Posts Tagged ‘royalties’

Stem Helps Split Royalties, and Takes Off as Music Distributor

February 7, 2017


When Frank Ocean’s album “Blonde” came out in August, it went straight to No. 1 and became the talk of the music business because it was released completely outside the usual channels of the recording industry. The mystery was how Mr. Ocean and his team did it.
One answer was revealed on Sunday in an online ad promoting “Blonde” as one of the most acclaimed releases of 2016 and noting that it was “powered by Stem.”
That service, which began only a year ago, has quickly become a player in a fast-growing corner of the music industry: online platforms that cater to independent artists by distributing their music to streaming services and organizing the many strands of royalties that accumulate from fans’ clicks.
Stem, founded by three 20-somethings in Los Angeles, has attracted a clientele of young artists who operate independently yet tend to collaborate frequently with other acts, some of them stars. For them, Stem’s attraction is its ability to easily manage the complex “splits” — the divvying up of royalties among multiple parties — that result from such collaborations. Stem Disintermedia, the company behind it, has raised $4.5 million from investors, including Upfront Ventures and Scooter Braun, who is the manager for Kanye West and Justin Bieber.
The indie music sector already has a well-established network of alternative distribution companies like TuneCore and CD Baby, which deliver unsigned artists’ work to online services for what is usually a small fee. But those services have no means to divide the royalties if a song has, say, two producers and five writers, an example of the kind of collaboration that is now common in pop. Instead, the main performer would be responsible for accounting.
Stem eliminates that burden by tracking every collaborator on a song, and requiring all parties to agree on percentage splits. Milana Rabkin, Stem’s chief executive and one of its founders, compared the service to online payment apps that let friends easily split a restaurant tab.
“In a world where Venmo exists,” Ms. Rabkin said in an interview, “why isn’t there a Venmo for Apple and Spotify?”
Stem’s consensus model, however, could also be its Achilles’ heel, since it will not allow any party to be paid until all agree on the splits, a process that gives holdouts bargaining power. Ms. Rabkin said that most projects reached consensus in a few days and that the longest had taken “a couple months.” The service takes a 5 percent cut on royalties.
Representatives of Mr. Ocean declined to comment on exactly how he had used Stem. But aside from the album’s initial appearance on Apple Music — when it was delivered directly to Apple — Stem appears to have been the vehicle used to release “Blonde” to most major services. Stem distributes music to Spotify, Apple, YouTube, Amazon, Tidal, SoundCloud and several other outlets.
While Stem’s model was novel when it first appeared, it now has competition. In December, CD Baby quietly introduced a new distribution service, Soundrop, which, like Stem, tracks royalty splits — although without the consensus requirement — and caters to a generation more likely to post songs on YouTube and think about making money later.
“It’s an opportunity to reach a demographic that wants to create differently,” said Kevin Breuner, the vice president of marketing at CD Baby. “Music distribution is a secondary thought to them.”
Stem, by contrast, is catching on among a class of young professionals who often operate independently but may be involved in the highest creative levels of the business. Its clients include Childish Gambino and the electronic producer Deadmau5. The company says it has distributed 6,000 pieces of content that have been streamed 500 million times.
Dina LaPolt, a lawyer representing Deadmau5, said her client was using Stem to track his music on YouTube, but explained that Stem’s royalty-tracking system was particularly important to artists in managing the otherwise daunting task of tracking royalty splits.
“Music is the only business in the world where the artist is responsible for doing all the paperwork,” Ms. LaPolt said.
Among Stem’s most vocal advocates is Anna Wise, 28, a singer and songwriter who won a Grammy Award for her work with Kendrick Lamar. She was working as a nanny before she began using the service, which she said had provided her with a steady income — “enough to pay Brooklyn rent,” she said — and devote herself fully to making music. Her latest album, “The Feminine: Act II,” released through Stem, comes out on Feb. 17.
The company’s system, she said, allows her and friends to quickly and transparently arrange deals among themselves, maintaining control and minimizing any disruption to creativity.
“It’s essentially like a smart contract,” Ms. Wise said. “It’s easier and simpler, and I love easy and simple.”


Music Artists Take On the Business, Calling for Change

August 2, 2015


Musicians are known for speaking out on issues like human rights, politics and the environment. They are less known for speaking out about how the music business itself should operate.

That may be changing.

When Taylor Swift publicly rebuked Apple in June over royalty payments, the company reversed its position and Ms. Swift’s move was celebrated throughout the music world as a victory. But it was only the most prominent example of a growing trend of industry-focused activism undertaken by a range of artists, from big stars who take a principled stand to middle-class musicians who need to worry about paying the bills.

“We’re at a turning point,” said the singer David Byrne, formerly of Talking Heads, who has been vocal on the economics behind digital music. “Musicians, their managers and many others are frustrated. The black box of hidden transactions in the music business, while maybe not illegal, is a recipe for chicanery.”

The activism has taken different shapes. Jay Z, for example, paid $56 million for the subscription streaming service Tidal, though his efforts to market it as an artist-friendly alternative have been criticized as clumsy. Prince, Neil Young and Ms. Swift have withdrawn their music from some streaming outlets, and various musicians have called for greater transparency in how the music industry operates.

Over the last few weeks, dozens of acts, including R.E.M., Common and Chuck D of Public Enemy, took to social media to support a bill that would require radio stations to pay royalties to performers.

The debate has been enabled by social media and reflects changes in many artists’ attitudes toward the online economy over the last 15 years or so — a period that stretches from the rise of Napster and iTunes to online streaming outlets like YouTube, Pandora and Spotify, and has been accompanied by enormous changes in how money flows through the industry.

“The support that we’re seeing, in terms of the range and number of artists, whether it’s from somebody who’s a working-class musician to somebody who’s very successful, it’s unprecedented,” said Ted Kalo, the executive director of MusicFirst, a lobbying coalition that includes record labels and musicians’ groups and that helped organize the social media campaign.

