs run up on advances.

        I feel like lately things are a bit tougher to find for free. I’ll pay if I have to but I don’t really feel altruistic giving Amazon $8-$9 knowing the band may get a penny. That’s not much different than buying a CD or LP, just a bit cheaper.

        Until there is a way for me to give way to give my money directly to the band (some have made this easy and I applaud it) I’m just going to look for the cheapest alternative.

        I think this is similar to the sentiment some express that they’ll buy a t-shirt at the show. I don’t think they deserve to be shunned or persecuted. The idea is that we like to support bands we like but most of the time our money never gets to them. Show me a way I can guarantee my money ends up in the artist’s pocket and I’ll pony up.

    • I agree, rather than having weeks and weeks of “best albums of iconic band xy” and then major articles like this one or the deconstruction of Sufjan Stevens and Christian music all crammed into one week is a bit much. I think stereogum would highly benefit from sequencing the publication of the individual features a bit better.

      This was a great read, however.

      • Listomania is almost upon us.

        In a few weeks we’ll just complain about how wrong everybody’s list is.

        Admittedly, we’re a tough crowd.

        • Michael_  |   Posted on Nov 20th, 2012 +1

          Too soon, I know, but I just published my 25 Best Songs of the Year, and I’m planning on publishing my 25 Best Albums of the Year next week. Would love to hear what you think so far!

          Also, you know what I realized about the Gummy Awards (if they have them?) When Pitchfork had its People’s List, there was an article from a feminist blog about how most of the voters were overwhelmingly white and male, and I would imagine that would be a similar breakdown here. What I’m getting at is that it’s a little funny realizing that the Male Indie Hottie superlative is most likely chosen not by legions of beautiful indie-listening females, but by a bunch of frumpy heterosexual white music dorks (and I’m sure we’re all comfortable with our sexualities anyway.)

          • Just went over your Top 25 list. I remember last year you had HEALTH covering “Goth Star” and I got super fucking amped because I knew they covered it on tour but didn’t know it got an official mp3 release. And of course your write-up and link to download was integral in catching me up on what truly is an amazing song and cover.

            So I was also pumped to see the #25 slot held by “Chum” – a song I just picked up off iTunes and was happy to find a 1 minute outro at the end of Earl’s verses. Good call locking that song in your top spots because it’ll only grow on everybody.

            Loved this: “It’s like staring straight into the headlights of an oncoming collision, and loving every second of the pain just when the crashing chorus hits.” My favorite album of 2012 :)

            Good call slotting “Thinkin Bout You” over “Pyramids” – I think it’s the biggest track from Channel Orange although I know a lot of fellow ‘Gum heads are big on “Pyramids” — I’m guessing one of those songs will be Pitchfork’s #1 song of the year.

            Big ups to Liars in the top 5! “No. 1 Against The Rush” is truly a feat. Love the music video for it too. Of course it takes backseat to “Brats” for me… Still! Love WIXIW!

            Japandroids in the top spot is a good call. I hadn’t listened to “Celebration Rock” since the summer and put it on recently and cursed myself. That album truly is perfect and THTHB is the culmination of that firework fueled whirlwind.

            And now I must find a link to this Charli XCX remix of How To Dress Well.

          • Michael_  |   Posted on Nov 20th, 2012 +1

            Yeah, the moment I heard “THTHB,” I knew that song defined my year. And WIXIW I hope gets more love on year-end lists overall, because after it sinks it, it’s really brilliant.

            “Pyramids” is epic, but “Thinkin Bout You” is just so smooth, clean and timeless.

            I’m not sure why all the SoundCloud clips are missing at the moment (I think their site is down) but here’s your link to the HDTI / Charli XCX remix in the meantime!:

            Looking forward to seeing what’s on yours!

          • Loved the How To Dress Well remix but LOVE LOVE LOVED her own song “You’re The One” (a song also on your list {higher even!}).

            I guess she only has a few songs anyway, so I suppose I haven’t missed much. I know Amrit put SALEM’s remix of one of her older songs on a Remixtape this year… or last year? (Side Note: I like to think SALEM remixes are posted with me in mind :)

            I’ll mainly have a Top albums list… probably only like a Top 5 songs list… and then a couple other lists that I’ll throw up in the comments from now through Listomania.

            “Chum” may have to end up breeching my Top 5… Earl is the best.

    • Please don’t accuse them of doing too much actual music journalism, lest we end up with more articles telling us which album turned 10 today.

    • It is going to happen no matter you people think, so don’t talk Spotify, a company that is actually trying to help the music industry.

    • “You’re forcing us to read and think a bit too much lately.”

      Oh, god. Please, please, please tell me you were being sarcastic.

  2. This was an amazing article, thank you.

  3. Chris, kudos for this excellent post about the constant, evolving pain for our creative community. What so many do not realize is the high price we will all pay, if artists continue to be devalued either by pirates or the tech industry.

