In late 1964, caught on the horns of the sterling crises in a rapidly changing environment, UK Prime Minister Harold Wilson reportedly quipped: “A week is a long time in politics.”
In the digital age, a week can feel like a lifetime as things happening over here can swiftly, and dramatically, be superseded by things happening over there.
On 20 July, Swedish music company Epidemic Sound filed a suit against Meta (parent company of Facebook and Instagram) in San Francisco, alleging mass violations of its copyrights.
Epidemic Sound claims that Meta had stored hundreds of its tracks in the music libraries of Instagram and Facebook and allowed users to download them, stream them and incorporate them in their UGC videos – and all without permission.
“This action seeks to stop the theft of music created by hundreds of musicians, songwriters, producers and vocalists, theft occurring knowingly, intentionally and brazenly by Meta on its Facebook and Instagram social media platforms on a daily basis,” said Epidemic Sound in its filing. “Defendant Meta is not merely aware of this infringement. It has actively infringed, as well as participated in, encouraged and enabled such infringement.”
The scale of the damage, according to Epidemic Sound, is enormous, running into billions of plays of unlicensed music across millions of videos on the two social media platforms in question. Epidemic Sound estimated that a staggering 94% of content that uses its music on Meta’s platforms “is unlicensed and thus infringing”.
Behind the scenes, it has been trying to fix this, but was, it appears, getting nowhere. Hence the move towards litigation as a last resort.
“Meta has allegedly known of the infringement since 2017 and has refused to let Epidemic access the tools that it lets others use to protect their copyrights,” reported Reuters.
Just four days after this suit by Epidemic Sound, Kobalt Music Publishing pulled its entire catalogue of rights from Facebook and Instagram in the US. The surface reason given was not as controversial as the Epidemic Sound one, appearing to be more mundanely tied to licensing periods. But the timing and the impact were significant – as was what may have been bubbling under the surface.
Music Business Worldwide saw the memo Kobalt had sent to its writers and partners about the move, saying that the existing licensing deal had expired and a new one had not yet been agreed upon.
“We’ve always stood for songwriters first, and we’re proud to continue to do so,” said Kobalt in the memo. “We remain fully committed to reaching an agreement with Meta.”
Kobalt added that it had “worked diligently” for months to try and sign a deal, adding “fundamental differences remained” and so a deal could not be arrived at.
MBW speculated on the reasons for Kobalt pulling the plug. It suggested the quantity/quality of data being fed back for music usage on the platforms could be an issue. Equally, the amount of money being paid through could also be a major sticking point. With regard to the financial issue, MBW further speculated that other rightsholders might be pushing for more money when their existing deals expire.
“Sources tell MBW that Meta currently continues to pay the music business via upfront advances that are not tied to precise music consumption on its platforms,” it said, teasing the notion that rightsholders might be looking to set per-stream rates alongside an advance here when they renegotiate rather than just accept a buy-out/advance.
The day after the Kobalt move, Meta announced a major development that would, it hoped, cast it in a more favourable light – in certain quarters at least.
Music Revenue Sharing, Meta said, would be its new monetisation feature aimed at creators and rightsholders.
Creators will be able to use pre-cleared music in their UGC and, where eligible (qualifying videos, for example, have to be at least 60 seconds in length), take a 20% cut of the resulting in-ad revenues.
The remaining 80% of the revenue will be carved up between rightsholders (labels and publishers) and Meta, although the exact splits were not made public.
“This feature is the first of its kind within the music industry — no other platform offers creators this type of revenue model at this scale,” claimed Meta at the initiative’s launch.
“[I]t means, for the first time, that the music industry is being paid a direct share of every bit of money generated by an ad on a UGC Facebook video,” said MBW. “Interestingly, it also means that users on Facebook – including influencers with lots of followers on the platform – have suddenly become monetarily incentivized (via their 20% share) to promote licensed music they love in their posts.
Cynics might wrinkle their noses at the timing of this, but it is a major undertaking and will have been planned for several months and would have had to pass through multiple tiers of corporate approval. Even so, the announcement may have been brought forward slightly to help the company in its PR rebalancing efforts.
MBW in its reporting of this move by Meta added the very pointed line: “Your move, TikTok…”
That is because mere weeks earlier, it had run a piece asking: When will TikTok start paying the music industry ‘properly’? “In it, the issue of buy-outs versus revenue shares was debated, noting that “TikTok’s revenues [are] expected to triple to $12 billion in 2022” but music rightsholders, whose music is a major driving force in TikTok’s growth, were not being recompensed beyond what they had negotiated as advances.
It looked at the YouTube model by way of contrast. “[It] means that every time a song is played – and that play generates money from advertising or a paying subscriber – an agreed portion of the money generated goes back to the rights holder,” argued MBW. “And so you end up in a situation where the more money YouTube makes, the more money the music industry makes, and the growth of that money is proportionate.”
Despite the forecasted revenue boom for TikTok, however, the situation internally is far from rosy. Wired has reported that a restructuring at the company will see layoffs in the US while staff in Europe were informed their jobs were at risk. It appears the company, despite revenues rising, is already buckling up for what could be bumpy economic times ahead.
With all that in mind, a move (like Meta has done) to recalibrate its cost base – and bring rightsholders into a revenue-share model – seems increasingly unlikely.
That could mean a two-tier social media system with regard to music rights and their monetisation: there is the certainty that comes with advances/buy-outs on a platform like TikTok; but there is also the tantalising potential that, in a revenue-share situation as on Instagram and Facebook, the economic upsides could be even greater.
In June 2022, David Israelite, President of the National Music Publishers Association, ran through his company’s numbers for 2021 and noted just how important opening up new revenue streams on new platforms was for the songwriting community.
“One of the most important stories from this data,” he said, “is the fact that nearly 30% of the industry’s revenue sources came from places that originally claimed they did not have to license or pay songwriters.” This included the likes of TikTok, YouTube, Twitch, Roblox and Triller.
In Synchtank’s recent multi-part report, Music Publishing In The Age Of The Songwriter, we looked in detail at the new and emerging revenues sources for the publishing business – as well as cataloguing what those working in the sector are hoping and aiming for in the coming years.
“There is […] a proliferation of short-form video services that have been growing at incredible rates,” said Antony Bebawi, President of Global Digital at Sony Music Publishing, in the report. “In almost all cases, music is absolutely central to what they’re doing.”
The shift by Meta is a significant one and could change the amount of overall revenue flowing to rightsholders from the use of their music in UGC videos on social platforms.
The move from a flat-rate advance into a performance-based one (where the bigger a viral video becomes, the greater the money the rightsholders stand to make) could create entirely new rules of engagement here.
It will not necessarily be a “winner takes all” scenario, but less in-demand music could go from a share of a guaranteed pot to having to prove its worth in a world where all that counts are clicks, plays and shares. For the top performers in this brave new world, however, the spoils could be significantly greater.