The economics behind downloads is relatively simple: Typically about 70 percent of a song’s retail price goes to a record company, which then pays its musicians according to its contracts. But with streaming, the system is complex and often opaque, as became apparent in May, when an outdated licensing contract between Sony and Spotify was leaked online, showing the elaborate formulas used in computing streaming rates.

Public relations missteps in the early 2000s kept many musicians from speaking out about economic issues, artists and executives said. Those include the music industry’s lawsuits against thousands of fans for online file-sharing, and the pillorying that the band Metallica received after it sued Napster for copyright infringement. But the shift toward streaming in recent years has prompted many musicians to investigate the changes in the business and comment online. Among them are independents like David Lowery of the band Cracker; Zoë Keating, a cellist who has documented her online royalties; and Blake Morgan, a singer-songwriter who owns a small record company and started an online campaign, #IRespectMusic, to draw attention to the issue.

At the same time, musicians and songwriters of all stripes have begun to complain, often bitterly, of low royalty payments from streaming music. Last year, for example, Bette Midler spoke out against Pandora and Spotify, and Aloe Blacc said that he earned just $4,000 in songwriting royalties from 168 million streams on Pandora of Avicii’s hit “Wake Me Up,” which Mr. Blacc helped write.

In response, many streaming outlets point out that their actions are a legal and rapidly growing source of income for the industry as sales of CDs and downloads plunge. Pandora says it has paid nearly $1.5 billion in royalties since it started a decade ago, and Spotify, which went online in 2008, says it has paid $3 billion. Yet how much of that money makes its way into musicians’ pockets remains hotly debated.

Melvin Gibbs, a jazz bassist in New York who is the president of the Content Creators Coalition, said that declining royalties — he recalled once getting a check for 3 cents — were a factor that led him to study the business models of Internet companies that offer abundant music free or at low subscription prices.

“None of these companies that are supposedly in the music business are actually in the music business,” Mr. Gibbs said. “They are in the data-aggregation business. They’re in the ad-selling business. The value of music means nothing to them.”

Several years ago Ms. Keating, who controls her own recordings, began posting detailed royalty statements from Spotify, and she has also reported on private negotiations with YouTube in which that company appeared to pressure her into signing a contract for its new music-subscription service.

Despite growing complaints from middle-class musicians, it is still the stars who have the most impact. As Apple prepared last month to release its new streaming service, Apple Music, independent labels around the world said that the company’s refusal to pay royalties for trial streams was unfair. But Apple did not budge until Ms. Swift scolded the company in a blog post — whereupon Apple changed course in a matter of hours.

Lobbying has become another battleground. In April, the Fair Play Fair Pay Act was introduced to Congress, which would require AM and FM radio stations to pay royalties to performers, in addition to songwriters. The bill has been hailed by musicians and opposed by broadcasters, who have long argued that by playing a song on air they give it valuable promotion.

But a side controversy has emerged over the MIC Coalition, a Washington advocacy group that includes Pandora, the National Association of Broadcasters and others that have frequently opposed the music industry over royalty matters. In June, Amazon withdrew its membership, and a senior executive told Billboard magazine that the company’s primary interest in transparency was “getting lost in the wilder noise surrounding rate-setting.”

Two weeks ago, National Public Radio also dropped out of the coalition after complaints from the Content Creators Coalition, which accused it of “working in Washington to deny fair pay to the very artists it purports to celebrate on their air.”

A spokeswoman for the MIC Coalition — whose name stands for Music, Innovation, Consumers — said that the group had not taken a position on the Fair Play act, though many of its members had as individuals. Michael Riksen, NPR’s vice president for policy and representation, declined to say why the organization had left the MIC Coalition. But he said that he “viewed the coalition as a way for the voice and values of public radio and NPR to be part of a broad-based conversation about copyright reform.”

“Had it taken a position” on the bill, Mr. Riksen added, “we wouldn’t have joined in the first place.”

The political chances are also unclear for the Fair Play bill, whose other provisions include paying royalties to artists for recordings made before 1972, which are not covered by federal copyright. Similar efforts have failed in the past, and the National Association of Broadcasters says that 203 members of the House and 19 senators have signed a nonbinding resolution opposing it.

Still, Mr. Byrne and other musicians pushing for the bill say they are undeterred.

“This one can be won, then we can move on to the harder ones,” Mr. Byrne said. “Why this time? Can’t point to anything specific. It feels right, and as musicians that’s what often drives us.”

US takes first step towards paying artists for radio play

April 14, 2015

Tim Ingham 4/14/15

US Congressman Jerrold Nadler and Marsha Blackburn yesterday introduced the Fair Play, Fair Pay Act of 2015 – which seeks to impose a performance right that would see artists and labels paid when their tracks are played on AM/FM radio.

Songwriters are currently paid when their tracks are broadcast on traditional radio, but performers are not – setting the US apart from almost every developed nation in the world.

Confusingly, artists are paid in the country – via SoundExchange Collections – when their tracks are played on personalised digital radio such as Pandora, and satellite radio such as Sirius XM.

The Fair Play, Fair Pay Act of 2015 seeks to correct what its supporters consider three ‘significant injustices’: the establishment of a sound recording royalty for AM/FM radio, removing satellite radio’s below-market-rate exemption, and treating pre-1972 recordings with the same level of respect as those made after February of 1972.

However, the Act faces a lengthy fight if it’s to be enshrined in law. The next key legislative steps would be having the bill considered in the House Judiciary Committee either with a hearing on the issues or through a vote. The Senate will also need to consider the bill, but at this point it has not been introduced there yet.

The next step for the Fair Play Fair Pay lobby is grassroots mobilising and putting pressure on Congress.

