Yesterday, on-demand music streaming service Spotifydid something pretty big by explaining in detail how it calculates and pays out royalties to rightsholders. With so many music industry pundits and practitioners in a tizzy about the economics of streaming, this move can be generally seen as positive. But as always, the devil is in the details.
It is certainly significant that Spotify took this step—probably long overdue—and we hope that it serves to increase the standard of transparency across the digital music sector. When a market leader like Spotify makes this kind of move, it can be a spur to other players to follow suit. However, it doesn’t really change much in terms of artist leverage on streaming on-demand services, nor does it impact most musicians and songwriters’ bottom lines. We spend a great deal of time considering this stuff—in fact, our own Kristin Thomson recently wrote a post for Music Think Tank about ways to make streaming music more viable for artists. (And if you need a primer on how the money flows on a variety of music platforms, check out these handy charts.)
Here at FMC, we regularly engage in a kind of protracted dialog with government through public comments and other filings that can extend over years (actually, thirteen and counting!). While we don’t claim to have all the answers, we do believe that our history of direct engagement with musicians, composers, independent labels, publishers, PROs, unions and others is useful for policymakers to consider as they grapple with the many questions facing creators in the digital age.
On Wednesday, Nov. 14, 2013, FMCfiled comments with the United States Patent and Trademark Office (USPTO) regarding their recent “green paper”—itself a product of the Internet Policy Task Force comprised of USPTO, the Department of Commerce and the National Telecommunications and Information Administration. Way back in 2010, we filed comments in the original proceeding that resulted in this year’s report, Copyright Policy, Creativity, and Innovation in the Digital Economy [PDF].
Future of Music Coalition filed the following comments with the United States Patent and Trade Office (USPTO) in an inquiry related to a previously published “green paper” from the Internet Policy Taks Force (a joint effort also including the United States Copyright Office and the National Telecommunications and Information Administration).
Let’s say you’re approached by David Copperfield (it’s OK, don’t run!), and he asks you to be an audience plant for his next big televised spectacle. You’ll be privy to some behind-the-scenes secrets, and outing his magic as merely illusion could be a disaster for his career—other magicians will cop his tricks, his performances will lose their coveted mystique, etc. That’s no good. So to make sure you keep your lips zipped, he presents to you (pulled out of a hat, probably) a non-disclosure agreement. This is a contract that says your discussions regarding this particular event are strictly confidential, and if you go blabbing he can sue you for breach of contract.
Non-disclosure agreements (NDAs) in this context seem pretty straightforward, but what about all the NDAs that pervade the music industry? Why all the smoke and mirrors obfuscating the terms of agreement between streaming services and major record labels, or deals between aggregators/distributors and YouTube?
For consumers, iTunes Radio may feel a lot like another version of the popular “predictive” radio service Pandora. Plug in an artist or genre, and an algorithm spits out sonically related tracks. But while the experience for listeners may be similar up to a point, the revenue flow behind the scenes isn’t an exact match.
In order to break down how money gets from iTunes Radio to the artists, it’s first important to remember that every song has two copyrights: one for the underlying composition (think notes and lyrics on paper), and one for the sound recording (think music on CD, tape or hard drive).
Acclaimed singer-songwriter Aimee Mann is the latest artist to enter the digital royalties battle. Mann recently filed a lawsuit against the company MediaNet, demanding statutory damages for copyright infringement of around 120 songs. If she wins, Mann could be awarded up to $18 million dollars in damages.
Mann’s lawsuit alleges that around 120 of her songs are being provided to various online radio sources by MediaNet, but the company does not have the rights to her songs, and has not compensated her for plays since September, 2005. Mann admits that in 2003 she entered into a license agreement with MediaNet, but she sent a termination notice in 2005. After her attempt to terminate the agreement, MediaNet allegedly continued to distribute her music, sending only a $20 advance in March 2013 for the last eight years, which Mann promptly returned.
Not long ago, we reported on US Register of Copyrights Maria Pallante’s House Judiciary Committee testimony regarding “the next great copyright act.” Pallante described the need to update our existing laws to make them not only more comprehensible to the average American, but also work better in a rapidly-evolving technological landscape. We thought that her reasoning was sound and that she was focusing on the right areas, including the incredibly complicated licensing environment for music.
Clearly, the commitee was listening. Yesterday, at a Library of Congress event marking World Intellectual Property Day, Chairman Bob Goodlatte (R-VA) signaled his intent to review the Copyright Act (which was passed in 1976 and took effect in 1978), with an eye to optimizing the laws to reflect current realities. You can read Goodlatte’s full remarks here. (Self-referential bit — Goodlatte also gave a keynote at the 10th Future of Music Summit.)
Music publishing is perhaps the most complex and little understood sectors in the music business. Most folks grasp that record labels own so-called “master recordings,” but many don’t realize there’s a whole ‘nother copyright in music. read more
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. read more