Is there a revenue stream in streaming music?

"I want to get into people's ears," he said, admitting that he actually was pleased the first times he saw that someone had uploaded JC Brooks & the Uptown Sound albums to YouTube and piracy sites. "One of my happy moments (was when) my mom found our first album on a torrent site. It was like, someone cared enough to put us on a torrent site? Yay. That is one of the flattering aspects of piracy."

Wisconsin-based singer Kelly Hogan, who has lived in and continues to perform often in Chicago, said she's still trying to get up to speed on this increasingly complicated business. "I have to always overcome that thing of 'All of this is evil. I just want to play music,'" Hogan said. "But you have to be smart."

She said she takes with a grain of salt companies' claims that "'the bigger we get, the more royalties we'll pass on.' I don't know where in history I've ever seen that."

Los Angeles-based electronic artist Ryan Farish said YouTube's Content ID program, which automatically identifies his music when it's posted by outside parties, gives him credit, a cut of ad revenues and a songwriters' performance royalties — helpful given that the video "Remember Me," a 2006 photo montage tribute to U.S. soldiers set to Farish's "Pacific Wind," has more than 31 million YouTube hits. Farish said he received $506 from Google Advertising for 590,698 YouTube plays in March for a dozen videos using his music that other people had posted, though the exposure is more important.

"It's given me a vehicle to reach people, and that absolutely does trickle down to sales on iTunes, Amazon and Beatport and Google Play," he said.

Likewise, Farish called Pandora "a lifesaver. I can't even count the number of people who have told me that they've discovered me on Pandora, and I know for a fact that it contributes hugely to my sales on iTunes."

Lowery disputes that Pandora is necessarily helping people discover his music because it most often plays songs of his that already were hits, such as Cracker's "Low." But Farish said Lowery shouldn't complain.

"I haven't heard the band Cracker mentioned since the '90s," Farish said. "He's exactly who needs Pandora right now. Don't bite the hand that feeds you. Seriously. Pandora is pushing your music to new listeners."

Farish said over the previous quarter his music had 5,238,000 plays on Pandora, compared with 107,760 on Spotify. "Spotify is not working for me to introduce my music to new people like Pandora is," he said. "Does that take away from sales? It's possible."

Lowery said he's "kind of ambivalent about Spotify. They sincerely believe they are helping artists and the music business. They may well be, but the jury is out."

David Macias, president of the Nashville-based Thirty Tigers distribution, marketing and management company, contends that Spotify has gotten a bad rap from its critics. "They're sort of saying 'All big companies are the same, and they're bad and they're out to screw us,' and I just feel like that's intellectually lazy and not getting us closer to understanding what's going on," said Macias, who rebutted Yorke and Godrich in a Billboard column. "I have yet to see a serious economic critique of Spotify that convinces me that it's a bad thing for artists."

What Macias sees is listeners shifting from an acquisitional model, in which they pay to own music, to one in which they consume it as if it were a utility, like water. You still pay for the latter but don't think about it every time you fill a cup.

When Spotify investor Ashton Kutcher was in town recently, he said that artists who feel undercompensated by Spotify "should call their labels. Their labels are screwing them." Macias said musicians are being unrealistic if they expect to make a lot of money from Spotify when the service here is akin to newly planted saplings. Instead, he said, they should look to Sweden, where Spotify has grown to forest proportions, and the country's overall music revenues have increased each year since it launched.

The Swedish recording industry association, GLF, reported that recorded-music revenues were up 12 percent in the first half of 2013 over the comparable 2012 period, with digital revenues accounting for 75 percent of that figure and streaming constituting 94 percent of the digital income. At the same time, physical sales declined 24 percent and downloads dropped 20 percent — so one could say that streaming cannibalized sales while growing the overall industry.

Spotify's Parks said revenues for global music superstars (who currently may gross more than $400,000 a month on the service) as well as small- to mid-level artists would only grow as the service catches on in the U.S. Parks said if Spotify grew to 140 million users with 40 million paid, compared with the current 24 million and 6 million, payouts would increase fivefold.

"The key to this business is scale," Parks said. "iTunes wasn't paying out a lot in 2003 when (the iTunes store) launched because they were small. The way we look at it is 7 billion people enjoy the music, and most people don't pay for it."

At $120 a year, Spotify's paid subscribers already are spending more money on music than more than half of U.S. consumers, though a Nielsen study released this spring noted that 40 percent of consumers do 75 percent of the music spending, laying down $200-$400 a year. One way the streaming model intends to create new income is this: If you burned, say, a disco mix CD for your friends, such sharing would generate no income for anyone, but if you posted such a playlist on Spotify and friends listened to it there, money would be paid out for each song stream.

"It's important that people be able to share music again in a way that doesn't deprive artists of royalties when that happens," Park said.

But for Justin Roberts, the reality remains that his album sales have fallen off dramatically despite his Grammy nomination for 2010's "Jungle Gym," and even though he releases his own music, the half-penny he estimates receiving per stream from Spotify and the fraction of that he receives from Pandora don't begin to cover his recording costs. He'd prefer a system in which streaming a song cost, say, a nickel ("I think it's worth 5 cents to listen to a song"), and if you listened to it enough times, you'd get it as a download. As it is, Spotify, unlike Pandora, doesn't include a link for buying songs.

"As a small artist it makes a big difference to me if one person buys my CD or buys a track on iTunes, because the number of times anyone would have to listen to a song to generate any meaningful amount of money is more times than most people would ever listen to a single song," he said, noting that he doesn't want to have to launch a Kickstarter campaign to fund future albums. "It's frustrating to see something that I spend a year of my life working on and a large amount of money to make be almost completely worthless when it comes out."

Hogan sounded resigned to not cashing in no matter which model prevails.

"I'm a musician," she deadpanned. "I'm used to not getting paid."

mcaro@tribune.com

Twitter @MarkCaro

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