Previously we reported on the Music Modernization Act, a bill proposed to ensure digital music services pay fair royalties to the copyright holders, and where it stands during its process to be become an enacted bill. As we are aware from the timeless SchoolHouse Rock classic “I’m Just A Bill”, in order to enact a bill it takes time and votes from different levels of Congress. The bill passed the House unanimously April 25, with a revised and amended version coming out of the Senate Judiciary Committee June 28. If the bill passes a Senate vote, it goes back to the House for a final sign off.
The bill seemed to be moving full steam ahead with no objections from any party until lobbyists discovered how much control private entities would lose to the newly formed MLC, Mechanical Licensing Collective. These offered amendments from the private sector have put the bill in danger of not passing. Technically, this copyright bill has until the end of the year to pass but legislators are targeting Oct 12 as the deadline. This date is before Congress adjourns for the midterm elections because after Congress goes on vacation, nothing new will be passed.
First the MMA received push back from The Blackstone Group, owners of SESAC and The Harry Fox Agency. They proposed an amendment that would allow the current mechanical licensing organizations to stay in control of mechanical royalties collection and administration. The Blackstone Group questioned why a government-commissioned mechanical licensing body was necessary, when these organizations already exist. After negotiations, the reps for the MMA clarified the restriction on what licenses can be administered by the MLC, which include sync, lyric and performance licenses. This allowed groups like SESAC and Harry Fox to maintain their clientele and continue business as usual, thus still allowing the MLC to collect data and administer mechanical royalties.
After putting out that fire, the MMA is now seeing restraints from another organization. SiriusXM is fighting a portion of the bill’s CLASSICS Act provision which calls for digital and satellite radio to pay royalties for playing pre-1972 master recordings, while terrestrial radio would be exempt.
The SiriusXm CEO has criticized the bill for expanding the royalty requirements for satellite radio without also expanding the requirements for terrestrial radio. Traditional radio doesn’t pay for the broadcast of any sound recordings and this bill does nothing to change that. During a period in which SiriusXM paid 2.2 billion for the use of post 1972 works, terrestrial radio paid nothing. The future of radio is digital and it would be wise for the drafters of the MMA to carve out language to fairly compensate artists in both the digital and terrestrial areas. At this point, neither side has figured out a solution and they only have a couple months left to do so.
Moving forward, the Music Modernization Act has only three paths to move through the Senate: 1. by speedy unanimous verbal consent, which would require all 100 senators to vote yes; 2. the more difficult floor process, which includes time for hearings and would require support of at least 60 Senators (46 Senators have signed on as co-sponsors); or 3. by attaching the MMA as a rider to another piece of legislation that is sure to pass.
Please continue to follow along the MMA’s progress (or lack thereof) here at L4M, @l4m, tkhlaw.com, @TrogliaKaplan or email us for more info.
Just some quick stats for your Monday. According to Nielsen’s US Music Mid-Year report, the United States is consuming more music via streaming platforms than ever before.
Key stats from the report are:
“On-demand song streaming activity is reaching new milestones, with volume surpassing 400 billion, which is offsetting declines in album and track sales. On-demand audio streaming volume is up 45%, having already exceeded 268 billion so far in 2018, and on-demand video streaming volume is up 35% year-over-year.”
Some of us have noticed that the introduction of new record labels popping up all over the place. A few years back reading that a new record label was opening up was on par with an announcement of a new Blockbuster Video opening its doors; it just wasn’t going to happen. Not surprisingly, a lot of the labels that are popping up are actually old shuttered labels that closed their doors a decade or so ago when they were unequipped to handle the digital music revolution. Now, with their parent companies (read the opening of a new label announcements with some skepticism, as they are often funded by a pre-existing major) finally reaping the benefit of deals struck with streaming platforms and the overall ease for consumers to stream music, revenue for labels is catching up. With a better formula in place to collect revenue from the streaming platforms and with the number of consumers steadily rising, it is not surprising to see a renaissance of sorts for record labels.
