The Truth About Pandora's Payments to Artists

SOURCE: wallstcheatsheet.com

Are Pandora and other streaming sites taking advantage of the music industry?

While free music on the internet might be awesome for the obvious reason, underneath seemingly great products and streaming sources, we see the problem with all the free music sites. The discussion to have music be free or not continues with this article from Billboard.com. This site seems credible because Billboard is a huge company dedicated to knowing stats on music and the industry itself. 

The article begins with immediately dismissing some claims that may not be true surrounding how much artists make from sites like Pandora. While Pandora claims that an artist like Drake might generate 3 million dollars on a song, is that really true? The author continues to talk about how the wording of Pandora's statements can be misleading and this can be purposeful. Pandora's statements might claim that the artist's song generated that amount of money. This statement is not technically wrong. It did generate that much revenue from listeners. But did artists actually make that money? That's where things get complicated.

The article continues on to explain that Pandora receives artists' songs through a service called SoundExchange. SoundExchange is a business which distributes the royalties an artist makes from their song. We find out that SoundExchange manages to give 50 percent of the royalties to the label, 45 percent to the performing artist, and 5 percent to other musicians who were in the recording. 

If we take our example of Drake making 3 million dollars from Pandora and split everything up like SoundExchange does, it would be divided like so: Drake would get about 1.3 million dollars, the label would get about 1.6 million, and other artists would receive about 150,000 dollars.

As a user of Pandora, this seems super unfair. I know Pandora's algorithms on how many listens generates how much money are no where near where they should be. While free streaming sites might seems super convenient and great, I don't think the label should be receiving as much revenue as it is. I believe the artist and other musicians in the recording session should be receiving more and the label should be receiving less. The label isn't creating the content. The artist is. The label takes care of all the technical stuff and actually distributing the music which is important, but without the artist, the label wouldn't be making that money in the first place. 

1. Is this a fair deal between artists and Pandora? Why or why not? How much do major services like Pandora, Spotify and YouTube pay artists?

2. Should artists continue to provide their content to free music streaming sites or not?