However, it faces fierce opposition from the radio trade body the National Association of Broadcasters. The NAB is strongly lobbying against the FPFP act with its own ‘Local Radio Freedom Act’, while claiming that any measure to force radio to pay artists and labels would devastate local stations.

Music First, a collective of artist representatives who have been calling for Fair Play, Fair Pay said in a statement: “Thanks to Reps. Nadler and Blackburn, we stand at the doorway of an incredible opportunity – a once-in-a-generation chance to make radio work better for music creators, radio services, and, most importantly, music fans.

“It is time for Congress to update music licensing laws. AM/FM radio, satellite radio and Internet radio exist side by side in car dashboards and compete for the same listeners. But whether performers and copyright owners are paid, and how much, depends solely on what button you press or app you choose. On Internet radio, it is one rate. On satellite, it is a different, lower rate. And on AM/FM, there is no rate at all – music creators get paid nothing. I think that we can all agree that makes no sense.

“Now, some digital services are claiming they don’t have to pay for pre-72 recordings. Several court decisions have already dismissed this absurd claim.

“The solution: all radio services should pay under the same ‘fair market value’ royalty standard for all of the music they play. Like everyone else who works, creates, or innovates, music creators deserve fair pay for their work.

“It’s a question of basic economic fairness, but it is also a matter of fair competition between music services. No more special privileges for old technologies. No more giveaways. No more special interest exemptions and subsidies. No more picking winners and losers among radio platforms. Let the best services win – fair and square, on the depth of their playlists and the quality of their products.

“Fair market value for music will encourage creativity by music creators. It will promote innovation among music services. And – most importantly – it will give fans the best music they have ever heard – delivered in the most exciting ways they could ever imagine.”

And Michael Huppe, president and chief executive officer of SoundExchange said: “For decades, music services have gotten away with building their business on the backs of hard working musicians, paying unfair rates — and in the case of the $17.5 billion radio industry, paying nothing at all — for the music they use. The Fair Play Fair Pay Act introduced today will bring much needed reform to the music industry and addresses many of the issues that plague the recorded music industry.

“It is time that we properly pay the artists who put so much hard work into creating the music at the core of these services. If it weren’t for them, these stations would be broadcasting little more than static.

“At the nexus of music and technology, SoundExchange is at the very center of the industry, representing the entire record music industry. In June 2014, we testified before Congress and laid out SoundExchange’s guiding principle: all creators should receive fair pay, on all platforms and technologies, whenever their music is used. This past February, the Copyright Office put out a comprehensive report that laid out a similar principle and today we have a bipartisan coalition in Congress heeding the same call.”

Big Labels Take Aim at Pandora on Royalties

April 19, 2014

BEN SISARIO NY Times 4/17/14

The music industry has opened a new front in its war against Pandora Media: royalties for songs made before 1972.

On Thursday, several major record companies filed a lawsuit in New York State Supreme Court in Manhattan, accusing Pandora of violating the state’s common-law copyright protections by using recordings of older songs without permission. Along with a string of cases filed last year against Sirius XM Radio, the suit highlights an obscure legal issue that has come to the fore with the rise of streaming music online: that recordings made before Feb. 15, 1972, are not subject to federal copyright protection and may be missing out on tens of millions of dollars in royalties, according to industry estimates.

In the suit, the three big labels, Sony, Universal and Warner Music, along with ABKCO, an independent label that controls the rights to many early songs by the Rolling Stones, accuse Pandora of playing old songs without licenses. Like the suits last year against Sirius XM — the band the Turtles (“Happy Together”) acted first, with a $100 million class-action suit, and the labels followed with their own complaint — the case argues that even though songs from before 1972 are not under federal copyright, Pandora should have to get permission to use them under state law.

“This case presents a classic attempt by Pandora to reap where it has not sown,” the labels say in the suit. “Pandora appropriates plaintiffs’ valuable and unique property, violates New York law and engages in common law copyright infringement and misappropriation and unfair competition.”

María Elena Holly, the widow of Buddy Holly, said in a statement circulated by the Recording Industry Association of America, which coordinated the suit: “Just because Buddy and the other ’50s musicians recorded songs before 1972 doesn’t mean their songs have no value. These companies’ failure to pay the rock ’n’ roll pioneers is an injustice and it needs to change.”

The suit includes a long appendix of songs by major acts from the 1940s to the early ’70s like the Beatles, Hank Williams, Aretha Franklin, Bob Dylan, James Brown and the Rolling Stones.

A Pandora representative said the company was confident in its legal position and looked forward to a quick resolution of the matter.

Under federal copyright law, online and satellite radio services like Pandora and Sirius XM must get licenses to use recordings made after 1972, so both companies pay hundreds of millions of dollars for these recordings. Those licenses and payments are usually administered through SoundExchange, a nonprofit royalty organization that is an offshoot of the Recording Industry Association. Recordings made before 1972 do not have federal copyright protection, but are covered by a patchwork of state laws.

Traditional radio stations have a longstanding exemption from paying for recordings, although all kinds of radio outlets — Internet, satellite and old-fashioned AM/FM — pay separate songwriting royalties to music publishers. (In the music world’s complex licensing structure, “on demand” services like Spotify and Rhapsody, which let users pick exactly what songs to listen to, negotiate with record companies directly for a different kind of license, and do not face the same issue with pre-1972 recordings.)

But whether Pandora, Sirius XM and similar services need licenses under state law for the older recordings is unclear, and the current wave of lawsuits represents a concerted effort by the music industry to establish what could be a major source of revenue in the future.

Pandora, with more than 70 million regular users, and Sirius XM, with about 26 million subscribers, are two of the most popular listening services, and their contributions represent most of the $656 million in performance royalties collected by SoundExchange last year.