Let’s just hope that they have learned from the past and that the structure of deals for artists that are clamoring to sign are fair (or at least close to it).
It seems to be a constant battle for songwriters to economically receive what is rightfully theirs. First, fighting with labels over rights and royalties, then finding a publisher (big enough) to collect those royalties, now going after digital service providers to payout those royalties, and the government for providing an obnoxiously low rate for reproductions rights and an outdated statute that can’t seem to keep up with the technological age. Yes, it has been a rough one as these factors are often working together in perpetuating this curse more commonly known as the compulsory license.
A compulsory license for sound recordings was created by Section 115 of the Copyright Act and allows anyone to reproduce and distribute a composition that has been released to the public either by digital or physical means with the copyright owners permission. (sounds good). Most of the time an artist records the composition, the label sends the created recording to its distributor and the distributor sends it to the digital service providers or DSPs (Spotify, Amazon, Google, iHeart, you name it) who in exchange receive dollars through subscriptions, ads and downloads. It seems like DSPs should be giving songwriters a call right? (Because they are reproducing the composition and saving it to their platforms to be streamed or downloaded.) Shockingly, they don’t call. In fact, if you are an independent songwriter (not represented by a major publisher), it is unlikely that you are paid mechanical royalties from any of the DSPs. Why? Because of the compulsory license and these evil excel spreadsheets called “author unknown” NOIs.
If you want a compulsory license, Section 115(a)(2)(b) of the Copyright Act requires you to serve the copyright owner of the composition with a notice of intention (or an NOI). However, IF there is no registration or public record filed with the Copyright Office of your ownership of that composition with an address where the licensee can serve you the NOI then you are considered an “author unknown”! (insert evil laugh). Basically, did you file and pay the Copyright Office to register your copyright that you already own (even though under no law are you required to register your copyright to validate your ownership) for the purpose of getting paid a royalty that, by statute, you are rightfully entitled to? That’s some hardcore bs, right? In fact, instead we are going to give DSPs and whoever else, an out to not pay you. Just submit an “unknown author” NOI to the Copyright Office, which is basically an excel spreadsheet with the title of the song, the DSP info, and unavailable written across the columns for any type of songwriter info. It doesn’t matter if the song is registered with a PRO, if you submitted the metadata to the label to give to the DSP, it probably doesn’t even matter if you call Spotify up and say “hey I’m your missing songwriter!” Nope, after a copyright search you are done. Also to add more bad news, if you file for your copyright tomorrow Spotify, Google and Amazon are not required to back pay on any of those royalties as long as they submitted an NOI to the Copyright Office.
Although a bummer, we will end on a positive note that this curse has not gone unnoticed and some are choosing to do their part to help. Insert Sound Exchange NOI database! (Superhero sound!) A simple system that organized the unknown author NOIs submitted to the Copyright Office so that you can easily discover who is not paying you and for which song. Although its not exactly putting the money you are owed into your pocket, it is getting us a step closer considering the Copyright Office database for NOIs is next to impossible to navigate. It consists of huge excel spreadsheets submitted by DSPs that often are not even downloadable without a zip compressor. If you are able to download the excel sheets, you will see DSPs list hundreds sometimes thousands of songs in no particular order that are submitted daily! It is an absurd waste of time. So thank you Sound Exchange for making it easier for the songwriters out there. I encourage all songwriters to sign up (its free) and search for any NOIs here. We at L4M are going to do our best to keep on this fight and find best practices to get these royalties paid out for our clients. We will keep you posted, but feel free to comment with suggestions and success stories as we want to keep songwriters informed on how to avoid those unknown author NOIs!
Wait a second…What just happened? Did the United States government actually try to address a problem that has effected millions of Americans for years by introducing a Bill before Congress? Did those blowhards in Washington D.C. stop fighting and tweeting and actually do the job that they were sent there to do?
Here is a draft of H.R. 4706, The Music Modernization Act of 2017.
