This Month in Music Royalties: March 2019 – Spotify “Sues” Songwriters, Article 13 Approved, More

We round up and analyse the top news stories of the last month in music royalties, including commentary from the leaders of key music industry organisations.

Spotify vs. Songwriters

• musicbusinessworldwide.com/…/wait-spotify-is-suing-songwriters-what-the-heck-is-going-on
• billboard.com/…/why-spotify-appeal-crb-rate-decision-huge-deal-songwriters-publishers
• variety.com/…/songwriters-turned-the-tide-against-big-tech-1203180177
• synchtank.com/…/silence-isnt-golden-why-music-publishing-conflicts-are-going-public

This month has seen the songwriting and music publishing community up in arms over Amazon, Google, Spotify, and Pandora’s decision to appeal against recent royalty rates set by the Copyright Royalty Board.

Having already warned in February that if streaming services appealed the CRB rates, they would “in effect declare war on songwriters”, President & CEO of the NMPA David Israelite responded to the news with the following statement:

“The CRB’s final determination gave songwriters only their second meaningful rate increase in 110 years. Instead of accepting the CRB’s decision which still values songs less than their fair market value, Spotify and Amazon have declared war on the songwriting community by appealing that decision.

No amount of insincere and hollow public relations gestures such as throwing parties or buying billboards of congratulations or naming songwriters “geniuses” can hide the fact that these big tech bullies do not respect or value the songwriters who make their businesses possible.”

In a response on their blog, Spotify stated it was not “suing songwriters” and agreed that songwriter royalties should increase “provided the license encompasses the right scope of publishing rights.” David Israelite was quick to retaliate, issuing a ‘fact check’ against each section of Spotify’s statement.

Many other leading industry figures and organisations have also spoken out against the appeal. “For the first time in 110 years songwriters get an increase in royalties based on how much the music business has changed in that time, and this is how tech companies react. Wow,” exclaimed songwriter Justin Tranter. Meanwhile Apple, which stood alone in refusing to object to the CRB ruling, are being praised as the good guys: “Apple understands they’re in the artist business”, tweeted Irving Azoff. “Clearly, Google, Pandora, Spotify and Amazon don’t.”

In a joint statement issued to Synchtank, AIMP National Chair and LA Chapter President Teri Nelson Carpenter, AIMP Nashville Chapter President John Ozier, and AIMP New York Chapter President Alisa Coleman stated:

“Of course, we are discouraged by Spotify’s decision to appeal the CRB’s rightful determination to increase payments to publishers, songwriters, and PROs. Digital services like Spotify are built on the backs of these rights-holders, and it is about time that they receive proper compensation for the use of their hard work rather than constant challenges from those exploiting it. That’s why we encourage all independent publishers and songwriters — as well as Spotify and its fellow appellants Amazon, Pandora, and Google — to attend the NMPA and NSAI’s upcoming Nashville Songwriter Town Hall on April 10. For too long, we have been forced to argue our case on digital services’ home turf. It is time for them to come to us.”

So what happens next? The appeal could play out in a number of ways but in the meantime the publishing community are working hard to protect the new royalty rates. Outgoing Sony/ATV boss Martin Bandier and Warner/Chappell’s co-Chair Carianne Marshall are urging songwriters themselves to speak out against the appeal. Perhaps the Town Hall Event, scheduled to be held by the National Music Publishers Association and the Nashville Songwriters Association on April 10th, will shed some light on more recent developments.

At Synchtank we hope that big tech and music creators are able to work together to ensure that songwriters are given the respect and compensation that they deserve.

Article 13 Approved by EU Parliament

• musically.com/…/meps-approve-european-copyright-directive-including-article-13-348-votes-to-274
• musicbusinessworldwide.com/impala-prs-for-music-and-others-attack-youtube-for-propagation-of-misinformation-ahead-of-article-13-vote
• musicbusinessworldwide.com/the-eu-copyright-directive-creates-a-fairer-partnership-between-creators-and-big-tech

It’s been a long battle but one that’s finally come out in favour of the music industry. On March 26th the European Copyright Directive, including Article 13, was approved by members of the European Parliament with 348 voting in favour and 274 voting against.

After an intense period of lobbying by the music industry, including accusations of “propagation of misinformation” thrown at YouTube, jubilant responses came from all areas of the business including this statement from The UK Council of Music Makers (CMM), comprising Ivors Academy, FAC, MMF, MPG and the MU:

“The UK Council of Music Makers (CMM) welcomes the European Parliament vote to approve the Copyright Directive. This is a historic turning point in the evolution of the digital era as outdated laws are modernised to balance the value gap between tech platforms that host creative works, whilst adequately remunerating and protecting the rights of those who create those works, as well as fans who wish to share the joy that such creative works bring.”

“The directive is good news for the digital world,” explained CISAC’s Gadi Oron in a MBW blog. “It will lead to creators’ works being better valued on digital networks, and creators being more fairly remunerated.”