    The attitude that creative content is a stumbling block for new businesses and entrepreneurship is a position espoused by short sighted profiteers, who would rather cash out a flawed business with an IPO, than build an enduring business that can be profitable for business AND artists.

    Great content is not digital road kill, but rather the fuel that drives the success of the internet.

    Will Buckley, founder FarePlay

  4. I’m intrigued, anyone have a good DL link for Chris’ book?

  5. Some evenings I just like to throw on the “Thinkpieces” station and zone out…

  6. Isn’t the answer to this riddle already in this article?

    “Netflix and SiriusXM have well over 20 million paying subscribers in the US. Spotify has something like three million…worldwide.”

    I’m assuming Netflix is a sustainable business model. It’s also been around for over a decade (albeit not in streaming form). If Spotify or Rdio or Pandora each had something like 10 million subscribers…wouldn’t artists be getting paid?

    Also, if streaming is so bad…why are nearly all major label releases available on them? I think the dirty secret is that big labels are getting paid and small indies simply aren’t. But this is more due to the realities of scale.

    Some Rdio users have been having a long and spirited discussion about this very topic for over a year:

    • Amen to that brother.

      And with Pandora, people seem to miss the fact that they’ve been losing money every year since they started.

      Why is that? Licensing fees, and instead of doing a disservice to their consumers and upping the price of their service to compensate (we all saw how people reacted to Netflix when they did that), they’re trying to change the situation so that 1) they don’t go belly up and wreck a revenue stream for the artists and 2) they don’t lose their consumers.

      So it’s basically a delicate balancing act.

    • After having conversations with filmmakers that have their films on Netflix, which I always thought would be a great thing for the filmmaker, I found that it’s a trade-off, not a money-maker. By having his/her movie on Netflix, the filmmaker gains exposure but almost no money. Most of the money goes to the distributor that the filmmaker signed with. The hope is that by being on Netflix they’ll get greater exposure and people will be more willing to pay them to make their next movie, not that they’ll receive anything substantial from Netflix. The alternative is doing all the distribution and sales of their film themselves, which gives them more money per sale/viewing of their film but very little exposure and is an incredible amount of legwork.

      I’m assuming Pandora/Spotify/etc is the same for musicians: greater exposure in the hopes that people will buy their music and/or see them live, which will be reflected in their label giving them more money to record the next one, but that will net them very little direct money. So while Netflix is sustainable, it doesn’t solve the problem of the artist getting a fair cut of anything. The whole digital system is fucked up, as this article so eloquently describes.

      • That’s interesting. I don’t seem to hear much about filmmakers kicking and screaming about the unfairness of it all compared to musicians. Both mediums theoretically have an ‘event’ market. A film’s success seems to be judged mostly on their box office sales. Perhaps everything after that is just gravy for filmmakers.

  7. Struggling artists aren’t making a lot of money from their art? This seems to be the case throughout all of history minus the last 50 years.

  8. While I agree that illegal downloading is a problem, and has been a problem, I think streaming services lik e Spotify are actually the solution (in time). Sure, spotify doesn’t pay much, but it rewards albums that draw repeated listens, over the more throwaway records. If someone illegally downloads mp3s, and then plays them through Spotify, the artist gets paid for those plays. One of the relatively unknown bands I work with recently released a single for free via bandcamp. We also sent it to Spotify. In about a month, that single song earned $16.00 off of 2,800 plays, so I’m not sure where these numbers come from: “On Spotify, one LP is equivalent to 47,680 plays.”

    There’s thousands of bands in the US who believe they deserve to make a living off of album sales, without working their asses off on the road. The road and merch have always been where musicians have made money. The labels took all the album sales money to cover the costs of marketing, production, videos and all the other bullshit.

    The sad reality is that the value of music diminishes as the supply increases. Musicians are generally greedy to think that they deserve to make a living off of their art. Art is a personal therapeutic practice for many to exercise their demons. I appreciate that you’d like to share your demons with me, but I might not think their worth a damn. Just like how you might enjoy a painting you see in a gallery but won’t buy it.

    • The Future of Music Coalition actually studied this, with a survey of thousands of working musicians. Contrary to what many people think, merchandise (t-shirts, etc) accounts for only 6% of an average artists’ income. And touring only accounts for 28%.

      Whether or not artists make much money from album sales is up to the individual deals with their label (unless of course, they’re self-releasing). If they’re working with one of the many indie labels that adhere to the classic 50/50 artist label split pioneered by Touch & Go, Dischord, etc, then album sales can certainly be a meaningful stream of revenue.

  9. In terms of artists getting paid, ease of access doesn’t matter as much as our lack of personal ownership toward musicians we like. The motivation to drink from a local brewery surely involves its superior taste. But it also involves feeling personally invested in a brand’s success. Buying local produce or buying from local bookstores might be (irritatingly) trendy but more so it’s a commitment to supporting institutions we value. Music shouldn’t be so different. Country fans take ownership of their artists. Country artists get paid. Rihanna’s Navy and Little Monsters take ownership of their artists. Rihanna and Gaga get paid. Even Christian hiphop’s Lecrae sells 100K of his releases because Christian culture understands that ministers have to be supported by their constituents. So much of independent music’s culture is based on hearing an albums just long enough to have an opinion of whether or not they belong on end-of-the-year Best-of lists. It’s a fun conversation to have every December. But that’s not a motivation artists can bank on.

    • I wish I could upvote your post several more times.

      And, as much as I hate agreeing w/underscore, I agree with underscore. If we want artists paid, we have to pay them.

      I use pandora as a service. As a result, I have purchased several songs that I would not have otherwise. It is not a perfect model, but I’m too old to drive three hours and pay $30 (plus the cost of drinking to eliminate the awkwardness of being an old guy at a show) to see a band that I kind of like. I’m much happier buying the couple of songs that I prefer, and leaving the concert hopping to the teeners. I also have trouble buying “CD’s” in record stores, because there aren’t any fucking record stores anymore.

      I’m not sure why the marketing opportunities provided by vendors like pandora are not mentioned more often in these sorts of articles. I rarely read comments on pandora, but most of the ones that I have read are a) people who hadn’t heard of the band before (and are seemingly now likely to purchase some music); b) people who “love this band” (and presumably have paid for the music); c) trolls.

      And there is another ugly, but very simple, fact. Markets simply don’t support thousands of mediocre competitors. It would be fantastic if everyone could be in a band and “make a living”. However, being in a band does not mean that “being an artist” is one’s job or career. If artists make art to make money before they make art to make art, then there is a serious disconnect somewhere.

    • Oh man did you hit the right spot there! I agree 100%. To me people should at least pay for some of their favorite music. Maybe not all of it cause i know that money is an issue for everyone and at the end of the day if piracy is so easy it is tempting to everyone (including me) to download for free. But i feel that if everyone paid for at least their 2-3 favourite artists’ work things wouldn’t be as bad as they are.

    • I want to find out what Christian hiphop sounds like, but also not.

  10. “Perhaps search engines could also be more effectively compelled to filter results that lead to black market distributors like the Pirate Bay.”

    You can’t tell Google not to crawl The Pirate Bay, because it would violate the fundamental way in which the internet works. Besides, even if you violate net neutrality and tell Google what it can and cannot crawl, people will just flock to alternate search engines and VPN services.

    • Telling Google that they cannot crawl Pirate Bay is NO different from how all ISPs and major web companies work together with spamhaus to BLOCK ip addresses used for spam. The ONLY reason for this hypocrisy is that GOOGLE (GOOG) makes BILLIONS from the ad networks that they own that push ads to the billions of the landing pages with links to illegal copyrighted media indexed by Pirate Bay, Kick Ass Torrents, Extratorrent, etc.

      • Answer this question:

        Why would Google invest 32 million into ContentID for free, but not do all they could to combat piracy?

        It’s not as simple as telling them not to crawl piratebay, and you’re ignorant to think that way.

        On top of that, if they had to change the algorithm for search, then think of what would happen. Just think back to how many people had to redo their site content because of the Panda and Penguin updates. Plus you have the costs in doing so.

        Google is not going to jeopardize the relationship they have with their consumers over a minority complaining about online piracy.

        Oh, and would tell you to pander your ridiculous Lowery-based conspiracy theories elsewhere, but you’ve gone and reiterated the same bullcrap to a number of sites.

        • Google invested in ContentID because it had to after facing billions in infringement claims on YouTube and other sites. And Google still gets away with murder on other websites, including all the Google AdWords revenue on third party piracy sites.

          Google’s job is to do the least it has to do to comply with the law while still profitting from piracy. Google makes money on free content, so why would they lobby to stop that?

          The fact is, the U.S. govt could force them to block piracy websites, just like they force Google to block other sensitive sites — searches for classified documents, etc — or just like Google censors its own results (not showing videos of warm crimes on YouTube, for instance).

          Google is not some benevolent, or at best, independent operator providing us a great service. They are a company benefitting from piracy and theft of creative works, music included.

          • Sadly warm crimes are not as bad as war crimes.

          • “Google invested in ContentID because it had to after facing billions in infringement claims on YouTube and other sites. And Google still gets away with murder on other websites, including all the Google AdWords revenue on third party piracy sites.”

            You missed the part where Google is not able to tell whether content is infringing, it’s not their responsibility to look out for the interests of Hollywood.

            “Google’s job is to do the least it has to do to comply with the law while still profitting from piracy. Google makes money on free content, so why would they lobby to stop that?”

