Sony/ATV CEO Slams Cheap Songwriting Royalties Paid by Pandora, Spotify: ‘Totally Unacceptable’

Marty Bandier’s internal memo includes the small sums paid for John Legend‘s 55 million “All of Me” quarterly streams, Pharrell’s 43 million for “Happy”

Marty Bandier penned an internal memo to his Sony/ATV employees on Tuesday praising his in-house Grammy nominees while slamming music streaming services, such as Pandora and Spotify, which he said pay “unjustifiably below-market royalty rates” to songwriters.

“I would like to draw your attention in particular to the royalties being generated for some of our most successful songs on the U.S.’s leading Internet radio station Pandora,” Bandier wrote. “As an example, the John Legend hit ‘All Of Me,’ which has a Grammy nomination for Best Pop Solo Performance, was streamed 55 million times on the service during the first three months of 2014, but that generated only $3,400 in publisher and songwriter royalties.”

Bandier also used Pharrell Williams‘ “Happy,” nominated in the same Grammy category, as another example. That song scored 43 million Pandora plays over the quarter, which translated to $2,700 in publisher and songwriter royalties.

“At current rates one million plays of a song on Pandora typically translates to only approximately $60 in royalties shared between the songwriters and publishers,” he continued. “This is a totally unacceptable situation and one that cannot be allowed to continue.”

Bandier called the rates provided by Spotify “equally dissatisfying.”

On that service, the exec remarked: “While the number of streams on market leader Spotify’s ad-supported, free service has grown by more than 70 percent in the past year, the royalties for songwriters and publishers have not come close to keeping pace with this growth.”

Bandier closed his email by stating that his No. 1 priority going forward is to rectify his perceived imbalance, allowing for fair compensation across the music publishing industry.

“I will not rest until the present system is reformed to allow this to happen,” he vowed.

Read the full internal memo:

Dear all,

It is my great pleasure to announce that our songwriters have had a terrific showing in the nominations for the 57th annual Grammy Awards, which will take place in Los Angeles on February 8 next year.

While this brief announcement does not allow me to specifically name each of our successes one by one, I would like to mention the great showing Sony/ATV’s writers have achieved in the event’s most high-profile categories.

For Album of the Year we have nominations for Ed Sheeran’s X, Sam Smith’s In The Lonely Hour and Girl by Pharrell Williams. In addition, our writers have achieved the incredible accomplishment of being represented on all five nominations for both Record of the Year and Song of the Year. Our Record of the Year nominees are “Fancy” (Iggy Azalea, Charli XCX, Jonathan Shave, Josh Turner), “Chandelier” (Sia Furler, Jesse Shatkin), “Stay With Me” (Sam Smith), “Shake It Off” (Taylor Swift) and “All About That Bass” (Kevin Kadish), while for Song of the Year we have received nominations for “All About That Bass”, “Chandelier”, “Shake It Off”, “Stay With Me” and “Take Me To Church” (Hozier). Sam Smith and Iggy Azalea are further shortlisted as Best New Artist.

A Grammy nomination is an incredible achievement and we should be extremely proud of all our nominees as they represent the very best in their class. This success comes at an exciting time for the business as it moves from a physical and download world to a streaming one. However, the changing market also brings about many challenges for us as it adversely impacts our mechanical income. I cannot help but mention that these Grammy nominated songwriters continue to be paid unjustifiably below-market royalty rates by music streaming services in the U.S.

I would like to draw your attention in particular to the royalties being generated for some of our most successful songs on the US’s leading internet radio station Pandora. As an example, the John Legend hit “All Of Me”, which has a Grammy nomination for Best Pop Solo Performance, was streamed 55 million times on the service during the first three months of 2014, but that generated only $3,400 in publisher and songwriter royalties. Similarly, Pharrell Williams‘ “Happy”, which is nominated in the same Grammy category, had 43 million Pandora plays over the period, but that earned only $2,700 in publisher and songwriter royalties. At current rates one million plays of a song on Pandora typically translates to only approximately $60 in royalties shared between the songwriters and publishers. This is a totally unacceptable situation and one that cannot be allowed to continue.

The royalty rates for songwriters on interactive streaming services such as Spotify are equally dissatisfying. While the number of streams on market leader Spotify’s ad-supported, free service has grown by more than 70% in the past year, the royalties for songwriters and publishers have not come close to keeping pace with this growth.

We at Sony/ATV want these digital music services to be successful because they are a great way for music fans to listen to music and have the potential to generate significant new revenues for everyone. However, this success should not come at the expense of songwriters whose songs are essential for these services to exist and thrive. That is why I have made it my No. 1 priority to address this issue and ensure songwriters are fairly compensated for their work. I will not rest until the present system is reformed to allow this to happen.

I am incredibly proud of all our songwriters who have received Grammy nominations. These are extraordinary achievements that should not be overshadowed by what continues to be an unfair marketplace. As Sony/ATV continues to lead this industry fight, we are optimistic we will address this issue and help to create a better future for our songwriters.

Please join me in congratulating all our nominees.

Regards,

Martin Bandier