The Big Royalties Debate

Congratulations! You have recorded a kick-ass song and a major label wants to sign it and distribute it to a worldwide audience. The trouble is, just how much will you be rewarded for your years of hard work?

The fact is that people don’t buy singles on CD or Vinyl for £3.99 anymore – they pay £0.99 (if you are lucky) for a download, so the record companies have a lot less coming to them (read: a lot less to share with you). Sales have gone crazy with the advent of the digital revolution, but that is just the tip of the iceberg; there has been no set royalty rate agreed with music publishers and the RIAA. No wonder everything is such a mess!

Just a few weeks ago, all the major groups representing record companies, songwriters and digital music websites agreed a new deal for so-called “mechanical royalties” for interactive streaming music and limited music downloads. (The LA times gives a very good glossary of these terms and further details on the agreement.) The RIAA chief executive stated that “This agreement provides a flexible structure to support innovative business models in the digital music marketplace that will benefit music fans, creators and online services”.

It’s a step forward, but there are still some other issues to be resolved, and some rather large ones at that. The biggest grey area at the moment is Internet radio and the royalties that would be accrued from that. I’m sure we’ve all heard various stories about sites such as Pandora and the constraints placed upon them.

Streaming and internet radio is big business, and if you can find a (legitimate) way to make money in this markets then you can justify earning just a few pence per unit sold, or even giving your music away for free, as did Nine Inch Nails recently. Some big bands such as Guns’n’Roses can even swallow a major album leak, use the publicity to their advantage and turn it into promotion of the full album release. The market for online promotion of merchandise and live gigs is just as vast, and enough for a future blog post

The dwindling pot of money further declines because, as the big boys keep moaning left, right and centre, pirates are stealing billions of pounds of music every year. Yes PIRATES! Swashbuckling, downloading, free riding college kids are able to find, copy, distribute and burn illegal copies of your music for free in their sleep. The industry believes that the ratio of unlicensed tracks downloaded to legal tracks sold is about 20 to 1, which is a staggering figure. While the recent agreement is a step in the right direction, we’ve still a long way to go.

The short answer is that you will not earn very much directly from sales of one successful song. The days of retiring from one lucky “ooh ahh just a little bit” are long gone. But the thought of earning a new community fan base of affluent, stylish, generation-Y internet users that share and participate in the online world… well, that’s worth its weight in gold.

Lee.