            Profiting from piracy, are you high? Why would they do that after Viacom’s appeal reversed the Youtube decision and they lost a lot of money? They know that Hollywood has a stronger reach in the government, so why would they kick the hornet’s nest by attempting to profit from piracy?

            “The fact is, the U.S. govt could force them to block piracy websites, just like they force Google to block other sensitive sites — searches for classified documents, etc — or just like Google censors its own results (not showing videos of warm crimes on YouTube, for instance).”

            It would disrupt their business model if they were forced to, which is why they’re trying to resolve it without massive changes to their infrastructure. I

            By the way, blocking searches for classified documents? You do know you can have Google de-index pages or files on your website? Also, if the government were putting up documents capable of being indexed and searched, then that’s pretty ignorant.

            “Google is not some benevolent, or at best, independent operator providing us a great service. They are a company benefitting from piracy and theft of creative works, music included.”

            And Hollywood is? Every business is looking out for itself, but at least Google doesn’t go around assuming that people are guilty until proven innocent.

    • Goog recently started downplaying pirate bay results. It won’t make any difference because people who know how to torrent also know how to search on the pirate bay site itself.

  11. The market for cultural products such as music, movies, books, video games, TV shows, etc. is never going to work until ISPs start following the law they asked for and terminate service of repeat infringers (BitTorrent Seeders). ISPs are simply flagrantly violating the law 17 USC 512(i) which states that in order to have safe harbor from the liability due to 42% of their upstream traffic being used to illegally distribute music, movies, software, games and books (Sandvine November 2012), they must have a policy for terminating repeat copyright infringers. Why was that law (17 USC 512 (i)) put in place in 1998? Because ISPs asked the US congress to give them a way to have a safe harbor from the copyright infringements occurring on their networks. The US congress did this because prior to the DMCA, it was CRYSTAL clear that ISPs could be sued for their third-party liability to copyright owners when their subscribers illegally distributed copyrighted material on their networks. Senator Feinstein and others believed the ISPs would hold up their end of the bargain. They have not. The ISPs now abuse this law and make tremendous profits at the expensive of every US creative industry. Broadband revenues have explodes to $50B since the DMCA and music, motion picture, console and pc gaming, cable subscriptions all decrease due to the fact that ALL of their products are now available on America’s ISPs illegally for free.

  12. Damn. This is depressing.

  13. This topic is of great interest to me. Thank you for addressing it here.

    I think what most people don’t get, and should, is that NOTHING IS FREE! Whether it’s pricier tickets for live performances, or over-priced merchandise, we’re going to have to pay in one form or another. However, the ultimate price is at the expense of the art form itself; “artists” are being replaced by “brands,” and music is being subsidized by perfume. Hey, maybe the government can impose an “art” tax on products made by crappy artists to compensate the really good ones. :)

  14. Its really frustrating for me to realize that the money im paying for my Spotify Premium membership does shit for the actual artists. I used to pirate music a lot. I couldn’t afford to buy it, or there wasn’t a shop nearby that even had what I was looking for. Im not gonna pay $10 for just a digital copy of an album. I want to be physically holding something such as a vinyl or a cd when I’m purchasing it. If people only realized that if we can all stop pirating music then prices for cds or vinyls will eventually become more affordable.

    • I do believe the artists earn more for people paying premium. i didn’t see that addressed, but I did read that in my music business textbook. does anyone know for sure? If so, the pull for premium should be greater. maybe even various price plans for levels of membership.

      • I’d still imagine most of that goes to Spotify. But that’s just how business works.

      • They do–I think that was mentioned somewhere in the last article like this on Sgum (or maybe in the comments), but also the dude from Galaxie 500 mentions it in the Pitchfork article linked to the Deconstructing post:

        “…in practice Spotify’s $0.004611 rate turns out to have a lot of small, invisible print attached to it. It seems this rate is adjusted for each stream, according to an algorithm (not shared by Spotify, at least not with us) that factors in variables such as frequency of play, the outlet that channeled the play to Spotify, the type of subscription held by the user, and so on. “

  15. Whatever music I might have hypothetically missed out on due to artists putting music on the back burner is more than made up for by the ridiculous amount of music I’ve discovered through not having every record I listen to be a significant (for my budget) financial investment before I get to properly assess its value.

    My rabid fandom emerging from having discovered these bands invariably results in vinyl, gig and merch sales for the artists in question.

    So, basically: whatever dude.

  16. They need to work on refining the whole file sharing process and figuring out how to channel their profit with that, because that’s the real appeal to me. For example, when putting together a CD of obscure Radiohead songs, you’ll get exposed to some really cool files when you take the time to search….I mean whats better than DL’ing really obscure Radiohead tunes and stumbling upon Drugstore’s Kill the President with Thom to add to your auditory goodness mix. Like The Dude tells ya….”It ties the whole room together.” Can’t find dat shit on iTunes.