We’re being screwed by Spotify! David Byrne, R.E.M.’s Mike Mills and Cake’s John McCrea on the fight for artists’ rights

February 26, 2014

“We need to have a sustainable system for people who create culture,” says John McCrea, announcing a new coalition
Scott Timberg 02/25/14

The musician John McCrea has led the Bay Area band Cake since the ‘90s and has begun more recently fighting for the rights of musicians in the digital age. He’s less ornery and assertive than David Lowery of Camper Van Beethoven, but no less committed.

The group he’s helped put together, Content Creators Coalition, aims to work on behalf of a wide range of artists and artisans. After keeping much of its membership secret, the CCC begins to come out of the wilderness this week, with a rally and concert Tuesday (Feb. 25) at Le Poisson Rouge in New York dedicated to getting musicians paid when their music is played on the radio.

David Byrne, Mike Mills of R.E.M., alt-country’s Tift Merritt, experimental/jazz guitarist Mark Ribot, and others are among the performers.

The group plans a further rollout later this year. McCrea spoke to Salon last week about the crisis, and his short- and long-term ambitions.

Let’s start with Content Creators Coalition. Why do a new group, and why now?

First of all, why now? It should have happened 50 years ago. I see now as a finite window of opportunity where even really smart people are a little confused about what the future holds. It’s perhaps a moment of opportunity wherein content creators can aggregate their power, their leverage and get something for ourselves that we should have gotten 50, 60 years ago. So amidst the confusion perhaps we can have a collective voice, have a little collective power. There are other artists groups that have done good work in the past. This group is not in any way to undermine their often noble efforts. But we think that there are areas in which a sort of overarching connectivity between content workers could do us a lot of good.

Let’s talk about that specifically. You’ve conceived of the Content Creators Coalition not simply as a group of musicians but as a place for writers, artists, journalists, artisans, others. What do these groups, all of whom do different things, have in common? Why do they belong together?

We all have in common the fact that our work — sometimes things that we do that take five years in a small room, as in the case of an author of a book — is easily digitized and distributed, sometimes consensually, sometimes nonconsensually, and I think therein lies our commonality. We need to have a sustainable system for people who create culture. Independent filmmakers, authors of books, journalists increasingly are without much of a bulwark against giant market forces, giant corporations — corporations the size of nation-states, who I guess we’re supposed to be negotiating with in a free market. But there’s a problem with the size of some of these entities compared with the size of a band or a writer or a filmmaker.

It’s not a fair fight at this point.

Yeah. We think that there needs to be aggregation of content-worker power.

But writers and musicians and artists have spent something like two centuries telling themselves that they’re somehow alienated on the margins of society, that they’re proud individuals. And the idea of independence has been important, especially for our generation. Indie rock and indie film, artists, and the DIY aesthetic have had an influence on all aspects of culture. It sounds like you’re suggesting that artists and others see themselves differently than just as independent individuals.

We fetishize the idea of individuality at the expense of a lot of good things like community. Individuality at the expense of sustainability. It would make sense that the artists of the 20th century would fetishize individuality at the expense of community and sustainability, but I think that we need to move into a new zeitgeist if we can. And I see it as an imperative economically. That’s not to say that people can’t still be DIY; I mean, our band still is going to release our album on our own label and we do just about everything, a lot of what it takes to release an album on our own. But there are just a lot of things that are out of our control now. And the epiphany moment for me, a few years back, was seeing a Newt Gingrich ad in front of one of our songs on YouTube and it was a particularly political song, and it was odd for me to not have a choice about whether or not to have a Newt Gingrich ad and also to be paid virtually nothing for that ad. That’s when it struck me that most people that go into songwriting or filmmaking don’t go into it for the money. There are many more surefire ways of making money. But I think it bothers most of us, the aesthetic insult of things like that. As well as the basic unfairness of a system that dictates to artists rather than allows them to set their own terms.

I wonder if there’s a — sticking to the history for just another minute — is there a kind of myth of suffering involved in the starving artists, the self-destructing musician, that becomes part of the problem when artists are trying to organize and fight for fair treatment?


In other words, to make a steady living, to be paid for their work, that there’s something impure or somehow wrong about that. That that’s not what an artist should be doing.

Yeah, you’ve isolated a very important point. It goes back probably farther than even van Gogh chopping off his ear, leading probably in part to an increase in the value of van Gogh paintings. The heroin needle stuck in the arm of the late ’70s punk rocker increasing the value in our capitalistic system of the music product.

I think Greil Marcus called it, “death as a career move.”

Right, right. And it’s a great career move for the handlers.

Less so for the actual person who dies.

Right, so the first thing people do when an artist says, “Excuse me, I don’t like this very much.” They say, “Oh, it’s all about the money for you!” It’s sort of an Achilles’ heel for artists. But I think it’s a smaller problem than the glaring unfairness and inequity of having huge corporations that monetize with or without an artist’s consent. And share little or nothing with that artist.

I think that the unfairness outweighs some of the now outmoded self-consciousness about caring about your physical well-being for artists. I know that we’re not supposed to care about health insurance and our teeth and things like that. But again, all of this fetishizing of individuality at the expense of even our own physical wellbeing is — my theory is it’s a product of the industrial revolution in a way. People feeling dehumanized by the assembly line, feeling like a number, and then requiring of their artists, this almost muscular extreme assertion of individuality. But instead of creating actual individuality, and actual revolution, and actual true individual uniqueness, it gives everyone this outlet whereby they can let off steam on the weekends with their individuality product and then go back, on Monday morning, to the cubby. It subverts actual change, actual true identity.

Let’s move back to the present for a sec. You’ve kept your membership in the CCC to yourself until now; why do that and why come out now?

We wanted to build some sort of critical mass. A lot of artists have spoken up individually and then they’re attacked individually and sometimes quite viciously. And we wanted to show that it’s actually about community. Artists can be concerned about a greater community than just themselves.

