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Last.fm: Artist Royalty Program - Pays Royalties to Unsigned Bands

Recently, online music service Last.fm announced that it will start paying out royalties to unsigned and independent bands that upload their music to the website. Artists will earn royalties whenever their music is played on-demand, or on Last.fm’s streaming radio service.

Who and what is Last.fm?

Last.fm is a UK-based Internet radio and music community website. It claims over 21 million active users based in more than 200 countries. Independent record labels and unsigned artists are encouraged to promote their music on Last.fm, because the filtering and recommendation features mean that the music will be played for users who already like similar artists. Labels and artists can upload their own music for streaming and Last.fm and can choose whether their music is to be made available for streaming only, or for purchase or free download.

What has exactly been announced?

Last.fm have announced their Artist Royalty Program, a continuatiion from their plan in January 2008 allowing unsigned musicians to collect royalties when their music is loaded into Last.fm’s library and then streamed. Since the first announcement in January, “more than 450,000 tracks by unsigned or independent artists have been uploaded to the site.” The artists will receive royalties if their tracks are either randomly streamed or played free-on-demand.

Who will benefit?

Artists that participate in the program will accrue their share of revenue in a Last.fm account that can be withdrawn once it reaches a certain amount, since fees would threaten to negate micropayments. According to Last.fm, “The Artist Royalty Program only pays recording rights directly; all publishing royalties will still be paid through collection societies. If you are a member of a publishing collection society you are still eligible for the Artist Royalty Program (ASCAP or BMI in the US, PRS/MCPS in the UK or GEMA in Germany are all examples of publishing rights societies).”

“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. ”

Who is against it?

At the moment, its seems that the only thing going against the Last.fm business model concerns compensation for tracks that have been played by independent artists in the past. Wired Blog have noted “Merlin [an international rights body that represents over 12,000 independent labels] claims Last.fm’s Artist Royalty Program (ARP) doesn’t pay artists retroactively for past plays and is vague as to what rights the license gives CBS/Last.fm regarding uploaded music. In addition, Merlin is upset that direct contracts between independent copyright holders and Last.fm seem to have undermined Merlin’s negotiations with Last.fm to license its members’ music to the service.”

What about the royalties?

Create Digital Music gives a brilliant look at the different aspects of royalty distribution. Here is a brief look at how last.fm will pay the artists.

“The Artist Royalty Program will pay artists royalties on plays directly – no label required. Unsigned and independent artists can sign up to earn royalties from on-demand plays and Last.fm’s streaming radio.”

“Previously, the system for the artist was to go get a label, and then get that label to collect royalties on the recording. The label, in turn, had to go to SoundExchange, formerly part of the RIAA but now an independent organization, to get the money. Result: fees get set by a board of judges chosen by the Copyright Office (the Copyright Royalty Board), and you’ve got multiple middle … men, actually.

Under the ARP, you go to Last.fm, and Last.fm pays you.

In addition to royalties, that includes stats, event management, and the ability to connect with fans. And the other thing that’s interesting about this whole system is that both parties essentially have to be happy. Artists have to be getting value from Last.fm’s service, and royalties that make sense for them. Last.fm can then, in turn, build an ad-based revenue model that works for them as a business. That’s a far cry from a giant battle between the recording industry and large performers’ organizations in front of a group of judges. It’s new, so we’ll have to see how it works, but it’s nothing if not appealing.”

Payment for the royalty program varies depending upon which Last.fm service a track is played. Songs played on its free radio service will get 10 percent of the share of Last.fm’s net revenue. Songs played on Last.fm’s personalized, premium radio station with get either 10 percent of net revenue or $0.0005 for each complete stream – whichever is greater.

For tracks on Last.fm’s on-demand service, copyright owners will get 30 percent of Last.fm’s net revenue from the on-demand service. Songs played on the premium, on-demand service will the great of either 30 percent of revenue or $0.0005 per complete stream.

Participants must earn at least $10 before they can withdraw funds.

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