Despite these celebratory responses the European Parliament vote is not the last step. The proposals need final approval by the European Council, which is set for April 9th, though this is expected to be simply a formality. The important part now is ensuring that the directive is implemented correctly by individual member states of the EU, as Raffaella De Santis, Associate at Harbottle & Lewis explained to Music Ally:

“The key focus now will be on how the directive is implemented across the EU over the next two years, and care will need to be taken to ensure that smaller services are not disproportionately disadvantaged by measures which are in reality designed to curtail the formerly unchecked power of the tech giants.”

Will the directive be instrumental in helping to lessen the much-discussed “value gap”? Watch this space…

Peloton out of sync

• musicbusinessworldwide.com/music-publishers-sue-luxury-exercise-brand-peloton-in-150m-copyright-infringement-lawsuit
• nmpa.org/…/nmpa-publishers-file-copyright-lawsuit-against-peloton
• billboard.com/…/peloton-removing-classes-songs-named-nmpa-lawsuit

In another interesting turn of events this month, luxury exercise brand Peloton has been sued by music publishers in a $150 million copyright infringement lawsuit.

The complaint, filed by publishers including Downtown Music Publishing, Big Deal Music, Reservoir, Round Hill, Royalty Network, Pulse Music Publishing and TRO Essex Music Group, says that Peloton has been using their musical works for years in its workout videos without proper licensing, resulting in income lost for songwriters.

As the NMPA’s David Israelite expressed in a statement, it is rather astonishing to see a company valued at $4 billion make this mistake, particularly as music is so central to their offering:

“Music is a core part of the Peloton business model and is responsible for much of the brand’s swift success. Thousands of exclusive videos and playlists are a major reason hundreds of thousands of people have purchased Peloton products. It is frankly unimaginable that a company of this size and sophistication would think it could exploit music in this way without the proper licenses for this long, and we look forward to getting music creators what they deserve.”

In a letter to Peloton users, company founder and CEO John Foley addressed the lawsuit, saying that, “out of an abundance of caution”, the company has decided to remove classes featuring the songs identified by the publishers. For Israelite, however, these actions proved too little too late. Responding to Foley’s letter he stated, “The best way for Peloton to prove that it wants to ‘partner’ with songwriters is to respect their rights and pay them.” We couldn’t have put it better ourselves.

More interesting headlines from March 2019:

• Facebook Now Supports Music in 40 Countries With New Deals in India & Thailand
  – https://www.billboard.com/articles/business/8502461/facebook-music-40-countries-india-thailand
• Africa’s Biggest Streaming Platform Boomplay Signs Licensing Deal With Warner Music
  – https://www.billboard.com/articles/business/8502648/africa-streaming-platform-boomplay-licensing-deal-warner-music
• US music advocacy groups call for a ‘more effective system of digital attribution and credits’
  – https://www.musicbusinessworldwide.com/us-music-advocacy-groups-call-for-a-more-effective-system-of-digital-attribution-and-credits/
• 90% of Ariana Grande’s “7 Rings” Royalties Go to Rodgers & Hammerstein
  – https://pitchfork.com/news/90-of-ariana-grandes-7-rings-royalties-go-to-rodgers-and-hammerstein/
• Merck Mercuriadis buys 3 new song catalogs, including No.1 hits by Usher, Beyoncé and Mariah Carey
  – https://www.musicbusinessworldwide.com/merck-mercuriadis-buys-3-new-song-catalogs-including-no-1-hits-by-usher-beyonce-and-mariah-carey/
• Streaming accounts for more than half UK record label income according to new BPI figures
  – https://www.theguardian.com/business/2019/mar/21/streaming-accounts-for-more-than-half-uk-record-label-income
  – https://www.musicbusinessworldwide.com/a-stark-warning-for-record-labels-uk-industry-revenues-fell-after-inflation-in-2018/
• Spotify enters high-stakes licensing talks with music industry
  – https://www.ft.com/content/d27c64e4-4a82-11e9-bbc9-6917dce3dc62
• Groups continue to compete to run US Mechanical Licensing Collective
  – https://www.billboard.com/articles/business/8503716/copyright-office-digital-licensing-coordinator-application-dima-mlc
  – https://www.billboard.com/articles/business/8503777/industry-consensus-group-mechanical-licensing-collective-plan
  – https://www.billboard.com/articles/business/8503431/music-modernization-act-industry-consensus-group-mlc-nmpa-op-ed
• Downtown buys CD Baby owner AVL Digital Group for $200m
  – https://www.musicbusinessworldwide.com/downtown-buys-cd-baby-owner-for-200m/
• IFPI reveals 2018 marked the global recorded music market’s fourth consecutive year of growth
  – https://www.musicbusinessworldwide.com/there-were-255m-paid-streaming-users-in-2018-driving-a-9-7-rise-in-global-recorded-music-revenues-to-19-1bn/
  – https://www.musicbusinessworldwide.com/warner-celebrates-biggest-market-share-gain-of-any-major-music-company-in-2018/

Enjoyed this post? Check out Silence Isn’t Golden: Why Music Publishing Conflicts Are Going Public