There’s a point of view among digital utopians and neoliberal economists, even some musicians, that says that musicians and others just need to adjust to accommodate themselves to this bountiful new world. Are you persuaded by that at all?

Most of the musicians I know are very resourceful. And sometimes it’s resourceful like living-in-your-van kind of resourceful, sadly. And some of it is resourceful as in extricating yourself from your label deal, and releasing albums on your own label to cut costs as the value of recorded music descends into the toilet. Most of us, most people I know, have done some of that.

And we’re all touring a lot more. And a lot of marriages are breaking up. People I know whose lives are falling apart because they’re touring so much. But I think we’re actually adapting quite well. The way in which we haven’t adapted is to aggregate our power. There’s no band that is big enough to have any kind of negotiating significance against a Google or even a Spotify or a Pandora. So as much as individuality is a lot of fun, we’re going to have to aggregate our interests together and find significant means of taking action in our own interest.

Let’s talk about what specifically you hope the group will do, in both the short and long term for musicians and others. What are some examples of things you’re aiming at?

It seems like the wave of the future is having really big companies distribute our music on streaming platforms. And as individual artists we really don’t have a lot of negotiational leverage if we don’t like the .00357 of a penny, or we can take a hike and probably a few people might take notice. But it’s not really an effective way to negotiate and we think that we’d like to find a way to have more leverage in that marketplace. And especially if streaming is going to be the way that we make a living from our recorded music.

We also think that there are still some avenues where we can still withhold our music. There are distribution platforms for writers that don’t pay anything. We think writers should stand up and withdraw their services if they’re not being paid. And we don’t think it makes much sense if one writer does it — but if a lot of writers do it all at once it makes a difference. This is old school in some ways. We also want to have some capacity for political actions, to make statements publicly. But not as an individual standing up on the shooting target practice. We don’t think that individuals should have to stand up. Artists who are good at making music are not necessarily — they should be able to play music and not have to stand up and make political statements and be a target.

The concert you’ve organized for Tuesday is about radio royalties for performers. Currently royalties only go to songwriters. What’s the issue here? Why is this important to you and the others?

Every democratic country in the world pays musicians for radio play. We think the United States is a good enough country to do that as well. We’re on a list with countries like North Korea and Iran and Rwanda. So we’re a prosperous country and we think it’s sort of a statement of priorities when we don’t pay Aretha Franklin for singing “Respect.” Now more than ever, artists are hanging by a thread. We’re really not talking about, you know, Elton John here; we’re talking about people who are middle-class and lower-middle-class musicians who need to eat. We think it’s important. Again, if it’s a college radio station or nonprofit radio station, we don’t care. We’re not asking to — we don’t want to close down nonprofit or low-profit radio, but if it’s a large for-profit business that is monetizing our work through advertising, that’s a different story.

For most of radio’s existence, no royalties have gone to performers. It benefits the musician by providing exposure. What’s changed to make the status quo untenable? Why doesn’t that system work anymore?

Well , No. 1, you have to ask, “Why do I need the exposure?” In the olden days it was sort of record companies would give that away to radio hoping they would make large profits from selling recorded music. But people aren’t buying recorded music, so it matters a lot less for us. It’s true that being put on the radio may help an up-and-coming band sell concert tickets. But it’s difficult to tour all the way into your 60s, 70s and 80s. So some of these artists’ music are being played for 30, 40 years and there’s advertising that’s gleaning value from that music. I think it’s an impure argument to throw these things in and say, “Oh, you’re getting exposure from that and this.” And a lot of the things on that list are a lot less valuable to artists now.

The exposure doesn’t lead to the same kind of payout for musicians? If people aren’t paying for records.

Not if you’re being paid .00 something of a fraction of a cent per song on Spotify.

Warner Music Close to Settling With Artists Over Digital Royalties Dispute

January 3, 2014

Class action lawsuit says talent should be paid much more for downloaded music and ringtones
Chris Martins 1/02/14

Warner Music Group has submitted a settlement offer of $11.5 million in a class action lawsuit filed by its own artists having to do with payment for downloaded music and ringtones. There will now be a hearing on January 23 to determine whether or not the offer is satisfactory. If the deal is accepted, it will merely be a stopgap in the greater issue of how to handle artist payouts for digital audio.

Filed on February 2, 2012 by named plaintiffs Kathy Sledge-Lightfoot of Sister Sledge, “Dream Weaver” writer Gary Wright (“Dream Weaver”), and singer/actress Ronee Blakely, the suit alleged the label improperly paid its roster royalty rates instead of licensing rates for music distributed via digital outlets. Royalty rates are worth 6 to 20 percent, and based on physical sales models. Licensing rates used in film and television are usually around 50 percent.

While the latter hasn’t traditionally been used in direct song sales (as opposed to selling a film or broadcasting a show that contains the music), the former is arguably more problematic because it accounts for concerns only relevant to physical product: manufacturing costs, customer returns, and unsold merchandise. If the settlement, which has already been accepted by both sides, gets a judge’s signature, no precedent will be set for future rates or rates-related disputes.

“We are pleased to have resolved this matter and believe that this is a fair settlement for all parties,” said a Warner spokesman, via Billboard. But the only resolution will be an $11.5 million payout, reduced by $3 million to cover legal fees and expenses, divided by possibly thousands of artists. Applicable members of the WMG roster include anyone signed before January 1, 2002. The payout covers sales that took place between January 1, 2009 and December 31, 2012.

As a condition of the settlement, WMG admits no wrongdoing. Participating artists will be receiving payouts pro-rated to account for their percentage of the money earned by Warner via digital media during the time period (estimated to by $381 million total). Artists who do not take the class action payout will be able to sue on their own over the exact same issue if they choose.