  17. This is a great discussion. I really think the Lala music service was on to something pretty great before Apple bought it/shut it down. You could listen to the album once, for free, and then pay a small fee to stream it forever (a web album) or purchase the tracks for download for a pretty moderate price (usually $6.99 or so). Spotify’s model could do something similar.
    The freedom of being able to listen to the music before making an purchase is amazing, as is the ability to discover new artists via a “Similar Artists” module. I just don’t think these services should be free, necessarily. It’s one thing to put ads in the free service, but at that point the majority of revenue, I’d imagine, is being absorbed by the service itself – without making it back to the artist. There really should never be a case where an intermediary is making money off another’s work. This goes for music sales, ticket sales, etc.

  18. I’ve read Stereogum for 8 years and though I rarely comment, I have to say this is the best article I’ve seen posted here yet. Bravo — a great call to action.

    The only thing missing, I’d say, is a mention of real legal solutions that could be implemented to stop music piracy. But we don’t have the political will (or perhaps capital) to implement them. It doesn’t help that Google makes billions off piracy and can spend a fraction of that to lobby the U.S. govt.

    • The only thing needed to make the market for music start working properly on the internet is for ISPs to follow the law 17 USC 512 (i) and terminate repeat infringers. They know they have to. That is why they are doing CCI to try and throw contnet a bone so they dont get sued for not implementing this law. Verizon’s acceptable use policy warns you that you could be terminated for repeatedly infirnging copyright. They just don’t do it. If they followed the law, 42% of all US internet traffic would not be used to illegally consume music, movies, software, video games and ebooks. Music rand Home Video revenue would actually go up like ISPs revenues and Google’s revenues. That is how the DMCA was designed to work. Most ISPs just ignore the law. Musician’s incomes would start increasing and over time people would value music again. That is what copyright does, establishes a value for copyrights.

  19. This whole conversation is pointless. Nothing will probably ever stop online piracy, even calling it piracy is a joke. I guarantee that 90 percent of people who download music and movies online for free don’t think of it as stealing. Also this isn’t really a new problem, online “piracy” has been going on since the internet was created so these musicians can’t act too surprised when nobody buys their LP from their websites. As far as royalties go I have no idea. I can stream music for free from Pandora, which is a legitimate music streaming service, so I don’t really see how they can pay every artist for something that they just give away. So who knows, and honestly I don’t really give a shit.

    • It doesn’t matter whether they think of it as stealing. Seeding or leaching copyrighted material without permission is a violation of US Federal law (17 USC 106) and of the basic human rights of the content creator. Article 27 of the Universal Declaration of Human Rights says “Everyone has the right to the protection of the moral and material interests resulting from any scientific, literary or artistic production of which he is the author.”

  20. As sincere as Chris may be about “the need to change ourselves,” this is not a realistic path to achieving change. I am a musician myself who tries to get people to buy my records, but the allure of unlimited free music is undeniable. I support artists with merchandise and concert tickets when I can, but I feel like I’m with most people who are somewhat troubled by downloading but continue to do it anyway. So what is the answer to this?

    We cannot regulate the internet in a Big Brother sort of way by blocking certain content. This is what SOPA chose to do and it had scary implications for free speech and civil liberties. We should focus on making supporting business models like Lala that did actually provide some sort of feasible income for the artist. Surprisingly, many people still do buy music that they really, as evidenced by significant album sales by Adele, Taylor Swift, Arcade Fire, Bon Iver, etc. We’re just going to have to find new ways to introduce/license music for maximum audiences to hear it, find business models that are affordable and support artists, and be realistic about where we are as a culture.

    • Blocking pirate websites causes no more civil liberties issues than blocking IP addresses that send spam which all major internet companies and ISPs work together through spamhaus to do everyday with tens of thousands of ip addresses. Pro-piracy businesses just hate the idea that they might actually have to pay part of their massive profits to the people who made the media they leverage. This is the biggest red herring in our lifetime. Google blacked out their logo in February because they own 60% of the ad networks that push ads to BILLIONS of landing pages that have links to illegal free content. The ISPs contribute to this canard because their broadband business grows 10% a year on the backs of illegal free media while all those content industries collapse. Also notice the other hypocrisy that no one says “an IP address is not an individual” when it comes to spam enforcement.

  21. The problem isn’t really consumers, or a lack of legal safeguards on the internet or their enforcement. These all play a role in decreased revenue, sure.

    But the focus should instead be on the distribution channels. Music wasn’t devalued by Napster, at least in a meaningful sense. Music was devalued by companies like Apple and Amazon, which when creating their brand-powered mp3 markets, cut market price of an album in half and allotted a FAR greater portion of earned revenue to non-artist parties. On the internet, limitless “information” whether it be in the form of music or movies, cannot have differing prices between retailers because there are no supply barriers to excuse it. Pricing then comes down to demand and the lowest common denominator for a company to turn a profit. When you look at CD sales decline in tandem with adjusted digital sales, the drop is not nearly as steep as we might like to pretend.

