Determining Artist Royalties In The Music Industry

The methods publishers use to divide up artists' royalties in the music industry.

Recording executives' jobs require that they determine who their customers are and what they want, and in order to do this they must have access to adequate resources for researching current market trends. BDS (Broadcast Data Systems), SoundScan, and Billboard charts are extremely helpful to executives in making decisions, however they are not infallible.

BDS is a complex computer system that reads encoded data streams in each song played on the radio. This feature enables it to count the number of times a song is broadcast each day - useful in determining the popularity of certain songs (whether or not they are in heavy or light rotation, and for how long) as well as reporting to ASCAP, BMI, and similar organizations in order to determine an artist's royalties. BDS seems to work the best out of all the systems because of its 98-99% accuracy rate in compiling songs, however as radio seems mostly to be the slave to advertisement that most media outlets are, I don't think it's necessarily a good judge of what the general populace wants to hear.

SoundScan is another computer system that works in chain stores and large retailers across the country to track music sales. Total sales are compiled and published in reports for record execs to see who's selling and who's not. Again, a good idea on the surface, but we must keep in mind that smaller retailers do not often have access to the SoundScan service, and they do provide for about one-third of all music sales. Bear in mind also that smaller "ma and pa" stores often have a greater customer loyalty for their ability to allow the customer to special order, preview CDs before purchase, and often being tailored to fit a more local or specific flavor of music that may not be available elsewhere, which can account for some very popular music groups that have not gotten major label consideration but are nonetheless formidable contenders in the music business (i.e.: The Grateful Dead, Dave Matthews Band, and many others).

Thirdly, recording executives can rely upon Billboard Magazine's charts to show the top 100 ranking of songs played on the radio and sold each month. The charts show how long the song / album has been in the top 100, and what rank it received for each week. This can be a useful guide to a band's long term and short-term success or failure, but unfortunately it is subject to the same error margins as BDS and SoundScan.

In my opinion, none of the above systems work as well as they should to determine trends in music consumerism; however, trend-setting is key to an artist's longevity in the music business, and without some method of tracking current market trends, recording executives could not make adequate decisions regarding contractual obligations for the artist, pay rates, and promotional considerations among others. So, perhaps in the future, improvements can be made to introduce a cheaper, more widely available method of music sales tracking that would cover not only large retail outlets but smaller stores as well; or, improving the power or range of the BDS system to cover local and short-band radio stations as well as larger, corporate sponsored ones.

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