Billy Bragg: labels not Spotify deserve streaming music payouts scrutiny

November 17, 2013

‘Artists railing against Spotify is about as helpful to their cause as campaigning against the Sony Walkman would have been in the early 80s’

Stuart Dredge the 11/07/13

Billy Bragg wants British musicians to take action to get better royalty rates from streams of their work Billy Bragg wants British musicians to take action to get better royalty rates from streams of their work. Photograph: Rex Features

Artists including Thom Yorke and David Byrne have criticised Spotify and rival streaming music services for the size of their payouts to musician. Billy Bragg thinks the attention should be more on labels.

“The problem with the business model for streaming is that most artists still have contracts from the analog age, when record companies did all the heavy lifting of physical production and distribution, so only paid artists 8%-15% royalties on average,” wrote Bragg in a post on his Facebook page.

“Those rates, carried over to the digital age, explain why artists are getting such paltry sums from Spotify. If the rates were really so bad, the rights holders – the major record companies – would be complaining. The fact that they’re continuing to sign up means they must be making good money.”

Spotify pays out 70% of its revenues to music rightsholders, and has said that it expects those payments to exceed $500m (£310m) in 2013. How much of that money gets passed on to musicians depends on the terms of their contracts with labels.

Not every label is paying artists a mere 8%-15% of royalties from streams of their music. Beggars Group, the parent company of labels counting Adele, Vampire Weekend, Sigur Rós and Yorke’s Atoms for Peace on their rosters, has a policy of paying artists 50% of their streaming revenues.

Bragg posted his comments from Sweden during his current tour, and cited news that some Swedish artists are threatening to sue major labels Universal Music And Warner Music over streaming royalties as potential inspiration for British musicians.

“Artists have identified that the problem lies with the major record labels rather the streaming service and are taking action to get royalty rates that better reflect the costs involved in digital production and distribution. UK artists would be smart to follow suit,” wrote Bragg.

He also suggested that artists are wasting their energies criticising Spotify and other streaming services. “I’ve long felt that artists railing against Spotify is about as helpful to their cause as campaigning against the Sony Walkman would have been in the early 80s,” wrote Bragg.

“Music fans are increasingly streaming their music and, as artists, we have to adapt ourselves to their behaviour, rather than try to hold the line on a particular mode of listening to music.”

In October, Thom Yorke described Spotify as “the last desperate fart of a dying corpse” in an interview with a Mexican website, claiming that “as musicians we need to fight the Spotify thing… it’s all about how we change the way we listen to music, it’s all about what happens next in terms of technology, in terms of how people talk to each other about music, and a lot of it could be really fucking bad.”

His criticism was followed by an opinion piece by David Byrne for The Guardian in which he praised some elements of Spotify, but warned that while labels have equity stakes in the company, artists may lose out from the growth of streaming services.

“It seems to me that the whole model is unsustainable as a means of supporting creative work of any kind. Not just music. The inevitable result would seem to be that the internet will suck the creative content out of the whole world until nothing is left,” wrote Byrne.

Another artist, Dave Allen from Gang of Four, responded to Byrne’s piece with the view that Spotify and the internet more generally “are not to blame for musicians’ problems… It is hard for me to understand why intelligent people like David Byrne and Thom Yorke do not appear to understand that we are in the midst of new markets being formed.”

Defining and Demanding a Musician’s Fair Shake in the Internet Age

October 1, 2013

BEN SISARIO 9/30/13 NY Times

RICHMOND, Va. — In the music business, they still talk about the “Lars curse.”

It has been 13 years since Metallica’s drummer, Lars Ulrich, identified the screen names of more than 300,000 Napster users in a copyright infringement lawsuit. The tarring he received in response — being derided as greedy and insensitive to fans — still makes musicians think twice before complaining about the problems with digital music.

But it hasn’t stopped David Lowery.

As the leader of the bands Camper Van Beethoven and Cracker, Mr. Lowery had a modicum of fame in the 1980s and ’90s. But over the last year, he has become a celebrity among musicians for speaking out about artists’ shrinking paychecks and the influence of Silicon Valley over copyright, economics and public discourse.

In public appearances and no-holds-barred blog posts, Mr. Lowery, 53, has come to represent the anger of musicians in the digital age. When an NPR Music intern confessed in a blog post last year that she paid very little for her music, he scolded her in a 3,800-word open letter that framed the issue in moral terms. Since then, he has attacked Pandora for trying to lower royalty rates, accused Google of masterminding a broad anti-copyright campaign and compared people who doubt the effect of piracy on musicians to those who think President Obama is a Muslim.

“Once the cobra bit me, I might as well just eat the cobra,” Mr. Lowery said in a recent interview at his home here. “Nothing worse can happen to me.”

The issue has become hot as technology companies like Pandora and Google have replaced major record labels as the villains of choice for industry critics. Recently, Thom Yorke of Radiohead caused a stir by removing some of his music from Spotify and saying that the service would hurt new artists.

To his detractors, Mr. Lowery is a divisive ranter who pines for a lost, pre-Internet economy. But his knowledge of legal and technological minutiae — he is a lecturer at the University of Georgia’s music business program — make his arguments hard to dismiss.

“He’s telling his personal story and standing up to the big corporations who claim to support songwriters, even as they work to undermine our rights behind the scenes,” said Paul Williams, the songwriter and president of Ascap. “He hasn’t flinched, and I think that’s given courage to other artists.”

Like most musicians, Mr. Lowery has seen his royalties fall with the overall drop in record sales. In 2002, his share of songwriting royalties from sales of the first Camper Van Beethoven album (released in 1985) was $1,147; last year it was about $440, a 62 percent decline. According to the Recording Industry Association of America, the value of record sales and streams fell about 44 percent in that time, to $7.1 billion last year, from $12.6 billion in 2002.