    Another factor still neglected, is the record labels, in cahoots with these powerhouse internet giants. Artists unfortunately sign away a great deal of their digital distribution revenue, in favor of the exposure and advances they may not otherwise hope to get. Good luck being an unsigned artist available on iTunes.

    Theoretically in this new internet model, it should be easy for a band to rise to the top of their own talent or promise, without ever being signed. Their rising notoriety would have record labels flocking to them, with the band holding the leverage in contract negotiations. But most professional music bloggers fail to do their due diligence, in seeking out music of their own volition. They rely largely on what is sent to them by label-affiliated promoters. Despite all our talks about the INTERNET being this WILD UNTAMED PRARIE OF USER-LED INTEREST, the fact is bands still need record labels to get noticed (with of course, the odd exception.) As long as that’s the case, bands are not going to get a fair shake.

    • Whether a digital download earns an artist more or less than a physical sale depends on the deal with their label. We’re all familiar with the terrible stories of major labels. You might be less familiar, though, with the way royalties work for many independent labels, many of which are run by artists, and strive for fair and transparent accounting practices. It’s not uncommon for artists make a greater percentage of revenue than they would for a physical sale, because of the lack of overhead for physical stores and the lack of warehousing costs with retail distributors, etc, in addition to cost of reproduction.

      Information on the ways payout works for various digital services can be found here:

      It’s worth noting that most indie labels are pretty enthusiastic about iTunes Store–partly because they reliably pay for sales quarterly–something that has historically been a challenge for certain physical music distributors.

    • Music has been devalued by the ISPs who facilitate the zone of anonymity which makes it economically impossible for content creators to enforce copyrights on the internet. This combined with the fact that the majority of the $400B telecom industry ignores 17 USC 512 (i) and doesn’t terminate repeat infringers is what has devalued music. It is simply amazing that so many people and powerful corporations are now involved in oppressing a generation of creative workers and depriving them of economic opportunity.

  22. “For instance, in pressuring the government to make sure US payment processors and advertising networks aren’t doing business with overseas torrent trackers, cyberlockers, and websites everyone knows exist only to deny musicians their common rights.”

    good luck in convincing any Republicans to support that kind of legislation. It’s ironic how they would defend “free-enterprise” and simultaneously screw over American companies AKA artists/labels etc. I suppose most artists wouldn’t be the type to vote for them…

  23. I use Linux and I cant read this article.

  24. First of all, to echo someone else’s point from earlier, I feel that while Spotify and other streaming services like it may not pay much, they help generate interest and a fan base for artists. I do use Spotify quite often, but usually I listen to whole albums to decide whether they’re worth buying. If I like the album enough after listening to it I’ll buy it, and even if I don’t like the whole album I might buy a few tracks off of iTunes. So in that frame of mind I do think those streaming services (especially ones that let you pick & choose what you listen to) do help some artists in many ways.

    Secondly, I do think music piracy is a huge issue. I personally don’t pirate music mainly because 1) If I really want to support the artist who created the music then I should buy it to reward them for the work with the hope that they come back and release more music and 2) because there’s already such a vast market of LEGAL & FREE downloads on the internet. Amazon always has samplers and free singles, iTunes had free tracks every week, here on Stereogum we get lots of freebies, rap artists release mixtapes, other music blogs/magazines like SPIN release compilations and free singles all the time, and some artists put stuff on their website. And it’s not always no-names; I remember that I’ve gotten some of my favorite songs free & legally from the internet; in fact, I first heard my favorite song ever (“Whirring” by The Joy Formidable”) after it was included in a SPIN mixtape. Just this week, Stereogum put up an Interpol demo from TOTBL. Other bands I first really got into thanks to free downloads include Wilco, St. Vincent & David Byrne, Cloud Nothings, GIVERS, Best Coast, and so many more. I guess what I’m trying to say is that you don’t even need to pirate music with so much already out there.

    tl;dr: Don’t pirate music because you’re stealing money from the bands (don’t give that BS about not wanting to support the labels) and because there’s a ton of awesome free stuff out there.

  25. There’s a big problems with how the major labels are handling this. In the case of Spotify, for example, they took millions of dollars upfront for the song licenses and basically pocketed the money.
    When it came time to pay royalties, Spotify was left with very little money to pay, having just paid off the labels.
    The small labels who weren’t in on the deal were screwed doubly as they didn’t get paid money upfront and also couldn’t get any royalties for their starving artists (which isn’t technically the job of the labels, but that’s a whole different story).

  26. I find emusic a great option for audiophiles but the list is not substantial enough. I think a price point like emusic would be good dent at at deterring if it had more options musically. I find iTunes might be a guide for people to illegally download because of the high prices on digital files.

