Streaming Services Are Cutting Big Checks for Rights Holders: Guest Post by Rhapsody President Jon Irwin
Streaming Services Are Cutting Big Checks for Rights Holders: Guest Post by Rhapsody President Jon Irwin

(The rise of the music-streaming market has brought with it apprehension about size of royalties paid to artists. People are simply concerned about the value of music, and it has been an increasingly common topic in news articles and blog posts in recent months.

But Jon Irwin, president of music subscription service Rhapsody, wants people to better understand streaming services before they dismiss or criticize this growing part of digital music. As he explains in the following exclusive guest post for Billboard.biz, streaming services aren't easily comparable to download stores because they represent different ways of experiencing music. Look past individual streams, Irwin writes, and consider the bigger picture.)

We welcome the recent discussion over artist payouts from streaming services, but we disagree with the tone of the recent coverage of the issue.

Rhapsody is a music company fueled by people who are in this business because they love music. Many of us are current or former recording artists and we are collectively invested in the success of our industry.

Since its launch in 2001, Rhapsody has generated hundreds of millions of dollars in royalties that have been paid out to record labels, music publishers and their representatives. Royalties have been the company's greatest cost since launch. We trust that this royalty revenue is flowing to artists, writers and the other creative folks responsible for the music we proudly distribute via Rhapsody.


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We've worked hard over the years to obtain direct licenses from music publishers, including from many writers who license their work directly to us or via a trusted administrator. In fact, we often hear from songwriters that Rhapsody royalties help them stay afloat in an era of diminishing sound recording royalties.

We have seen some of the artist income numbers being reported, and we agree, they seem awfully small - particularly those cited as generated by some of the free services. However, to look at these numbers through the lens of a single transaction is myopic. If an artist sells a download, they may get a bigger cut, but they only are paid once. If the purchaser listens to a record a million times or puts it on their wedding CD and distributes it to 500 people, there are no additional royalties paid to the artist or writer. By contrast, royalties are paid each and every time a track is streamed on Rhapsody. Each stream is a singular, recorded, secure transaction that creates infinite potential for artists and writers to be compensated over time pursuant to their agreements with their representatives.

Today, streaming music is a small percentage of all music listening, but it is growing -- it is the future. In the coming years, on-demand music will be available on every consumer device imaginable: in the home, in the car, virtually everywhere a music fan goes. As the industry continues to evolve, the hundreds of millions of streams being delivered today will become billions and then trillions of streams - each one generating compensation to the artist, writers and others responsible for the recording. These are the early days. The potential for compensation is huge as more and more people engage by streaming from legal services instead of stealing their music.

We encourage artists and writers to work with their representatives (labels and publishers) to better understand how this shift in music consumption can benefit them, rather than simply pull their content. We all know that illegal access is an enduring, free and easy option. Let's work together to improve legal streaming sources rather than shy away before their potential is realized. There are big bets being placed on streaming as the future for digital music, and I firmly believe that streaming is best for artists and writers over the long-term.

Having an artist's complete catalog available to Rhapsody members-who are passionate, voracious consumers of music and are willing to pay for it-will allow us to maintain a talent-centric focus at Rhapsody, and to make bigger and bigger payments to rights holders as our subscriber base expands. It also means the work has the potential to be discovered and rediscovered over and over again, for years to come. And it's the only way artists can be guaranteed compensation for every play.

These are difficult times in our industry, but together we can find a path forward where the explosion of streaming revenues flow fairly to all participants, including - and most importantly - to the artists and writers behind the music.

Questions? Comments? Let us know: @billboardbiz

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