You might have the impression there’s no real money in Pandora. For years they’ve been at the center of a national debate about royalty rates for artists, songwriters, labels, and more — and there’s been a fair amount of criticism lobbed at the non-interactive streaming giant by rights holders (though those criticisms often falsely equate a single play on Pandora that reaches one listener with a single play on terrestrial radio that could reach tens of thousands of listeners or more).
But here’s the thing: for many independent artists, there IS real money in Pandora. We heard from one CD Baby artist recently who is earning upwards of $20,000 per MONTH on the platform, and she’s not “famous” by any stretch. She just happens to own all the rights to her music: she’s the songwriter, publisher, label, principal artist, and performer all wrapped up in one.
Knowing what kind of money your music is generating is important, and a play on Pandora can generate a few different kinds of royalties. In this article I want to give a quick summary of what those royalties are, how they’re generated, and where you need to go to collect them all.
The difference between non-interactive and interactive streaming
Non-interactive streaming is what Pandora originally became known for; it’s essentially online radio. Although a Pandora radio user can customize their stations based on their tastes, they can’t choose the exact song they want to hear (the way you might on Spotify or Apple Music). That online radio model is non-interactive; it’s a more passive listening experience.
Interactive streaming, also called on-demand streaming, is when the user chooses exactly what they want to listen to. Again, think Spotify or Apple Music.
To complicate things in your mind though, Pandora IS getting into the interactive streaming game too with the launch of Pandora Premium. And Pandora Plus, the ad-free version of their non-interactive radio service, now has a replay function (which DOES generate the royalties associated with interactive streaming that I will list below).
So, in short, the particular royalties you’re entitled to from Pandora depend on how the listener is accessing your music.
Non-interactive plays on Pandora can earn you…
Digital performance royalties
Also sometimes referred to as ‘digital royalties’ or ‘neighboring rights,’ these fees are paid by online, non-interactive service providers such as Pandora for the usage of a particular recorded version of a song. It’s about the recording, not the song itself, so these are NOT publishing royalties.
Unlike publishing royalties (which get paid to publishers and songwriters), digital royalties get paid to:
- Featured artists – 45% gets paid to the primary artist/s (the one whose name is probably on the album cover).
- Non-featured artists – 5% gets paid to a fund for session players, backup musicians, etc.
- The owner of the recording – 50% gets paid to the label or entity that holds the rights to the recording.
For many independent musicians releasing music today, they’re both the featured artist AND the rights holder (label).
But how do you collect digital royalties from plays on Pandora?
- The artist portion is paid by Pandora to SoundExchange, a nonprofit organization that collects and distributes digital performance royalties to featured artists and copyright holders. Register with SoundExchange today to collect the artist share of your digital performance royalties!
- The rights holder portion is paid by Pandora to the distributor of the sound recording. (Hopefully that’s CD Baby 😉 ). Your distributor will then pay those royalties to the owner of the recording.
IMPORTANT NOTE: SoundExchange used to receive BOTH the artist and label shares from Pandora, and you could collect them both from SoundExchange. However, for any directly-licensed music on their service, Pandora now pays the copyright owner’s share of digital performance royalties directly to the artist’s distributor. They do not pay that portion to SoundExchange.
Even if you opted out of CD Baby’s SoundExchange collection for your releases, Pandora will pay the label share of your digital performance royalties to us as your distributor. You’ll be able to see a full accounting in your CD Baby members section.
Performance royalties (publishing)
Just like with terrestrial radio play, the songwriter and publisher are owed a performance royalty for the broadcast of their music. If you write original songs, you’re owed performance royalties for Pandora plays.
And just like with traditional radio, performance royalties get split:
- 50% to the songwriter/s
- 50% to the publisher/s
If you haven’t signed away your publishing rights, good news: you’re the publisher of your own songs, and you can collect both the writer and publisher shares.
To collect your performance royalties, you need to get affiliated with a performing rights organization such as ASCAP, BMI, or SESAC. CD Baby Pro can help you get set up with a Performing Rights Organization, if you aren’t already, and can be your publishing administrator to make sure your songs are registered so you can collect your performance royalties.
Many performing rights organizations have a way to affiliate yourself as both the writer and the publisher, so you’ll collect both shares. With CD Baby Pro, CD Baby would collect the publisher’s share (50%) of your performance royalties and pass along those royalties to you through your CD Baby account.
CD Baby Pro is worth considering for another big reason though: mechanical royalties. I’ll get into those more below, but it’s important to know that performing rights organizations do NOT collect mechanicals, and they’re almost impossible to claim and collect on your own. So… CD Baby Pro!
Interactive plays through Pandora Premium and replays on Pandora Plus will earn you…
Performance royalties (publishing)
The same royalties I talked about above, owed to songwriters and publishers, are generated from interactive, on-demand streaming. With Pandora Premium, on-demand is an option for Pandora users (for a monthly subscription fee).
Note: Rumor has it that Pandora plans to curate its interactive catalog, so there’s no guarantee that your music will be available on Pandora Premium, even after CD Baby delivers it to them. But of course you want to be ready to collect any royalties your music is generating, so consider signing up for CD Baby Pro, and at the very least affiliate with a P.R.O.
Sound recording license fee
This is the standard payment the owner of the sound recording receives for a stream. It gets paid by Pandora to your distributor. If CD Baby is your distributor, you’ll see it in your accounting along with the details: song title, amount paid, date, date of reporting, etc.
Mechanical royalties (publishing)
Any time a song is mechanically or digitally reproduced (CD, vinyl, download, stream), a mechanical royalty is owed to the publisher.
As I mentioned above, mechanical royalties are almost impossible for you to claim and collect on your own without the help of a publishing administrator.
That’s where CD Baby Pro Publishing Administration comes in. We can help you collect all the publishing royalties you’re owed worldwide — including mechanicals from interactive streams on Pandora.
As you can see, a single play on Pandora can generate multiple royalties. It’s important to set yourself up to collect them all, from Pandora and countless other music services. Here’s how:
- Sign up your music for worldwide distribution through CD Baby
- Register at the same time for CD Baby Pro (or upgrade your older titles) to collect publishing royalties for a range of music uses
- Choose the P.R.O you’d like to be affiliated with (such as ASCAP or BMI) — or let us know which one you are already with — and CD Baby will then handle the affiliation process and register your songs with collection societies worldwide
- Submit your music to Pandora
- Register with SoundExchange to collect digital royalties from a range of music services
That may sound like a lot of steps, but this is the really important stuff you have to do ONCE (per release) and then you’re set forever to collect your performance royalties, digital performance royalties, mechanical royalties, and streaming license fees!
Hope that helps. Holler in the comments if you have questions.