    In Canada, we don’t have access Pandora anymore because of copyright laws and are not able to download the app either. Prices are more substantial here than in the US, on new albums and a cheap source that is hard to come by.

    A friend told me about Very cheap and operate “legally” through Ukraine laws. I was wondering what people thought about sites like these that are popping up out of the Ukraine,.

    Also, the only two sites in Canada that I know of are, emusic and iTtunes. We don’t even have amazon mp3 downloads.

  27. a lot of people can’t afford to buy new albums all the time. i dont think we should restrict access to art to the middle class and up from the top economy countries.

  28. This is an interesting article which makes some very valid points, especially in regard to the effect piracy has the market, but in my opinion the criticism of Wyden’s bill is a little short-sighted. The Internet Radio Fairness Act is trying to change the royalties paid to artists from a flat rate to a percentage of the streaming service’s revenue. Not only does this mean that these streaming services are less likely to go out of business, but it also means that the more successful they are, the more money artists get paid.

    The comparison to think of here isn’t digital downloads, it’s “traditional” radio. When an artist gets played on terrestrial radio, they get nothing, when they are played on Pandora, they might get a tiny, tiny royalty, but that’s still more than radio airplay would provide. If royalty rates continue at the current rate, streaming services WILL die off, making piracy a more attractive alternative to many. With the passage of the IRFA, Pandora, Spotify, I Heart Radio and the like will be able to stay in business and provide a revenue stream to the artists where there wasn’t one before. Even though streaming music has been around for nearly a decade now, it is still a market in it’s infancy. This is a revenue stream that is only going to grow and expand. They payoff might be small now, and even for years to come, but the IFRA would give both the streaming services and the artists a chance to grow their market share and profits.

  29. Don’t agree – doing a ‘Just say no’ No tolerance attitude to file-sharing won’t work, as it hasn’t with drugs – and just look at the mess over Megaupload for that – feel sorry for the legitimate users who have lost their files…and the trampling of international law that took place.

    I think rather than victimising fans – after all study after study has shown that the biggest pirates are the biggest paid consumers of music, rather than less – maybe you should look at the existing legit download model. Paying more for a bunch of MP3s than CDs with no warehouse costs, no printing or duplication costs is ridiculous but again and again I have a choice whether to pay more for a digital download or wait a few days then get the physical CD *for less*. This isn’t some blackmarket CD seller, this is Tescos or Sainsburys or or Amazon. That’s the biggest problem – people know how much goes to iTunes or the store, people know how little goes to the artist. That’s why I try and support bandcamp releases and self-published releases if possible since I know the artist is getting more.

    The problem isn’t that the users or ‘new media gurus’ devalued the music, it’s that the industry has gouged the consumer on every format change from vinyl to CD to MP3. Sort out a fair price, or bonuses for buying physical copies (see the return of vinyl for something that bucks this end of the world trend) or special deals – a classic is buy the physical album and get a download code – simple stuff but many don’t do it. Another is for record companies to release their back catalogues.

    Again and again I’d happily pay for some rare 12″ mix or long deleted album as a nice fresh digital download which goes to the artist and estate rather than some Popsike/Discogs chancer with a dodgy scratched copy – but again and again I’m dismayed. Bootlegs (of the original sort) and the like should have been history YEARS ago….there is hardly any cost for a label to release it’s entire catalogue digitally. But it seems so many records still remain as scratchy vinyl rips unless you want to spend hundreds of pounds on ‘rare’ vinyl which I care little for. I want the contents, the format or special japanese pressing made of uranium and pubic hair interests me not.

    So solve those and I think the record labels will eventually be in rude health. But keep this mindset of only releasing the newest thing and ‘deleting’ the old (some of the most expensive things I’ve come across recently were DVDs or CDs only released a few years ago and going for a pretty penny now – surely we should be past such things in this digital age? Nope…) then of course they’ll struggle because they’re not actually benefiting from any of this, nor even being able to measure demand on older or not-so-old catalogues because they are deleted.

    I would make it so the copyright laws were changed that if you didn’t exploit that right within a certain period you lose it – i.e. after release date, you need to keep it on sale otherwise the right either reverts to the artist or goes public domain. This would stop record labels holding onto albums for aeons, and mean a new artist-friendly secondary market would prevail….or at least mean long-lost careers might be salvaged from the industry.

  30. Just because you can have everything for free doesn’t mean you deserve it or need it. I don’t think having access to sooooo much music is necessarily something that people ‘deserve’, and yes you can easily buy and support an artist, especially in America, (europe and elsewhere it’s more $) for about 5 dollars. I’m all for discovering new bands via free outlets, but there gets to a point where it actually just dilutes people’s attention spans and nobody really gives anything the proper time it deserves.

