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A musician on his 21-cent royalty check

Musician Damon Krukowski discusses the challenges of making a living in the era of Pandora.

Since high-speed Internet and streaming music took over the music industry, the business of being a professional musician has become confusing at best. What was once a relatively straightforward transaction -- you give me a few bucks, I give you my record -- is now part of a complex algorithm that online music services like Spotify and Pandora use to figure out how much musicians ought to be paid.

Which is, to put it mildly, not very much.

Damon Krukowski, once of the band Galaxie 500 and now half of a duo called Damon & Naomi, took on fee structure in a story he wrote for online music magazine Pitchfork titled "Making Cents." In it, he defined the problem with a simple example of a recent royalty check he'd received from a streaming online service:

"Galaxie 500's 'Tugboat' was played 7,800 times on Pandora in the first quarter of 2012, for which its three songwriters were paid a collective total of 21 cents, or seven cents each."

Pathetic, right?

"It depends on your attitude and how much you expect to make on your music," Krukowski laughs before agreeing that it's not a livable wage. While he's a supporter of the free movement of information and he's excited about the distribution opportunities afforded bands by the speed and scope of the Internet, he wrote the article because he feels there are still fortunes being made in the music industry, but maybe by the wrong people.

"Someone is making an enormous profit," says Krukowski, "and it's not the musicians."

About the author

Kai Ryssdal is the host and senior editor of Marketplace, public radio’s program on business and the economy.
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Kai, there has been a ton of talk circulating about a new company launching in January called Funn Networks. Its been a ten year in the making project and here's what we have thus far on information relating to music payments:

FUNN COMPENSATES LABELS, ARTISTS AND INDIES LIKE NO OTHER

Our mission is to provide a platform that provides both parity and transparency unlike all of the other businesses that currently make up the digital distribution landscape. It’s also time for everyone to get paid what they deserve and to eliminate the infighting between artists, labels and the consumer. So how do we plan to do that? It’s simple. Funn plans to pay all participating content providers up to 20 times more (not percent) then they are currently making today.

Here are a few examples:

Music Videos

Our research shows that the two most popular video streaming companies pay roughly $0.01 per video stream to artsts/content owners. Digital Music News recently reported that a Top 10 artist had one of his video's shown 170,000,000 times yet he made less than one million dollars. LESS THAN A MILLION DOLLARS??? Funn is projecting that it will pay all artists (including Indies) roughly $0.10 to $0.20 per video stream. So if we streamed a video 170,000,000 times we would pay $17,000,000 at a bare minimum. We think this speaks for itself.

Internet Radio

There are numerous companies that make up this landscape yet they all pay the bare minimum to labels and artists. These payouts have ultimately led to artists fighting with labels because they feel they aren’t being compensated enough. In the labels defense, there simply is not enough money to spread around or pay artists with. We plan on putting an end to this. The major Internet Radio players, on average, pay roughly $0.005 per stream on a best case and even less to independent artists. Funn plans on paying $0.02 to $0.05 per stream. Yes, you read that right. Go ahead and do the math.

Concert Events

For some reason, just as with Music Video’s and Internet Radio, this is an area where artists and labels have failed to make revenue. Funn plans on putting an end to this as well. Funn projects it will pay (at a minimum) $5.00 to $10.00 PER USER, per a Funn based exclusive event. Yes, this amount is enormous and its meant to be- - It's about time artists finally make up for the money companies such as Ticketmaster, Live Nation and others have sucked dry. So how does this affect you? Well if your event, hypothetically, had 20,000,000 views, Funn projects the event will gross $100,000,000 in additional revenue.

Sync Licensing

Now its gets even more Funn. Did you know that millions upon millions of videos on sites such as You Tube are made by consumers who mixed a copyrighted song into a video without permission or a sync license? With Funn, we are going to offer a service called "Funn Sync" whereas consumers will be able to mix a song into a video and as a result will allow the artist to finally make money where they never have in the past. This is an area where the entertainment industry simply has failed to produce revenues. Funn projects it will pay out hundreds of millions of dollars per year in royalties for simply by “allowing” the consumer to sync content. For example, check out a video on You Tube labeled "JK Wedding Entrance." It's a video that has been seen 76 million times. That’s 76 million times an artist, in this case Chris Brown, didn't make a dime.
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Funn has a twitter page and facebook page. Hope this helps. Its time for the bs to stop. People need to be compensated for what they are worth!

This story really bothered me. I think when Damon said he wasn't angry at all (or something to that effect), he was lying through his teeth. I get that he was trying to sound "with it" and all, but why doesn't he just admit that he's longing for the benefits of the old business model while only having a relevant voice BECAUSE of the new business model he is whining about. Dude, if you were at the mercy of BMG and Sony, you'd have given up on music a long time ago. You now have a much more even playing field and a platform that gets people to your shows (where you should be making your money). You also don't have to send 500,000 jewel cases into a landfill every time you write a song, and you don't have to participate in a system where a bunch of dopes who know nothing about music extort every possible nickel from your fans. You're living the dream, Damon! Wipe away those tears.

Maybe universal instantaneous free distribution is not the dream but in fact a nightmare when the price you pay for it is - no income generated.

I think Damon is missing an important point about revenue that comes to him that's not necessarily from Pandora, but is directly driven by Pandora. To me, the whole point of Pandora is music discovery - it serves up music it thinks you'll like based on what you tell it you like. Since I started using it, I have found songs and artists I never would have found by browsing through itunes, or listening to traditional radio. And guess what I do when I hear Pandora streaming something I like? I bookmark the song or artist in Pandora. Then once a week or so, I look through my bookmarks and go BUY those songs though itunes, amazon, etc. I've bought more new music in the past 5 years than I bought in the preceding 15. So the artist IS getting paid for the stream whether they see the connection or not. And it's money they never would have gotten from me otherwise.

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