Let’s say your metal band is playing a headlining club gig. At the end of the night, the promoter hands you an envelope containing $200. Is that a fair share?

Or say you’re a R&B singer with a CD released by an independent record company. Your label sends you quarterly royalty checks, but how do you know if the amount is correct?

Or imagine you’re the composer & lyricist of a popular country song that gets played on an on-demand streaming service. You get regular checks from your performing rights organization (PRO) for this use, but how do you know if the rate you’re getting is fair compared to what other songwriters get for plays of their songs?

These three scenarios all highlight the importance of transparency in today’s music business. This is a word that gets thrown around a lot by various parties, but what does it actually mean?

To us, transparency means that artists have a full understanding of the business and technological structures in which they participate. But that’s not even the whole picture. The entire industry—from artist to fan to music service—would benefit from greater transparency in rights management (who owns what and what uses are allowed), as well as transparency in how deals are constructed. Otherwise, we run the risk of not only perpetuating legacy problems, but also missing new opportunities.

There are ways to build more transparency into music business transactions. To take our earlier example, many venues and promoters now deliver a “wrap sheet” with payment at the end of the night, breaking down the show attendance, itemized costs, and spelling out how everything is calculated so artists can understand how much money they walk away with and why. Similarly, the best labels include detailed data with their checks for physical sales, breaking down the per-unit costs and splits, so you can understand precisely how the accounting works.

The Internet has made music a truly global phenomenon. While this has opened up new avenues for artists to be heard in places that would have previously been unreachable except for the biggest stars, it has also created challenges in the collection and distribution of royalties. In the United States, we have a well-established music business with a great many laws to govern it. Yet there are still frustrations. Many are the direct result of a lack of transparency in how artists are compensated, how revenue shares are allocated and what information is necessary to pay artists accurately and in a timely fashion.

Now, it’s important to understand that transparency alone isn’t a guarantee of fair treatment: just because the terms of a deal are transparent doesn’t make them equitable or favorable. A concert promoter or record label could be giving you a crummy deal, and just because they spell this out in a wrap sheet or royalty statement doesn’t make it okay. But transparency is a baseline necessity for artists’ rights, because without transparency, we won’t know what to fight for—individually or collectively.

In this series of posts, we will examine transparency in three specific areas:

1.  structural transparency: how different services function and how they compensate artists

2.  rates and revenue transparency: how money is split, who gets paid what and why

3.  repertoire transparency: readily available ownership information to facilitate more efficient licensing and accuracy in payment

This is a pretty huge topic, especially when you consider that there are two copyrights in music: the underlying composition (think notes on paper and lyrics) and sound recordings (think performances captured to tape or hard drive). Compositions (or musical works) belong to songwriters and publishers; sound recordings are typically owned by labels, but sometimes belong to artists.

The next post in this series will focus on how a lack of transparency in publishing impacts songwriters. We’ll zoom in on songwriter performance royalties, as this issue is currently a hot topic. The important thing here is that any future dealings between publishers and services are structured so that ALL songwriters are paid what they’re owed in a fair, timely, accurate and efficient manner, and lawful services can deliver more amazing music to your ears. Transparency is key to making the entire system work.

Typewriter image via Shutterstock