So this one keeps getting more and more interesting and worrisome (depending on your viewpoint). Check out this article from The Verge:
http://www.theverge.com/2013/6/13/4428106/bmi-sues-pandora-calling-radio-station-purchase-a-stunt
We’ll continue to monitor and let musicians and rights holders know what it means for them (other than lower streaming rates).
Pandora recently announced that it has passed 200 Million Users on its streaming music platform. This reportedly includes over 100,000 artists that compile the Pandora catalog of music.
Pandora which went public back in June 2011. Its stock has fluctuated after an inflated IPO. However, the recent news made public by the SEC, shows that its founders are cashing out as if they were dependent on streaming revenue to pay their bills (sarcasm intended). The SEC Form 4 report show that Pandora’s top brass has cashed out approximately $87.6 million dollars of their own stock all within less than 2 years of going public.
So what does this mean? Well, it means several things: 1. the executives are now rich (assuming they weren’t before they sold their own Pandora stock), 2. the stock will likely slide in value as the market watches the top executives’ behavior as an indication of the health of a company, 3. the streaming music model is not working well.
Point 3 should be the most alarming and obvious to artists. We’ve reported numerous times of the apparent inadequacies of streaming revenues (e.g. 1,000,000 streams equal some insanely low amount of money). With this new information it is clear that the streaming financial model in place with Pandora, while inadequate for most artists seems to be inadequate for Pandora itself. It appears that the royalty rates that Pandora agreed to pay the labels set the bar at too high of a rate to be a sustainable or scalable model.
For the artists out there, how much have you seen in terms of streaming revenue to date? Are you sound exchange numbers increasing in a proportional manner? Curious minds want to know.
Please write in with your comments. Stay tuned for more.
An off again on again trend in music news is the story of artists recapturing their copyrights. As with most music related matters, the law in this area is pretty straight forward but has been made to seem complex and insurmountable to artists. We wrote about this a few times over the years and have helped a handful of older musicians fight to get back their copyrights in music that was created before a certain time period. Each day a new set of rights holders has the opportunity to recapture rights that they previously signed away to a label or third party.
Read (or re-read) our post on how to recapture your rights here:
http://lawyer4musicians.com/2011/07/01/does-forever-really-mean-forever-recapture-your-copyrights
/ and contact us to see if we can help get back your rights.
The big news of the day is the narrow escape the country had from falling off the Fiscal Cliff. Buried within the passed legislation is the long-awaited renewal of Section 181. The film and television production incentive that has been in limbo since December 31, 2011 was officially renewed and extended through December 31, 2013.
For Hollywood and all independent film and television producers, this marks a huge victory. Those soliciting investments into qualifying projects will be able to offer incentives to investors on top of the remaining state tax credits making film and television productions much safer (obviously still risky) investments.
We imagine that productions that began in 2012 will be grandfathered into the new renewal, but will find out and post any info we get here. In the meantime, if you or your project need help or have questions about how to implement Section 181 when seeking investment into your qualified film or television project, please contact us at josh@lawyer4musicians.
Here is a link to the American Taxpayer Relief Act of 2012, scroll to Section 317 for the renewal of Section 181.
Protesting Royalty Rates (or something similar)
The current hot topic debate in the music industry involves the Internet Radio Fairness Act (“IRFA”). Recently, the debate is getting louder as the top artists in the music world and successful Internet radio companies clash over the bill. Supporters of IRFA say it is vital to the survival and success of all digital music streaming companies to end a flawed royalty system, but opponents claim it represents a disproportional cut in pay that musicians have come to and may eventually rely upon. It’s no surprise this debate revolves around money, but let’s not mute what’s more important: the long-term health of the digital music business itself.
How are the current Internet Radio and Streaming royalty rates set? Music rights owners (publishers, labels and independent musicians) and the digital radio companies do not negotiate the price of a license for streaming digital music. Instead, Congress’ Copyright Royalty Board (“CRB”), a three-judge panel, directly sets the price once every five years after SoundExchange (remember SE represents both master owners and performers which can include labels as well as independent musicians) and the digital radio services (online, satellite and cable radio companies) present evidence about the value of recorded music and the technology for delivering it to music listeners. Then, the CRB determines the royalties each kind of music service will have to pay out for the next five years. SoundExchange is then charged with distributing out those royalties to its members. The Performing Rights Organizations have their own equally confusing method for collecting and distributing royalties from internet broadcasts.