At the same time, the nature of royalties has changed, going from larger payments attached to CDs and downloads to fractions of a penny from streaming services. Pandora, for example, pays record labels and performers a combined 0.12 cent every time it streams a song; Spotify’s rates are not disclosed but are usually estimated at around half a cent per stream.

“As little as I was getting paid in 2002, it looks pretty nice compared to almost nothing,” Mr. Lowery said.

Mr. Lowery, who still plays with both his bands (Camper Van Beethoven released its eighth studio album, “La Costa Perdida,” in January), said he had been an early believer in the promise of the Web for artists. But in a process he describes as less of a light-bulb eureka moment than “a fluorescent light with a bad ballast, flickering there, wanting to come on,” he gradually shifted.

“What we do as musicians was slowly being devalued and demonetized, especially for niche artists who are never going to make it up on the road,” said Mr. Lowery, his face stubbled with red hair and his voice still slightly raw from a concert the night before.

On “The Trichordist,” a blog Mr. Lowery writes with a mostly anonymous group of like-minded independents — “a leaderless jihad,” he calls it — this conversation is an unvarnished monologue, with Mr. Lowery’s own royalty statements as visual aids. One popular recent post: “My Song Got Played On Pandora 1 Million Times and All I Got Was $16.89, Less Than What I Make From a Single T-Shirt Sale!” That figure was for songwriting and did not include additional payments as a performer.

His heated tone, and his tendency to see corporate tentacles everywhere, have not endeared Mr. Lowery to everyone on his side of the business. After being rejected from a conference this year whose sponsors included Google, Mr. Lowery accused CASH Music, a two-person nonprofit that makes open-source software, of being “at best quislings and at worst shills” for not publicly defending him. Jesse von Doom, CASH Music’s co-executive director, said in an interview that his organization has indeed received $105,000 in grants from Google in the last two years. But he insisted that no strings were attached to those grants, and that he’s nobody’s shill.

“The problem with David,” Mr. von Doom said, “is that he is driving the car in the right direction, and veering off the cliff some of the time.”

Mr. Lowery’s modest three-story house here would seem an unlikely headquarters for an assault on technology companies. Sitting at his computer in his home recording studio in a room decorated with portraits of Lewis and Clark, Mr. Lowery recalled one of his blog posts, which offered qualified support of the Stop Online Piracy Act, a bill aborted in early 2012 after a thunderbolt of opposition from Google, Wikipedia and other Web titans.

One of the first comments on that post, Mr. Lowery said, was, “We’re going to turn you into Lars Ulrich.”

Some of Mr. Lowery’s ideas oppose the unquestioned credos of music on the Internet. For example, he thinks musicians would benefit more from scarcity of their work online — and from the power to withdraw from any service using their work — than from the ubiquity we have come to expect from services like Spotify and Pandora.

He and his Trichordist colleagues also advocate for an “ethical Internet” supported by strong copyright laws and industry practices that pay artists fair royalties. In response, he has been mocked as naïve.

“People say, ‘Hey, man, you can’t fight this, we’re moving from ownership to access,’ ” Mr. Lowery said. “That’s exactly why I’m fighting it. We have to get it right. I want to get those rates right.” Speaking of young musicians like his students at the University of Georgia, he added, “I want them to have the same advantages I’ve had, to get paid fairly.”

Collectors of Royalties for Music Publishers May See Better Results

September 23, 2013

BEN SISARIO NY Times 09/23/13

The music industry is used to bad news. When the International Federation of the Phonographic Industry announced that record sales in 2012 had their first yearly uptick since 1999, for example, there was jubilation in the record business — even though the gain was only 0.3 percent.

One area that has been growing consistently, however, are the royalties from performing rights organizations like Broadcast Music Inc. and the American Society of Composers, Authors and Publishers, which pay songwriters and music publishers when their music is broadcast, performed live or streamed online.

BMI, as Broadcast Music is known, will announce on Monday that it had $944 million in revenue for the year that ended in June. That is 5 percent more than it collected the year before, and a new high for the organization, whose 600,000 members include stars like Taylor Swift, Pink and Adam Levine of the band Maroon 5. BMI paid $814 million in royalties, the first time its annual distributions have exceeded $800 million. Since 2003, BMI’s revenue has increased about 50 percent.

The performing rights societies are some of the industry’s oldest financial engines, and they are trying to adapt to a digitized business that has spread far beyond radio and broadcast television, their bread and butter for decades.

BMI, which was founded in 1939, collected $57 million in its most recent year from digital services, which include not only Pandora and Spotify but also Hulu, Netflix and other online outlets. As recently as 2009, such services represented just 2 percent of BMI’s domestic revenue, but in its latest fiscal year they were 9 percent.

BMI’s “general licensing” category, which includes live performances as well as the music played in restaurants and other businesses, brought in $116 million, and $297 million more came from international sources. Michael O’Neill, who took over as BMI’s chief executive this month, said the organization had become leaner through staff reductions and by building a more efficient digital infrastructure to track billions of performances of its songs.

Founded in 1914, the American Society of Composers, Authors and Publishers, or Ascap, reported in March that it had $942 million in revenue for 2012, down 4.2 percent. For the year that ended in June 2012, BMI’s revenue also fell by about 3.5 percent, to $899 million. In those periods, both organizations — which are nonprofits regulated by federal consent decrees — were hit by a royalty renegotiation with radio broadcasters.

Even as the performing rights organizations have tried to adapt and streamline their operations for the digital age, their future has been cast into doubt. In recent years, some of biggest publishers have withdrawn digital rights to their catalogs from the performing rights organizations, in an effort to control the royalty rates paid by online services like Pandora.

