Last.fm Compensates Artists, Unlike Some People We Know

By Eliot Van Buskirk 

Lastfm

The United Kingdom-based social music streaming site Last.fm has made good on its promise to launch an Artist Royalty Program that gives music makers — regardless of their stature within the industry– a percentage of revenue earned from the advertisements that appear next to their music as it streams in a radio program or is played on-demand by a visitor to the site.

“This is a big day for DIY artists,” said Last.fm co-founder Martin Stiksel. “We’re leveling the playing field by offering them the same opportunities as established bands to make money from their music. The young musician making music in a bedroom studio has the same chance as the latest major label signing to use Last.fm to build an audience and get rewarded. ”

We’ve had a bone to pick with MySpace about this for a while, because it plans to compensate major labels with a share of ad revenue without similarly compensating indie labels, unsigned artists, or possibly even the artists signed to them.

Should revenue from MySpace’s ad-supported music streaming feature really just flow to the major labels, even though smaller labels and unsigned bands built most of the MySpace music empire? And why should the future of the music business look even more bleakly monolithic than the past, with artists needing to be signed to a major in order to collect (a portion of) what’s rightfully theirs?

We talked over these points with Last.fm co-founder Martin Stiksel earlier this year, wondering whether his company, now (and then) part of CBS, was similarly planning to leave artists in the lurch, or whether the program for compensating artists it had announced in January was for real.

Today, we have an answer.

Last.fm’s Artist Royalty Program, announced in January, goes into effect on Wednesday morning. Bands and labels that register (or already registered) will start accruing money into Last.fm accounts whenever their music is streamed from the site as of today. The company already pays artists through rights organizations, including SoundExchange, but this new plan allows artists to receive direct payment for their music being streamed without joining — more information available here.

Since January, bands have uploaded over 450,000 tracks as part of Last.fm’s Artist Royalty Program, and many more are likely to follow. Artists are increasingly looking for multiple streams of income, rather than just a fat advance that they’ll have to repay with future sales.

As for how much money bands can expect to make from this, Stiksel said it would depend on the ads that appeared next to their song, but that bands shouldn’t expect to see a ton of money roll in at this stage of the music streaming game.

“A massive online streamer is still not like the BBC over here, which has millions and millions of concurrent users. In general, online streaming is not at that level yet… we’re not going to be able to pay royalties in the region of (what) these massive radio stations pay, but it is competitive to commercial radio… in the US.”

Artists that participate in the program will accrue their share of revenue in a Last.fm account that can be withdrawn once it reaches a certain amount, since fees would threaten to negate micropayments.

At least they’ll know exactly what they are due, unlike many other areas of the music business, where the only way to find out what you are truly owed is to sue for the right to audit records. Last.fm, on the other hand, has committed to a transparent payout system.

Stiksel told us about two tools launched concurrently with the Artist Royalty Program that show artists “how many scrobbles, now many streams, how many on-demand plays (they’ve had) and so on – all of these things will be broken down, because it’s a prerequisite for transparency as far as the accounting of all of the royalties is concerned.” He continued, “I’m aware that most royalty collection societies have a lot harder time doing this. They’re depending on spot samples (as opposed to actual usage data, which Last.fm’s system uses).”

I asked if he had any advice for artists who are considering joining Last.fm’s payment program, and Stiksel broke it down as follows:

“There are a lot of possibilities at every musician’s disposal, and while you can do a lot yourself, there are still certain aspects that you might need some help with. Being creative is a full-time job… very few megastars are (created by) just one person doing something. There’s still a roll to be played for management, for promoters, for pluggers, and yeah, also for labels as well, if you really want to take stuff forward…

“First and foremost, you have to concentrate on making the best music possible available to your fans, otherwise there’s no point entering the game in the first place.”

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