This Fortnight In Music Royalties (15/12/17): More Trouble For Spotify? Songwriters Cashing Out Their Royalties For New Opportunities

Our friends at Royalty Exchange round up and analyze the top news stories of the last fortnight in music royalties.

Week ending December 8th: More Trouble For Spotify?

Spotify Attorney Estimates It Infringed 300,000 Songs In Settlement Hearing (Billboard)

Spotify Announces Most Streamed Songs of 2017 (NPR Music)

Benom’s Take: Last Friday, Dec. 1, a court hearing for final approval of a $43 million settlement announced by Spotify last May was held. The settlement is to compensate songwriters and music publishers for copyright infringement of songs streamed on the service without licensing and royalty payments.

A year earlier, in March of 2016, Spotify also settled another class action lawsuit for $30 million with the NMPA, the music publisher’s trade association. These two class action settlements are also stated as reasons why Bluewater Music initiated its own lawsuit against Spotify.

It’s reported that some of the rights holders are dissatisfied with the $43 million compensation and may try to opt out of the settlement. The court also appears positioned to reject the settlement altogether, which if true, spells trouble for Spotify. Such actions would open up the floodgates for more individual copyright infringement lawsuits against Spotify, just as the streaming giant hopes to launch the long-awaited IPO (or direct listing).

The royalty in question here is the interactive streaming “mechanical royalty”, not the public performance royalty paid via ASCAP, BMI and SESAC. The interactive streaming mechanical royalty is due for paid subscription streams and regulated by the Federal government’s Copyright Royalty Board. The streaming mechanical royalty is currently a statutory rate of 10.5% of streaming revenue, less public performance royalties.

Collectively for public performance and mechanical royalties, this percentage of revenue works out to roughly $0.07 per 100 paid subscription streams. For some perspective, if all 1.4 billion Ed Sheeran Spotify streams of “Shape of You” were paid subscription streams, the six songwriters and six-plus publishers on that song would earn around $980,000 in total publishing streaming royalties. The sound recording royalties would generate between $8 million and $9 million for the same 1.4 billion streams.

Considering this massive “value gap” in streaming royalty payouts from Spotify, the songwriters and publishers have to fight for every fraction of a penny. [READ MORE]

And now for this week’s other headlines:

YouTube to Launch New Music Streaming Service in March (Bloomberg Technology)

SONGS Music Publishing Sells For A Reported $160 Million (Music Business Worldwide)

Mothership Music Publishing Acquires “Genie In A Bottle” With Appletree Songs Catalog (Music Business Worldwide)
Just 29% of Music Fans Pay to Stream: Nielsen Report (Hypebot)

Week ending December 14th: Songwriters Cashing Out Their Royalties For New Opportunities

Searching for Unclaimed Royalties Is About to Get Easier for Music Publishers With New SXWorks Database (Billboard)

Benom’s Take: Have you ever lost loose change between the couch cushions? Maybe some pennies, a few nickels and dimes, a couple of quarters? How would you feel if you lost $20,000 worth of loose change between the couch cushions?

Sounds crazy, doesn’t it? But people in the music industry do it all the time, especially songwriters and music publishers. That’s what makes this week’s news of a searchable unclaimed publishing royalties database so interesting.

First, a little background. The new database and company (dubbed “SXWorks”) is owned and designed by SoundExchange–the U.S. federally mandated non-interactive streaming royalty collection society for sound recordings and recording artists. (Non-interactive streaming is when you can’t pick the song or skip, like on SiriusXM and Pandora.)

But notice what I said there–SoundExchange was created to work on behalf of the sound recording side, not the music publishing side.

So why is SoundExchange creating a searchable database for the music publishing sector to find their unclaimed royalties?

Over the past year or so, SoundExchange has begun to weave its way into the music publishing sector. This move toward “collective licensing” is the company’s strategy for future growth.

“Collective licensing” essentially means creating a one-stop shop for multiple music rights and their corresponding royalty payments. Instead of going multiple places to get licenses and pay royalties, a user can kill multiple birds with one stone, by licensing and paying one entity for many.

For example, SoundExchange recently purchased Canadian publishing mechanical royalty society, CMRRA. A few years ago, in a similar move, SESAC acquired the U.S. equivalent of CMRRA, the Harry Fox Agency. This means that both SESAC and SoundExchange can offer licensing and royalty payments for multiple rights under one roof.

So how then does one even begin to lose $20,000 in loose royalty change? [READ MORE]

And now for this week’s other headlines: