Welcome back to our series on transparency in the music business. If you haven’t already, be sure to check out Part One, Part Two and Part Three.
Here’s an overview of the three types of transparency we previously outlined:
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
Today, we’ll take a closer look at revenue transparency. This goes beyond simply knowing how much you’re getting paid as a musician or songwriter. Revenue transparency should also include information about the terms of compensation and how revenue is collected and distributed.
Before we get started, it’s crucial to understand that there are two distinct copyrights in music: the musical work (think lyrics and notes on paper) and the sound recording (think of performances captured to tape or hard drive). Musical works belong to publishers and composers, while labels typically own sound recordings (though sometimes it’s the artist).
In certain circumstances, the law treats these two copyrights completely differently. This can make the revenue picture even more complicated. For a great breakdown, check out our Music and How the Money Flows charts—they’re particularly helpful for visual learners.
Keep in mind that the laws and business practices that govern compensation are often in flux. New or hybrid technologies can emerge that require a novel approach to payment, and some individual deals end up affecting the entire marketplace. Additionally, the US government is currently examining current copyright law with an eye towards an eventual update. With those caveats in place, here are some examples to consider.
Welcome to Part Two of FMC’s look at transparency and why it matters to musicians and composers. In Part One, we described three different types of transparency, and outlined why each matters to anyone who wants to get paid in the digital age:
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
Today, we’re going to look at a current hot topic—direct deals for performance rights in music publishing—as a case study.
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?
When music is played on a non-interactive digital service like Pandora, Sirius XM, or cable radio, payment for the sound recording copyright is collected and distributed by SoundExchange, a non-profit performance rights organization. As we detail in our handy “Music and How the Money Flows” chart, this revenue is divided up in a standard formula: 45% goes to the featured artist, 50% goes to the sound recording copyright owner (usually a label), and 5% goes to the AFM/SAG-AFTRA Intellectual Property Rights Distrbution Fund, for distribution to backing players, session musicians, and backing vocalists. We’re fond of this system because it treats all artists equally, ensuring direct payment that can’t be held against recoupable debt to a label, with equitable splits.
But what happens if you’re a self-released artist who doesn’t work with a label, but owns the copyrights to your sound recordings? You are entitled to collect both the artist share and the label share yourself. Unfortunately, many artists don’t know this, and end up missing out on money they ought to be collecting, because they’ve only registered for the artist share. Other artists haven’t registered with SoundExchange at all.
CD Baby, a popular distribution service with a large userbase of mostly self-released artists, recently announced a change to their terms of service that allows them to collect the label share from SoundExchange for their roster of distributed artists. This move was met with some minor controversy, as indeed, artists are entitled to collect that money themselves directly from SoundExchange, without the administrative cut that CD Baby charges. We decided to go directly to the source: CD Baby CEOTracy Maddux answered our questions this week via email.
At first, I was thrilled to be discussing something other than Taylor Swift and Spotify, but then I got a bit annoyed at the binary nature of the debate. Those in support of Albini tended to be musicians from older generations who in earlier years struggled with basic issues like access to audiences. Those moved by Steinhardt tended to be disillusioned about the economics of music today, accompanied by a general fatigue that comes with trying to cut through a noisy marketplace.
I won’t rehash the points made by either gentleman (which you can read here and here). Both critiques are relevant in the sense that they describe aspects of the challenges and opportunities of making a life in music. However, in both pieces there is a tendency towards totalizing one’s individual experience—however valid—and applying that to the music community writ large. This leaves a lot out, including other genres, genders, cultures, races, ages, business approaches and creative ambitions.
by Sam Redd, Communications Intern and Kevin Erickson, Communications Associate
It’s happening again: another contemporary hitmaker is involved in a lawsuit with the estate of a well-loved musician over alleged unauthorized use of elements of the latter’s past work. In this case, the issue is Robin Thicke’s 2013 hit “Blurred Lines” and the Gaye family’s claim that the song illegally appropriates elements from Marvin Gaye’s #1 hit “Got to Give it Up,” released in 1977. After more than a year of legal wrangling, it now appears that the dispute may be one of the rare infringement cases that makes it to trial. But there’s a surprising wrinkle: in the course of litigating this dispute, Thicke may have let slip one of the music business’s more troubling open secrets.
Initially by accident, and perhaps later by design, YouTube became the number one destination site on the planet for music listening, discovery and sharing. It now has more music listeners than every other streaming music service combined.
With this accomplishment under its belt, it is now making a concerted effort to become an even bigger deal in digital music with the launch of its new YouTube Music Key service.
With this launch come several notable changes to YouTube:
Judge Colleen McMahon of the United States District Court in Manhattan said no-go to SiriusXM’s motion for summary judgment (a move to dismiss the suit), giving the satellite broadcaster until Dec. 5, 2014 to dispute remaining facts. This means that SiriusXM can be held liable for copyright infringement.
Currently, recordings made before February 15, 1972 do not enjoy federal protection, as there was no federal copyright for sound recordings until Congress passed a bill on that date. However, this legislation did not apply retroactive protections, which means older sound recordings are covered by a patchwork of state statute and case law.
I’ve talked a lot about Taylor Swift these past couple of weeks. She’s a bona fide superstar, and people wanna know what’s up with her decision to pull catalog from Spotify. But all the hullaboo has also created opportunities to discuss how the current marketplace works for artists who aren’t among music’s one percent. The musicians and songwriters I know are hardly lazy or entitled; they want to pursue artistic excellence and have that excellence rewarded. Everyone at FMC is delighted that artists are speaking up and helping to refocus the debate from the tired “content versus tech” binary. Because that leaves an awful lot of important stuff out.