Streaming Royalties Estimates for 2015

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Summary

According to various stats collected from the top streaming services, there were about 1.03 trillion music streams in the first 6 months of 2015.   With the growth of streaming it is a safe bet that the total streams in 2015 will easily hit the 2.2 trillion mark by year-end.

Here is what those numbers mean in terms of royalties collected.

Sound Exchange

Sound Exchange collects money on behalf of the “recording artist” (musicians, producers, etc.) and pays the copyright holder, the people holding the rights to the “master”, according to rates set by a quasi-governmental rates board.   They are supposed to collect for all digital transmissions of music played by organizations that qualify for the statutory rate*.

* Statutory rate compliance means ALL MUSIC played online via non-interactive (no audio-on-demand/play what you want when you want) streaming services.   It is not clear what on-demand services pay but they may be negotiating rates directly with the copyright holders.

In 2015 the typical rate paid via Sound Exchange for companies that qualify for the statutory rate of $0.0024/play yields $5.25B in royalties collected by Sound Exchange on a projected 2.2 trillion streams (2x the 6 month figure presented above).

Sound Exchange operates with a 4.9% “maintenance fee” on all funds collected.  In 2015 this will put $258.7M in the Sound Exchange coffers.

The PROs

The PROs, most notably ASCAP, SESAC, and BMI, collect money from just about anyone anywhere that plays music.   They collect for every performance in order to pay the owners of the musical work, the notes and lyrics for a song.   They collect from the local bar or restaurant for playing a song.   They collect from streaming services.   If you hear music these people get involved in collecting cash for their members.

Since there really is no “typical rate” for these organizations, we can only estimate the royalties collected.   To complicate matters these organizations have a hard time figuring out which “flavor” of a song they represent so they tend to just “blend it all together” and the “customer” ends up paying all the major PROs based on a generic formula.

However, we can assume that the rates are the same as what Sound Exchange collects to give us a point of reference.   While this is often not true due to “percentage of revenue” contracts that make “free streams” a HUGE issue, we need some measure of performance here.

At 2.2 trillion streams we end up with the same $5.2B in royalties collected for song writers.   If it were divided properly among the “big three” PROs this would put about $1.7B into each organization to be re-distributed.

ASCAP deducts their operating expenses of 11.3% from their $1.7B cut.  That puts about $327M in the ASCAP coffers for 2015.

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