The debate or heavy complaining which led to the introduction of IRFA is coming from streaming services like Pandora. CRB has decided on dramatically different royalty rates: Internet radio companies like Pandora, the IRFA’s most vocal supporter, purportedly pay more than 50% of their revenue in performance royalties; satellite radio companies like Sirius XM pay about 7.5%; cable radio companies like Muzak pay about 15%, and AM/FM radio pays nothing. The result of these high royalty rates have forced most online streaming services out of the music business; most notably some giants such as AOL, Yahoo, and Microsoft.
With the rise of services like Pandora and Spotify, the labels and publishers went to extraordinary lengths to ensure that they would be paid a “fair” amount and the artists lobbied hard as well. Any change, however minimal, will be met with angry voices screaming (or singing) on the other side.
IRFA is designed to give Internet radio stations a fairer calculation process for setting the price of their music and lower this difference. The goal is to put services like Pandora, Spotify, Muzak, SIriusXM, on the same or similar footing. But 125 major label artists including Rhianna, Ne-Yo, Billy Joel, Maroon 5, and Missy Elliot penned a letter opposing IRFA. Their unified voice argues that IRFA will cut deeply into current Internet radio royalty earnings by an estimated 85%.
Who is right? Who is wrong? Who knows? What we are sure about is that, without a doubt, Internet radio is good for consumers. It allows for more music choices with more control for the listener, pushes songs from both major record labels and the nation’s rising independent musicians, and enables greater exposure and potential compensation for thousands of artists who would otherwise never be heard. Rights owners see this medium as a meaningful revenue stream that is only going to grow overtime. And the more listeners and the more plays mean Internet radio companies must pay more in overall licensing and rights fees to stream the music. Supporters of IRFA say that not only will these lower rates drive more innovation in legal music distribution, but also ensure more artists are fairly compensated for the performance of their recordings.
It is hard for us at L4M to pick sides in this fight. We have been writing about the changing music industry for almost five years now. We spotted Spotify as a potential solution and also a potential problem prior to its US launch. It comes as no surprise to us or our readers that there is a fight over how much streaming radio plays should pay out to artists. Obviously, we want to see a fair resolution, but that gets us into the existential debate over what is fair and how much is art worth. We’re not getting into that debate in this entry (save that for a night filled with several glasses of scotch and smoking jackets).
What do you think? Comment, email or discuss over Thanksgiving dinner (please don’t).
This article was penned in part by aspiring L4Mer Jessica Rzotkiewicz
This Mysterious Castle is said to house all uncollected Sound Exchange Royalties. Enter at your own Risk!
We here at L4M often make reference to a somewhat mysterious organization known as: Sound Exchange. However, many people are still confused as to exactly what Sound Exchange does. We constantly receive questions regarding Sound Exchange so we thought we would give a little primer here.
Prior to 1995 artists and labels did not receive a performance royalty for sound recordings. On L4M we have stressed the importance of receiving your publishing performance royalties from ASCAP, BMI and SESAC. However, these organizations only deal with the underlying compositions. Since 1995 artists and labels, in limited circumstances, are now able to receive royalties for the actual sound recordings. This has been the norm in most of the rest of the world for a long while now.
The main areas where royalties are available for artists and labels are: 1. satellite radio (think Sirius), 2. internet streaming radio (think Pandora), and 3. cable music only channels (music with no video, think satellite radio delivered by your cable or satellite provider). Unlike the underlying composition where you have a choice of three performance rights organizations, Sound Exchange is the only organization for your sound recording performance royalties.
So, if a song is played on terrestrial radio only the writers and publishers are entitled to a performance royalty. If the same song is played on one of the above mentioned avenues, the writer, publisher and now, artist and label will receive a royalty.
