Page 40 - Mar_Apr23

The Business of Composing, Part 2 - Licensing

The Digital Era downloaded” or owned outright, this is still considered
Digital Audio and Video Licensing and Roy- “streaming” audio.
alties are some of the most complex areas of music Streaming audio is divided into two different
licensing, and have changed significantly in the last categories:
few years. Few resources exist to pull together all the 1) Interactive streaming, where the user has some
different strands into one resource; we hope that what level of choice about what tracks they listen to (e.g.,
follows might provide an understanding of the whole Apple Music, Spotify, and many others), and 2) Non-
picture for music creators. 2 Interactive streaming “internet radio” where the user
Originally, “digital distribution” of music referred “tunes in” but doesn’t directly choose what to listen to
only to Downloads (nowadays more specifically called (e.g., Pandora or iHeart Radio).
“permanent downloads”), in which the user receives,
permanently owns, and stores a musical file on their
own device. Permanent downloads are still a source
of revenue, since some people prefer to purchase
and download files for permanent ownership, e.g,. on
iTunes (not to be confused with Apple Music, which
offers streaming).
However, piracy (illegal sharing of music files in-
stead of purchasing) became rampant when download-
ing was the only option, so the industry opened up a
new avenue where users can access an entire library
of music for a subscription fee that cost much less than
downloading all one’s music. (Note: this did “reduce
piracy” but slashed revenue for all but the most popular
artists; many composers received much more income All DSPs collect revenue from their subscribers,
from iTunes in the “download era,” in spite of piracy, monitor the plays on their service, then distribute rev-
than they do now in the “streaming era”!) enue based on that data. (We sometimes see figures
This new “access library” approach is called about what DSPs pay “per play.” but it’s almost always
streaming audio: audio streamed by a user from a more complicated than it sounds; there is no clear “rate
Digital Service Provider (DSP) such as Apple Mu- per play” in streaming audio. For a detailed explana-
sic, Spotify, Pandora, etc. In this model, the audio file tion on the complexity of calculating and comparing
is played through the device (computer, phone, etc.) “per-stream rates,” see https://soundcharts.com/blog/
but does not permanently stay on the device. Stream- music-streaming-rates-payouts). For this article, we’ll
ing platforms like Spotify offer “free” versions that run simply focus on the types of revenue generated—and
ads, as well as a “subscription” version which is ad- here’s where it gets more complicated: interactive and
free and may offer more features; other platforms like non-interactive streaming both generate multiple types of royalties,
Apple Music do not offer ad-supported versions, and which differ from each other.
always require subscription. Subscription fees are typi-
cally around $10/month—the former typical cost of
one album download. Interactive Streaming – Audio
As part of a paid subscription, some DSPs may allow We’re about to move into some technical inner work-
audio to be downloaded onto the user’s device in that ings of “the system.” If you’re content at this level of
platform’s app, but the download is not a permanently understanding, you don’t have to continue. However,
owned file; the user’s subscription must be maintained we hope to shine light into some little-understood areas
in order to preserve their access (known as a “limited of licensing for those who are interested, and provide
download”). Since the recording is not “permanently answers to common composer questions that are dif-

38 CHORAL JOURNAL March/April 2023 Volume 63 Number 7