Yesterday, news broke that performance rights organization ASCAP lost its appeal of a decision by a federal judge to keep webcasting rates at 1.85 percent. The ruling also affirmed an earlier decision that publishers are not allowed to “partially withdraw” digital rights from ASCAP. This decision only applies to public performances of musical works on non-interactive (or “radio-like” services such as Pandora. (For more information on how all of this works, check out our ASCAP and BMI consent decrees fact sheet.)
Songwriters want to be paid more, and we think they deserve to be paid more wherever their music is performed. However, there are a few things that songwriters might want to keep in mind with regard to this decision:
1. The appeals court ruling means your royalties stay the same for the rest of the term, which is only through Dec. 31 of this year. After that, parties must come to a new agreement to achieve rates for the next five-year period or return to rate court.
2. Terrestrial radio pays 1.7 percent of revenue to Pandora’s 1.85. Most of the songwriters we know—including us!—are more likely to be heard on Internet radio than commercial FM. And you have to be played to be paid. Granted, Pandora is likely to buy an FM station in South Dakota, which would make them eligible for the 1.7 rate. However:
3. The Department of Justice (DOJ) is likely to make recommendations soon to modify the consent decrees, which according to several federal judges, currently prohibit partial withdrawal of digital rights from ASCAP and BMI. Depending on what the DOJ decides, publishers may be allowed to negotiate digital licenses directly with the services, which could lead to higher rates. But do pay attention to what the songwriter guilds and associations have to say about transparency. Because it doesn’t serve songwriters if the major publishers can play “hide the money” or trade equity and cash advances for lower writer royalties.
4. How do we get you paid more without fracturing the licensing space and tilting the playing field to just three major publishers? There are a great many writers who own their own publishing, are with independent publishers or have sub-publishing deals with the majors. This is a highly complex space with multiple writers and multiple publishers on a single song. Getting paid more is important, especially as our mechanical royalties erode. But eliminating webcasting isn’t the answer. Rock-solid data, transparency and yes, maybe even direct licensing under certain conditions, is likely to produce a better outcome.
Or else we’ll just have to ask Congress to “fix it.” And that might take a while.