If you are an independent artist that owns your own master recordings it is important that you sign up as both an artist and as a sound recording copyright owner. This is important because Sound Exchange divides the money as follows: 50% to the copyright owner (usually a label), 45% to the featured artist and 5% to background musicians. As an independent artist where every dollar counts it is imperative to sign up correctly.
For some reason there are a lot of artists and labels which are owed money that have not yet signed up with Sound Exchange. There is no cost to sign up and royalties are paid quarterly. If you think you may be one of these artists or labels you can search here and check: http://www.soundexchange.com/performer-owner/does-sx-have-money-for-you
We hope this helps clarify what Sound Exchange does. Now, go check if you are owed money and sign up. Good luck.
As you know, typically we write about protecting your rights. This post is about musicians, of all types, having the right to make music in any format he or she may want.
Every decade or so a new type of music becomes popular amongst the teen to twenty-somethings. With the onset of a “new” hot genre of music an inevitable reaction is harsh criticism. The thirty-plus-somethings who still are fond of the trend that was tops when they were of a “taste-making” age cannot help themselves and shred the quality, craftsmanship or artistry of the the music trend du jour.
I guess it is a right of passage; you get to a certain age and you automatically are permitted to present your opinons on why whatever is hot right now sucks compared to what you like. In my formative years, rap took shape and took over. When I started rolling around in my Chevy Citation with a sideways tape deck and front-only speakers blasting Poor Righteous Teachers, De la Soul and NWA (when I was feeling especially hard) I definitely got some nasty looks from inhabitants of my white-bread suburb of Minneapolis. I immediately dismissed my parents and other elders who disclaimed that Rap was nothing more than unoriginal shouting and noise. They (Parents) just didn’t understand (thank you Will Smith).
Every generation has a similar story. Elvis and Chuck Berry were nothing but trouble makers with all that electronic nonsense and rotating hips. The Grateful Dead, Jefferson Airplane and the Almond Brothers were pot smoking hippies who made noise that was only audible to people on acid trips. Ramones, Sex Pistols and the Misfits were screamers who couldn’t play more than one chord on a guitar. Hair bands came about, and well…I don’t know what to say about hair bands. The point is, every generation has its own thing, its own view point on music and society. That point begets the counter point that the preceding generations typically hate the succeeding generations music and viewpoints.
Enter Electronic Dance Music. EDM has taken the world by storm. DJs who seemingly have no traditional musical ability or knowledge are selling out tours and arenas with their version of music. Is it melodic or overly complicated in production and writing? No. Will it stand the test of time? Maybe. Is it actually music at all? Who cares?
Kids love it and are paying to see it. Yet, the music industry cannot help but get in the way of itself. Complaints by critics and label execs complain that it is destroying the professional musician and his/her chance at a career. Stories of musicians making less money because of the large number of computer programmers currently “acting” as imposter musicians are all over the industry blogs and postings. Complaints of so-called talentless button pushers are rampant amongst the “purists”.
What we can’t seem to understand is why are all of these critics complaining about anyone in the music industry making money? Jealousy is the obvious answer. Laziness or stubbornness are additional answers. The point is, in an industry that has completely changed in the past 15 plus years, another change in popular genres or fan patters should not be surprising. EDM is just another example of a new generation making a choice of what it wants to party and dance to; nothing more. No one is saying you should listen to it and no one is forcing you to buy a dub-step or die t-shirt. Just don’t hate on the kids that do.
EDM has had a huge impact on recent sales from pure DJ’s like Skrillex and Bassnectar to the EDM producers like Guetta and Afrojack. The Pop world has embraced it with acts like Bieber, Usher, Britney and Madonna jumping on the bandwagon and incorporating Dubstep and EDM styles into their major label releases. New festivals and concert series are popping up all over the place and bringing in huge revenue for the promoters, vendors and, oh yeah, the musicians.
So whether you can get down to “wub wub wub” or it makes you stroke out, try to accept it as the natural evolution of music. If you make EDM music, do what you can to learn the ins and outs of the music industry. If you are good, no doubt the late to the party label folks are coming around. Know what you are getting into before you get into it. Your music, whether created on a piano or a keyboard, carries the same rights as any other music. Make sure you protect it and make sure you cash in before the next craze takes shape.
