Fighting Digital Exploitation

Volume 114, No. 10October, 2014

Shane Gasteyer

As technology advances, finding music gets more and more convenient for consumers. Music fans today have a wide variety of user-friendly platforms through which they can access their favorite music at the click of a button. Internet radio stations offer curated playlists in a virtually unlimited number of musical genres and subscription services offer unlimited access to millions of songs on-demand, all for either a flat monthly fee or for free, if you are willing to listen to advertisements. While this may sound like a music lover’s dream, music creators are growing concerned that this ever-expanding marketplace of low-cost (or no-cost) streaming access to music does not include a fair compensation structure for their work, an increasingly important issue in the light of the continued decline in physical record sales and paid downloads of music.

What an artist or rights-holder is paid by a streaming service depends on a number of factors, but it is usually true that the money that he or she receives is less than what it would have been in the instance of a physical record sale or a paid download. One factor is whether or not the stream is interactive, meaning whether or not the user can listen to a song on-demand.

Non-interactive services include internet radio like Pandora, iHeartRadio and Slacker. You can’t choose the exact song that you want to listen to. Interactive services include Spotify, Rdio, Rhapsody and Grooveshark.

Non-interactive streaming rates are covered by federal statute. Royalties are paid to musicians through SoundExchange. (For more information, and to find out if you might have money waiting for you, see

Interactive streaming services, on the other hand, are not covered by these rates, leaving artists and rights-holders to negotiate rates of pay directly with the services.

Artists themselves have been largely left out of these negotiations, and as a result the royalty rates are generally very low. In recent years, several notable artists have come out publicly against the low rates paid by services like Spotify, who, according to its own estimates, pays as little as $0.006 per stream to rights-holders.

Spotify’s response to this criticism has been that it will pay artists better sometime in the future, when it has more subscribers. Other proponents of these streaming services have pointed to the AM/FM radio model, where stations don’t pay performers at all. The thinking here goes that Spotify’s miniscule payout is better than no payout at all. What this argument obscures is that radio historically promoted record sales. Streaming, on the other hand, is a disincentive to purchase music. (That being said, there is no reason that AM/FM radio shouldn’t also compensate artists. In fact, securing performance royalties for radio play is something the AFM has been lobbying for.)

Another important problem with the state of digital royalties is the fact that several satellite and streaming music services are currently refusing to pay royalties on recordings made prior to 1972, using a legal loophole related to the date on which copyrights for sound recordings came under federal jurisdiction. While this claim is the subject of various lawsuits around the country and may yet be righted, what is clear from this legal wrangling is that these companies are seeking to limit the royalties that they pay to artists, thus demonstrating another way that musicians are not reaping their share of the income being generated by the new music economy.

The most glaring issue for many artists is the fact that the people who run these companies are making money off of streaming, well before any of the people who provide these services with music content see any significant payback.

“The CEOs of Pandora, Spotify, and Google/YouTube are all making good money now, but they expect us to live on next to nothing until some theoretical date in the future when, according to them, their business models might start to pay off for the musicians,” said Local 802 member Marc Ribot, who has given this issue much thought as a founding member of the Content Creators Coalition.

The CCC is an artists’ rights organization with an ambitious agenda. In addition to demanding higher pay rates from streaming services, the group is taking on online piracy, which continues to threaten musicians’ ability to make a living. What’s less obvious to most people is that online piracy is much bigger than individual users obtaining music without paying for it – it’s about advertising.

“The problem isn’t the college student downloading something in their dorm room,” says Ribot. “It’s the fact that corporations are making money from hosting ads on the sites that post the illegal material.”

Online advertising is big business and ad revenues from music pirate sites bring in major bucks for top tech companies like Google, while the musicians whose work is being ripped off get nothing. Eliminating corporate ad-based piracy is a top concern for the CCC, which has been remarkably busy in the past year. This past February the group held its first major public event: a concert and rally in support of a performance royalty for terrestrial radio.

This summer, as Google was gearing up to roll out a new YouTube subscription music streaming service, several indie labels reported that their catalogues were being threatened with exclusion from the YouTube video platform unless the labels agreed to substandard licensing deals for the new service. Google faced a backlash from the creative community when this came to light, including a CCC protest action at Google’s NYC headquarters, all of which resulted in the company agreeing to continue negotiations and walk back their earlier threats.

This fall will be busy for the group as well, as the CCC is planning two major events in October. The first, a concert fundraiser for the organization, will be held on Oct. 18th at Roulette in Brooklyn and will feature John Zorn, Marc Ribot, Henry Grimes, Amir ElSaffar, among others. The following day, the CCC will hold a public concert and rally in support of artists’ rights in the digital domain, featuring performances by singer-songwriter Rosanne Cash, Marcus Rojas’ Brass Ensemble, and Rhett Miller (of the band Old 97s), as well as other speakers and performers. For more detail on these events, go to

As technology changes the way that people access music and other creative works, artists are faced with many new challenges – and also many new opportunities. As a union, we must continue to support musicians’ rights as the music marketplace changes. While a welcome development to some, many of these new technologies emphasize consumer convenience at the expense of musicians’ ability to make a living. Local 802 and the AFM are working to support musicians who want their voices heard in this debate. We seek to protect all musicians in the face of a marketplace that prioritizes short-term corporate profits over artists’ livelihoods. If you are interested in getting involved with Local 802’s efforts on any of these issues, feel free to contact us at

Allegro pays special attention to music and the internet. For more background, check out the following stories: