DMPulse Music Royalties Explained

Here's a question from Andy in Chicago:

"I've heard you talk on-the-air about the music licensing and royalties DMPulse pays. Would you explain what those are and how much it costs?"

Internet radio stations like DMPulse pay royalties for each song you hear on the station. Those royalties are essentially paying for the right to deliver that copyrighted material to the listening
audience. Many of the artists we play on DMPulse are struggling artists, and we believe it is essential that we pay our fair share for the great music they provide for us to enjoy!

We pay two parties: the songwriters and publishers, and the performers. The songwriters and publishers are represented by three organizations: ASCAP, BMI, and SESAC. Perhaps you've seen those acronyms in the liner notes of albums. A songwriter joins one of those groups, which in turn keeps track of where that songwriter's songs are being used and then generate royalty checks to the songwriter. The license-fee sturcture is different for each group, and you can learn more at each organization's website, linked below. For simplicity, I've included the yearly minimums for each license:

ASCAP: (Minimum annual rate) $288
BMI: $324
SESAC: $209

Each of the above also includes additional fees based on a percentage of the internet radio station's revenue. I've estimated that DMPulse's licensing/publishing fees from the above three groups will total around $1,030 this year.

That covers the songwriters; now to the performers of the songs!
We pay royalites for every "performance" of each song. To put it another way, a royalty is paid for each listener that hears each song on DMPulse. The organization we pay is SoundExchange, which collects and administers the royalty payments. Each month we provide SoundExchange with a list of songs played and the number of performances. The rate structure is set yearly:

2011: $0.0019 (per performance)
2012: $0.0021

Let's break this down ... so, the royalty rate is $0.0019 per song, for each listener. Since these are fractions of cents, it is easier in my own mind to put this in terms of hours listened, to get the
numbers bigger. On DMPulse, we average 15-16 songs per hour. So, doing the math: 15 songs per hour, times $0.0019, is $0.0285 cents per hour/per listener. Rounding up slightly, that's about 3 cents per hour, for every hour you listen. A bit of perspective here ... via a nifty chart!

Find the average number of hours you listen a week to see what your share of our royalty payment is:

Hours per week        Rate/week        Annualized Rate (52 weeks)

10 hours                  $0.285            $14.82
20 hours                  $0.57              $29.64
30 hours                  $0.855            $44.46
40 hours                  $1.14              $59.28

Most DMPulse listeners average 20-30 hours of listening each week. Our next SoundExchange payment is due in January, and it will be based on the 2011 rate example above.

Last year, DMPulse was hosted by Live365.com, which covered the songwriter royalties as part of our monthly payment to Live365. In addition, Live365 sold on-air advertising to cover the cost of the SoundExchange royalties. In 2010, DMPulse served 240,000 hours of listening, so at about $0.03/hour, that would have amounted to $6,840, and essentially that was covered by the advertisers at Live365 plus what DMPulse paid monthly for the Live365 hosting of the station.

This year, now that DMPulse is a non-profit, independent internet radio station no longer hosted by Live365, and ADVERTISING-FREE, we are responsible to cover this year's royalties "on our own." Because DMPulse is now non-profit, our royalties fee structure is somewhat less than what it was in 2010, but still substantial.

Thanks to all who have donated to DMPulse to cover your share. Those dollars ultimately go to the musicians and artists you hear on DMPulse!