If you’ve ever looked at who gets paid (and how) in the digital music space, you may have walked away dizzy. The two copyrights in music — sound recording and composition — wend their way through the marketplace in lots of curious ways. For us, the most important thing is how money gets back to the actual muscians and songwriters.
As convoluted as things can be in the US, the picture is even more complicated in other countries. This post at the TuneCore blog looks at the rights that digital download stores need to acquire in order to pay the people that are supposed to get paid when a piece of music is sold. (There’s also a separate but related post about a recent incident with TuneCore and Amazon EU/UK, in which the latter company pulled TuneCore artists’ tracks due to an unresolved royalty issue.)
The TuneCore/Amazon situation is still being sorted out, but there may be some early takeaways. Of the millions of artists who use TuneCore to get their music into digital stores, a healthy percentage are also the songwriters. And it’s probably a good bet that not all of these songwriters have publishers or are even members of Performing Rights Organizations (PROs). In fact, 99 percent of the world’s songwriters do not have “publishing deals” (by default, they are the publisher but can do little to enforce their rights in certain environments).
This isn’t to suggest such institutions aren’t worth belonging to, but rather that there are now a great many creators who exist outside the traditional music industry structures. They should, however, have the same rights as other artists when their music is purchased.
For US songwriters and US digital music retailers, there is a degree of predictability to the marketplace. When these same songwriters and tunes are sold on digital platforms overseas, things can get weird — especially if nobody’s paying close attention. TuneCore honcho Jeff Price explains:
When a song sells in the United States, a digital music service like Amazon pays the songwriter money to the record label and then the record label pays the songwriter.
When a song sells outside of the United States, a digital music store must get the licenses and pay the person or entity directly that controls the songwriter rights. The digital music service does not pay the money to the record label to pay the songwriter.
OK, that seems pretty straightforward, right? A digital service simply pays the money to whatever entity owns the songwriting copyright. Not so fast. The hiccup comes from the fact that there are TWO rights that a digital music retailer needs to acquire to sell a songwriter’s music overseas: the right to reproduction and the right to public performance.
In the US, the reproduction right (aka the mechanical royalty) is paid by the labels to the publisher through the Harry Fox Agency (the publisher typically has a split worked out with the songwriter, or the songwriter is the publisher). There is no public performance royalty owed for digital downloads in America; here, that right only exists for broadcasting (over-the-air or online).
This means that many US songwriters who sell music in digital services outside the US may not have a way to collect all the money they’re owed. And even if you belong to a PRO like ASCAP, SESAC or BMI, you aren’t covered for the reproduction royalty. Confused? Here’s Jeff again:
If an artist is affiliated with a performing rights organization in the US like ASCAP or BMI, it is only for the right of Public Performance, not for Reproduction, which is just one of the two needed songwriter licenses.
The digital music service still needs to obtain the second license (the right of Reproduction), and make payments to the person or entity that controls that right for the songwriter….
…Some digital music services might try to get the licenses and make payments to a local, third party that does not represent all the rights (or any of the rights) of the songwriter.
These local collection agencies hold onto the songwriter’s money, take over 20 percent of it, and give the rest of it away to others companies like Warner Bros., Universal, EMI, Sony and others based on what percentage of the “market” they control.
The reason we bring all of this up is because it stands to reason that there will be more and more artists coming into the marketplace who use services like TuneCore, CD Baby or ReverbNation to get their music on global digital retail platforms. This means that there is the increasing need to make sure the money owed to these creators gets to them, even if they aren’t members of a foreign royalty society (or a domestic one, for that matter).
We think it’s great that Jeff from TuneCore is going to bat for the artists who use his service. But what about non-TuneCore artists? We’d love to see even more open dialogue on this subject, as the internet has made music a truly global phenomenon. Getting things to run smoothly for creators will require cooperation from a lot of parties, old-school and new-school.
The compensation picture for artists is likely to remain pretty complicated — as initial findings from our Artist Revenue Streams project attest — but that doesn’t mean we can’t work together to make it less so.