    • It isn’t about what people deserve, it is about what is going to happen based on money. Get off your high horse and stop telling people what to do.

  31. So this is something that has bothered me for a while…If I throw down $20 for a vinyl copy of a new record, and it doesn’t come with MP3s (what’s up, Drag City!) am I justified in downloading it illegally? FWIW I spend way too much money on records and merch.

  32. The media is slowly catching on to the fact that the biggest player in music has become none other than YouTube. They have multiple advantages in this arena.

    Advantage 1. Unlike Pandora et al they are governed by the DMCA rules and thus are not subject to the types of draconian royalties Pandora has been fighting as, “outdated for the modern music-scape”.

    Advantage 2. They have been accepted by both the big players like Sony / BMG / etc. and have set up revenue sharing via embedded banner ads.

    Advantage 3. Video. MP3s are essentially an auditory experience which ignores the multimedia age we live in.

    Advantage 4. New artists and user created mashes. We live in the era of web 2.0 aka the social web. There are far more versions of songs, performances, etc. in the YouTube catalog than you will ever find on services like rhapsody or pandora.

    And the last but not least advantage. INNOVATION via the YouTube API. For example, recently launched an all in one music solution based directly on the YouTube API. The benefits in this case are staggering. Unlike YouTube itself the videos served by YouTube via its API do not have commercial interruptions but instead rely upon in video/embedded banners. In the case of fuhshniZZle they have added identical features found in Pandora, Rhapsody and Playlist and all content is shareable on social media without restrictions.

  33. What all of these comments have completely forgotten is that there a lot more artists I know of now than ever before. Do you realize how many bands were operating and standing the test of time in the 60s? Look through an old record collection… it is rarely diverse and you know of most of the bands. There are more bands making music than ever before. The decreased return on investments from making an album is coupling with the fact that the amount of money to make an album is extremely low. The field is much more level now than ever before.

    I think the other thing that the article does not cite is that Spotify pays artists based on a complex algorithm. If I get 1000 plays of my album in a 3 month period, it is extremely possible there are only 50 unique listeners who listen to it an average of 20 times over the 3 month period. 50 people buying an album over a 3 month period has always been an extremely small amount of royalties paid to musicians. Looking at pay per play statistics from artists is a waste of time and a biased way of representing the amount of royalties being paid to artists.

  34. Great thoughts on the real issues that have lead us to the Internet Fairness Act. While piracy may have lead us to this issue, I do not believe it is a mainstream practice anymore. Also, customers are willing to pay for quality services and content, but they will always want the best deal or no cost at all. We cannot rely on the fans to resolve this issue; the music industry needs to collectively establish the rules and foundation for the fans to buy into. Hopefully, this act is pushing us in the direction of overall digital rights reform instead of solely a bandaid for Pandora’s issue.

  35. I’d like to take issue with one of the contentions this excellent article made, because on the surface it seems inarguable, however I don’t think it is. The initial quote comes from Rawkblog

    “The false expectation lthat a handful of specific tech start-ups were going to make artists a living overnight seems deep-rooted and pervasive and I’m not sure why.”

    By implication it’s that the artists are being naive/foolish, and when put like that, it seems perhaps so. But I’d to tackle the “I’m not sure why”. Maybe artists aren’t quite so green, because perhaps some are looking and seeing there is an existing “revenue stream”, which already operates on youtube and similar. I know of people who video tricks for games such as FIFA 2012 or Madden, and then upload them to youtube, and they are attached to advertising and every time their clip is shown, the creator receives a small royalty. It’s possible on fairly modest views of several thousand (well compared to spotify listens anyway) to make a couple of hundred dollars/pounds a month. Now if some doofus (respectfully as I know such as “doofus”) can get extra pocket money for turning a neat trick in FIFA, for a few hours work learning and recording that trick, then surely the same potential has to exist for artists placing their own records/videos/live performances? This kind of pocket money would make a considerable difference to some artists. Now perhaps this revenue stream is gonna crash and burn as the people paying for advertising decide it isn’t worth their time, but currently it exists.

    Also I’d like to ask, as someone with records out there, why do bricks and mortar radio stations pay considerably bigger royalties (Radio 1 would pay something like 10 pounds for one play to the MCPS (Mechanical Copyright Protection Society) and even several plays would yield a small bonus for the band) than Spotify? I suspect that artists were sold down the river by their record labels here, even tiny independent ones for their blanket rights, and as inferred the only way forward is for artists to remove their content from Spotify/Pandora and take control again. In print publishing, authors receive money for their work from ACLS (in the UK) for books that are photo-copied or bought by libraries,for works that they may have contributed to, that can work out as a several hundred pounds a year for fairly modest contributions. No-one thinks that absurd. Why are musicians any different?

Leave a Reply

You must be logged in to post, reply to, or rate a comment.

%s1 / %s2