Pop Quiz: Who Gets Paid For Streams On Pandora

By George Howard

Last week we posted a music publishing pop quiz. There was a hypothetical followed by 5 questions, and today I will reveal the answer to the fifth, and final question. The hypothetical is below as a refresher, followed by the question and answer.

A Jazz artist performs her own composition in a club in the United States. In the middle of the song, the guitar player plays a solo. As part of his solo he quotes a fifteen second snippet of The Flintstones theme song.

And the question was…
5.  The song recorded and released by the label is streamed on Pandora. Who gets paid and how?

Here’s the answer:

As this is the last question, and I’m sure it’s been a lot to take in, the good news is that we’ve largely answered this question at this point. However, it’s VERY important to understand the distinction between interactive and non-interactive streams.  It’s why I broke the quiz into these two separate questions (four and five).  The two emphasize the differences between what, arguably, will be the most crucial revenue streams for many/most artists moving forward.
As explained in the answer to question four, when a song is streamed, it can be done so in one of two ways, interactively or non-interactively.  We explained in the answer to question four how interactive streams work, via looking at Spotify.
Pandora, on the other hand, is non-interactive. This means that songs can’t be selected by the listener; can’t be played repeatedly or rewound.  Essentially, a non-interactive stream operates much in the same way that traditional radio does.
However, the fact that these streams are digital (rather than analog/terrestrial) is very significant in terms of payments to the rights holders.
First the similarities.  Just as when a song is played on terrestrial radio, the songwriter gets paid via a public performance royalty (ASCAP, BMI, SESAC), when a song is streamed non-interactively on Pandora, web radio, Sirius/XM, etc., so too does the songwriter get paid a public performance royalty (ASCAP, BMI, SESAC).
So, in our hypothetical above, both the Jazz Artist and the writer/publisher of the Flintstones’ theme get paid a public performance royalty via their respective PRO when the song is streamed on Pandora.
However, there IS a key distinction based on the fact that this non-interactive stream is digital.  As we discussed the copyright holder for the master (the SR, the (p)) is granted a right of public performance for the sound recording, when the sound recording is publicly performed via non-interactive digital transmission.
That’s what we have here.  And, thus, the label(s), featured performer, and background performer are all owed a public performance royalty when their master is streamed on Pandora.
The entity that collects and administrates these payments is called SoundExchange.
I wrote a recent article on these rights and royalties entitled “Neighboring Rights: What They are and Why They Matter”. It should provide answers to any additional questions you have on this topic.

So, to sum up the answer to this question, for a non-interactive stream the songwriter/publisher would just receive one royalty for Streaming Performance revenue (through ASCAP/BMI/SESAC, as an example). However, unlike with terrestrial radio, because this is a digital stream, here the Master Holder(s) also receive a royalty.  So, the Jazz Artist would receive a public performance royalty, as would the writer/publisher of the Flintstones’ Theme. Additionally, the label who released the Jazz Artist’s recording would receive a public performance royalty – via SoundExchange – for the master usage (some of this might flow to the performer, depending on the state – recouped or not – of their account with the label).

Thanks for taking the quiz! Let us know how you did in the comments.

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George Howard is the Executive Vice President of Wolfgang’s Vault. Wolfgang’s Vault is the parent company of Concert Vault, Paste Magazine, and Daytrotter. Mr. Howard is an Associate Professor of Management at Berklee College of Music