This is a blog post I wrote for the Last.fm blog, head over there if you want to join the discussion:
With the Artist Royalty Program we wanted to solve a crucial problem. Since we started in 2002 we had licensed music from various ‘content owners’ (major and indie labels as well as digital music distribution companies), and we also paid money to collections societies all over the world. But there were certain artists and labels losing out: those who do not have access to all the above, or chose not to be part of this traditional music industry network.
The process to solve this started with two goals. First, we wanted to continue to be an effective promotional platform for all artists, a place where we could connect music makers with new fans. (Our recommendations are key to achieving this: an artist on Last.fm doesn’t have to keep reaching out to people, as our system will automatically find new music for everyone based on their existing music taste.) Secondly, we wanted to build a fair system that shared Last.fm’s revenue with those artists. In this way, as Last.fm grows, the commercial success that comes with that will be shared with all music makers, of whatever stripe.
After months of research, discussion and technical development, we launched our Artist Royalty Program at the beginning of July. From then on, artists and labels that opted into the program started accruing royalties (if their music was being played on the site, of course). Last Friday we finished the final part of this work, and have published royalty reports to all artists, and will now automatically do so every three months. And for the first time we could actually see ourselves how our royalties were being distributed between all artists and labels.
First of all, I saw something that was not surprising: there are many labels that will collect a small amount of royalties and some who collect a lot. The Long Tail never fails. Then I was looking through the labels that were the top earners and I made some interesting discoveries: there were plenty of labels in there that I had never heard of. I was surprised but equally pleased that some (what I would call niche) content owners used Last.fm to find their audience through our recommendation system, and were able to do this successfully. We have been saying for years that Last.fm can work very well for less well-known artists – since our recommendation system will find fans even for the most obscure artist – and now we have some very hard proof for that.
There are now 85,000 artists and labels collecting royalties from us directly and this number is rising steadily. And of course I want to mention: if you make music too you can join right now.
