Our friends at Royalty Exchange round up and analyze the top news stories of the last fortnight in music royalties.
Week ending January 26th: Sales, Streams, and Settlements: The History Behind the Enrique Iglesias Breach of Contract Suit
Enrique Iglesias Sues Universal Music Group For Breach of Contract, Underpaying On Streaming (Billboard)
Benom’s Take: Our leading story this week is a throwback to the genesis of digital music consumption. Apparently, the early struggles between artists and their labels over how digital music royalties are shared is still going strong. Before the public, the government, and the music business could really grasp this whole “internet” and “streaming” thing, artist royalty provisions in record contracts were virtually silent, or at best confusing, regarding digital music royalties.
So naturally, the Enrique Iglesias lawsuit is not the first such suit regarding label payments for streaming. Some watershed moments include the FBT v. Aftermath case involving Eminem’s royalties, and a 2015 class action lawsuit including Chuck D, Rick James, Whitesnake, and others.
Without getting into deep legal waters, the primary contractual issue there is still under debate, and it goes something like this:
How are royalty rates split between income generated from “sales” and income generated from“licenses?” The contractual definition of “sales” and “licenses” could be the difference in millions of dollars.
A common provision found in record contracts states that the artist will receive a lower royalty share for “sales” (usually averaging in the ballpark of 15%, inclusive of the producer royalties), while “licenses” would earn the artist a much larger 50% share. “Sales” are usually defined as sales of private, permanent copies of sound recordings, like physical albums. “Licenses” could be something where users or companies pay actual licensing and royalty fees, to essentially “rent out” the sound recording.
The most common example of a “license” is a TV/Film use where the record label’s sound recording is synced up to a particular scene. After the FBT case, the major labels changed their accounting terms to deem digital downloads as “licenses,” earning artists a 50% share for permanent downloads. The Enrique Iglesias lawsuit states that his renegotiated deal in 2010 did not address streaming royalties. He also claims that up until 2016, Universal was paying the 50% digital download rate for streaming, before changing to the lower rate. [READ MORE]
And now for this week’s other headlines:
- Senate Moves Forward On Music Modernization Act (Billboard)
- Spotify’s Troy Carter on Goals, Frustrations and ‘Meritocracy’ (Variety)
- YouTube Is Paying Artists’ Promotion Budgets…If They Promise Not To Criticize YouTube, Says Report (MBW)
- SoundExchange Launches ‘NOI Look Up’ Database to Fix U.S. NOI Copyright Problem (MBW)
Week ending February 2nd: Spotify Brings Songwriter Credits from Vinyl to Streaming
Spotify Adds Songwriter Credits To Desktop Platform – And They’re Coming To Mobile (MBW)
Benom’s Take: The first month of 2018 is setting a very positive and encouraging tone for songwriters and music publishers.
Just a week after the Copyright Royalty Board increased on-demand streaming mechanical royalties, Spotify announced it will add songwriter and producer credits to its streaming platform.
Users will be able to click on a track’s drop down menu of options, (such as “Add to Playlist”, “Go to Artist”, “Save to Your Library”, etc.) and select “Show Credits.” The user will then be able to see the available songwriter and producer information for that song.
This is long-overdue good news for the songwriting community. The talented people behind the music we love will now be more visible than ever to the public and get the recognition they deserve.
Of course, the data is provided to Spotify by the record labels, which is usually incomplete and erroneous. Nevertheless, it’s a major step toward more songwriter equity in the digital streaming market. As Spotify is quoted in the article:
“We realize some of the label-provided credits are incomplete or may contain inaccuracies, but this is just the first step in displaying songwriter credits on Spotify.”
This has several important impacts:
1. It allows fans to discover new music they might not otherwise have known about. If you were to find other songs by the same writer (but recorded/performed by different artists), a fan may find themselves following the writer, as well as (or ever instead of) the artist. An example would be like discovering different TV shows or movies based on the screenwriter (à la Aaron Sorkin), instead of the actors.
2. It gets songwriters’ names out there which can pave the way to becoming star performers themselves one day. Many of today’s most famous and successful performing artists got their start in the industry as behind-the-scenes songwriters (see for instance Bruno Mars, who just swept the main Grammy categories this past weekend).
3. It elevates the whole notion, craft, and artistry of songwriting. Highlighting the fact that many songs are written by a team, and not just the headlining performer, gives fans a new perspective into the artistry of making good music. Elevating the craft of songwriting shows the public how important and essential it is to the music we love.
All of this adds up to public awareness of the songwriter’s vital role and in turn, gives context and weight to the songwriter arguments for better compensation in the marketplace. If 70% of songwriter income is in some way regulated by a government entity, it only stands to reason those entities, along with the public, know more about how pervasive and valuable songwriting is. [READ MORE]
And now for this week’s other headlines:
- U2 Copyright Infringement Case Dismissed (Hypebot)
- Pandora Cuts Staff In $45 Million Restructuring (Hypebot)
- Concord Music Acquires Cole Porter And George Gershwin Copyrights With Tams-Witmark Music Library Buyout (MBW)
- Canada’s SOCAN Paid Out Over $240M in 2017 – Warns Remuneration From Digital Music Must Be Corrected (MBW)