But last week, a federal judge in a case between Ascap and Pandora ruled that publishers could not keep some rights within Ascap but withhold others. That decision did not directly affect BMI. But it raised concerns that the societies — already threatened by the trend of rights withdrawal by publishers — could be in even greater danger if they are seen as standing in the way of publishers getting the highest rates they can.

“This was the year we were declared dead by some,” said Richard Conlon, a senior vice president at BMI, “and we just hit a 74-year high in revenue.”

Royalty disputes strike sour note in streaming music

July 22, 2013

Mike Snider, USA TODAY 07/21/13
Streaming music is growing in popularity, but some artists are feeling short-changed in the new digital music ecosystem.

Consumers are getting in tune with streaming music, but the artists who produce the tunes are growing louder in their complaints about the music services.

Most recently, Radiohead lead singer Thom Yorke struck a defiant chord when he and collaborator Nigel Godrich pulled from Spotify the recent album Amok from their side project band Atoms for Peace. Also removed: Yorke’s 2006 solo album The Eraser.

Last month, classic rockers Pink Floyd criticized Pandora for trying to persuade artists to support reduced royalty rates on the Internet radio service. It’s the second shot taken recently at Pandora.

Last month, David Lowery griped the service was paying him only $16.89 in the first quarter of 2013, during which a song he co-wrote was played more than 1.1 million times. Lowery co-wrote the song Low with two other members of the band Cracker, for their platinum 1992 album Kerosene Hat.

Both services say that they’re paying significant sums for music that is streamed. But for music lovers — many of whom have embraced streaming — sorting out the debate is no easy feat.

Spotify and Pandora are different in that Spotify delivers on-demand tracks — for free with ads, and $9.99 monthly for ad-free listening on portable devices — while Pandora streams themed radio stations for free and premium subscriptions.

Meanwhile, royalties can differ depending on whether an artist wrote or performed the song — or both — and what type of service the song is played on. Because the industry and the law treat different technologies differently, the royalty paid when the same song plays on terrestrial radio, satellite radio or on the Internet may vary.

Pandora and Spotify pay different performance royalties because Pandora is a non-interactive service, in that you can’t choose a song on-demand, as you can on Spotify.

That just scratches the surface of the intricacies in the evolving digital music ecosystem. “What does it mean to own a piece of music in 2013? That is the question for copyright owners. Will people download to own, or will they simply pay for, or steal, access to music in the cloud?” says Shelly Palmer, author of Digital Wisdom: Thought Leadership for a Connected World. “Today, digital music rights fees (such as those paid by Pandora and Spotify) represent the lion’s share of revenue that recorded music companies make.”

The artists charge companies are making millions by paying pennies to artists. “It’s bad for new music,” Godrich tweeted July 14. “It’s an equation that just doesn’t work.”

However, many music fans seem to like the medium. Digital music sales are estimated to make up a growing chunk of total music spending as it rises from about $7.2 billion in 2012 to $8.1 billion in 2017, according to estimates from Strategy Analytics. Despite download sales dominating the digital music store, streaming is steadily making up a larger percentage of digital music sales, rising from about 12.5% in 2012 to 15.8% in 2017.

So Spotify, Pandora and other music services such as Rdio and Apple, which has a new iTunes Radio in the works, are trying to develop a successful business model.

Spotify has 6 million paying customers and 24 million active users globally, the firm says. Online music tracker Eliot Van Buskirk at estimated that Spotify could soon take in $1 billion in revenue annually.

At Pandora, even though it grew listenership to more than 200 million U.S. registered users, the publicly traded company lost $38 million during the fiscal year that ended in March.

The surviving members of Pink Floyd — David Gilmour, Nick Mason and Roger Waters — noted that Pandora raised $235 million in its 2011 initial public offering, in the band’s June 23 editorial on “Nearly 90% of the artists who get a check for digital play receive less than $5,000 a year,” they wrote. “Everyone deserves the right to be paid a fair market rate for their work, regardless of what their work entails.”

Pink Floyd also charged Pandora founder Tim Westergren with deceiving artists by urging them to sign a “letter of support” for Internet radio that actually would cut Pandora’s royalty rates. Westergren countered by saying that Internet radio is threatened by a convoluted and unbalanced royalty-setting process that can include individual deals between labels and broadcasters.

Pandora might only pay $1,370 in royalties for a million spins of a song, he says, but each spin may be only heard by one person. Meanwhile, if that same song is played on a popular FM station, thousands, even millions, could hear it.

“If major market FM stations paid the same rates as Pandora, based on audience, some would be paying thousands of dollars for every song they played,” Westergren wrote in a blog post. “How much do they pay performers right now? Zero.”

Similarly, Spotify CEO Daniel Ek noted on Twitter that “we’re paying out more than $500 (million) this year. That’s real money.”
Pandora plans to continue to push for Congress to pass a bill enacting lower royalty rates. Meanwhile, music services, labels, publishers and artists will hash it out.
“We’re dealing with antiquated laws for different types of music that don’t quite make sense any more,” says Paul Resnikoff, publisher of “It is so complex (because) it has to do with antiquated rules that never quite got revised, and everyone has piece of the pie, and they are going to protect that piece of the pie.”

Among the oddities in these streaming showdowns are that Yorke and Godrich, the longtime producer for Radiohead, were able to get their music pulled from Spotify. But Radiohead’s catalog, which is owned by Warner Music, remains on Spotify and other music services. And Atoms for Peace plans to make its live performances Thursday and Friday available on video site

Pandora continues to offer a “Pink Floyd” radio station that includes the band’s songs such as Another Brick in the Wall, Pt. 2 followed by tracks from other bands such as Dire Straits and Led Zeppelin.

The digital music evolution has become “a paradox,” says Resnikoff, “in which consumers have about 100 times more enjoyment and access than they have ever had, but the only problem is that the value of those plays … (what) goes back to artists has decreased. That causes all sorts of problems.”