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Digital Radio Streaming Revenues Adding Up

Not too long ago, I published an article on royalty rates for music streaming services such as Spotify and Napster. The moral of the story was that no one is becoming a millionaire (or even making a decent living) off of royalties these services provide. Now that the topic  has been under the spotlight for the last few weeks, other media outlets are starting to run similar stories focusing in on additional revenue streams. Just a week ago, the New York Times featured an article on royalties from internet radio stations such as SiriusXM and Pandora. The article showed an upward trend in the amount paid out to labels and performers, which is obviously great news for any starving artists out there.

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SoundExchange, a non-profit group that processes payments for online streams, announced that they paid more than $100 million in payments this quarter alone, versus $292 million for all of last year. That $100 million also sees SoundExchange hitting a milestone of $1 billion paid out in total since the company's inception in 2000.

The milestone is a great indicator of the changing dynamic in not only the music industry but the listening habits of the general population as well. It may be something that is fairly obvious to some but worth stating that terrestrial radio has gone the way of the dinosaur in terms of listenership. Many believed that it was due to the iPod, iPhone and other various MP3 players that provide the listener with any song he or she wants. However, a notable rise in digital radio revenues may point to the idea that listeners still enjoy the radio "format," they just enjoy the idea of being able to tap into it anywhere at anytime; something terrestrial radio can not offer.

Royalties paid out by SoundExchange were minimal in the early days but now that technology has caught up, it's only natural to see a rise in these revenue streams. A rise in revenue is great news to labels! Jagjaguwar, Bon Iver's label was quoted as saying that they have received $95,000 since 2007. While that money is only a drop in the bucket for what record labels need to run on, that coupled with other channels of income such as Spotify and Napster, really starts to add up.

It may not be the glory days of the music industry but these upward trends point to the idea that the industry is coming out of the recession that it was in. As technology grows and labels transform to meet this new climate, we could see a rise in the general living conditions of artists and record label employees.

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I wouldn't throw a party just yet because digital radio royalties still have a ways to go before they catch up. Songwriting licensers ASCAP and BMI paid out $1.64 billion in 2010, which is a fraction of the $292 million that SoundExchange paid. Nonetheless, the information and numbers are positive and point towards a bright future for artists and labels alike.

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