For years now the streaming revolution has completely disrupted the way consumers listen to music, the way musicians release music and the way rights holders (musicians, publishers, labels etc.) get paid. With the recent onslaught of litigation against giants like Spotify and Apple Music, lobbyists in D.C. seem to have been effective in getting our legislative branch to try to address an over decade old issue.
With the goal of ensuring that streaming platforms (a) don’t get sued, (b) mechanical royalty rates are set as independently as possible and (c) theoretically, getting money to the right people in a faster way, the MMA sets up several new processes for the music industry.
In typical Washingtonian fashion, the Bill introduces yet another bureaucratic body to oversee and administer digital licenses and pay all copyright owners (so long as your works are registered correctly). While, in theory, this sounds like an intelligent move, there are numerous questions about the efficiency of yet another “agency” involved in paying monies to the correct rights holders. We think it is definitely a move in the right direction by centralizing all digital blanket licenses and the decision makers for mechanical royalty rates (without a commission or overhead cost put on the backs of rights holders), but the move begs the question of how effective other government led regulatory bodies have been in the past (Government Shutdown ring a bell?). Lobbyists have touted this move as a departure from the tenured “judges” that rule over the PRO’s (ASCAP and BMI) and allows for a more impartial method in determining amounts paid for performance royalties to songwriters.
Since the inception of streaming services, platforms have avoided paying mechanicals because after filing the required Notice of Intent (or NOI) there is no further requirement to determine the actual right holder of a particular song. So if your information isn’t found or hasn’t been registered, Spotify, Apple, Amazon etc. haven’t had to pay you for streaming your license. The MMA attempts to do away with this giant loop hole. The new oversight/governing body will attempt to collect all data (by working with Content ID/Google and other data aggregators) and theoretically make sure that every song is registered so that every right holder is paid (some minuscule amount) for every stream.
The Bill then sets up a more “free-market” system for determining what mechanical royalty is actually paid to the rights holders (now that they will all be contained within this database). The rights holders and the platforms will have the ability to negotiate and set rates rather than relying strictly on government set rates.
The Bill was introduced to the House Judiciary Committee before the end of 2017 and there it sits. We will be watching carefully, along with millions of musicians and industry folks, to see how it progresses, what changes are made and how much pork is added to it.
Maybe it is a millennial thing or maybe it is just a product of the industry but we consistently hear several things from new artists that are trying to make it to the next level:
“I need a manager”
“I need a label”
“I need a publisher”
Sometimes there is a need for one of these. Sometimes there is a need for all of them. But when does an artist really need a publisher?
We think there are only a couple of situations where a musician who writes music truly needs a publisher rather than self-publishing:
1. You are a top-line (lyrics) writer or producer that needs a publisher to set up writing/recording sessions with other similar or more established writers or producers.
2. You are in need of a substantial check as a loan/advance.
Going in reverse, the only way you are going to get to #2 is if you have a previously released catalog of music that is making substantial revenue on the publishing side of things (actual record sales, licenses, performance royalties etc.). Obviously, easier said then done.
So in our opinion #1 is probably the best and primary reason that an artist should consider or seek out a publishing situation. If you are a writer/producer that either writes for him/herself or has written for another artist and your goal is to try to continue to do so or write with writers who have credits on gold/platinum albums, a good publisher should be able to facilitate this. They should be able to pair you with established and up-and-coming artists that have budgets behind them. Getting in with those artists and getting music actually released with a budget for radio/pr etc. obviously builds your own value and the value in your publishing.
As many of you know, getting tracks to the top artists is incredibly difficult. Even if you have a direct line to the artist you still have to get through the artists, management, publisher and label to even have a shot of getting a placement on that artist’s album. Getting a writing session with the artist is even more of a challenge.
If you are at the point where you have the chops, you have a history of writing really solid music, your previous writing is actually earning you some money and you can write for other people, you want to make sure that you are doing everything you can to maximize your value and that of your publishing. We have so many stories of writers/producers that were involved in big songs that weren’t credited the right way or were left off registrations for some reason or the other. So making sure you are handling your publishing yourself is the first step in preparing yourself to even be considered by a major publisher.
Please don’t get it twisted (as the young folks say), if you self-publish you better be able to administer your works or have a lawyer/manager who knows how. Without registering your music with the PROs or securing correct split sheets or hounding labels for statements or hitting up independent artists who have used your music, you are essentially lighting money on fire. You have to know what rights you have in and to your publishing and how to go about collecting it. Registering works is not complicated. Understanding how and when you get paid from those works is.
There are several companies popping up that are offering admin services. Some are directly tied to the big publishers but then you have companies like CD Baby and Tunecore rolled out an admin service and functions a couple of years back. Songtrust is another one that offers a ton of services including administration of publishing. We have clients that have positive things to say about each one and those that have negative things to say about each one. So we will leave it up to you to decide if one of these outlets is right for you.
Remember, if you write a song and do nothing to register it or attempt to collect on it, it’s not really “published”.
Just like everything else in music (or most industries for that matter) you have to work your way up. You won’t get a publishing deal that makes sense unless you have already proven yourself as a writer. It is tough to prove yourself as a writer without getting a break in a very competitive industry. But you won’t get a break at all if you don’t treat your writing like an actual business and get the people you need to be in your corner to help you do so.
There have been a ton of articles written about how the current revenue models created by streaming platforms are grossly unjust and woefully inadequate as far as compensating artists. Great sources like Digital Music News have compiled hundreds of pages of Spotify reports in an effort to truly understand how much money an artist can make per stream. Forbes via Quora has probably the best breakdown of how Spotify, Apple, et. al. work with musicians, labels, publishers and “back office services” when calculating the true revenue per stream.
Unfortunately for artists, the result of all of the calculations results in the following analysis: The revenue per stream is really really really low. Like $0.004891 per stream low. Easier math to contemplate is to figure that for every 1,000,000 streams on Spotify, your band will make $5,000.
More crappy financial news for musicians. The fact that music industry is on a never-ending downward spiral is as newsworthy as another allegation that Trump has ties with the Russians. Everyone knows. Yet, a funny thing keeps happening with all of the artists that we work with here at L4M and The Propelr. They all turn to their numbers on Spotify before literally everything else. The success of a project, in their minds, is almost exclusively dependent on the number of streams on Spotify.
So if your music isn’t on New Releases Friday or doesn’t make it onto Rap Caviar, how does an independent artist get significant spins on Spotify?
Not surprisingly “streaming promotion” companies are popping up. Promises are being made that for approximately $5,000 you can be assured of, wait for it…1,000,000 streams on Spotify (no risk offer!). I’m not saying that these companies cannot achieve this benchmark but it leads to a greater question of what is the value in having millions of streams, especially if you have to pay for them.
Paying for spins is not a new idea. Payola ruled the industry for decades. Payments to program managers and dj’s of radio stations were as common as paying for studio time. While Payola was officially made illegal by Congress in 1960 some form of pay for play remained commonplace in the industry for the next fifty years. Rather than straight up paying for radio rotation, promotional payments were made as marketing expenditures and not-so-cleverly identified as artist or record promotion. In 2005 the State of New York settled with the majors to try to put a stop to this practice and loop hole in the law. There was a chilling effect after that out-of-court settlement but those who have tried to get their music on the radio still know you have to pay someone to get there. It’s just the way it is. Want a number one album, plan on spending $200,000 (according to an anonymous label source).
With the advent of streaming officially taking over the value of physical sales for the major labels, the labels are forced to (finally) face the fact that they are in the streaming business rather than the download or sale of music business. (Click Here for a great article about it from Music Industry Blog) That means that there will be far more attention, effort and dollars going into boosting the numbers of spins that a song receives. Labels will most likely swallow up some of these independent spin maximization services and look to infiltrate the algorithm and fan behavior platforms like Pandora and Spotify.
With the labels spending more time, money and attention on the importance of streams is that 1,000,000 spin number even worth it? In short, yes but don’t pay someone to get them for you.
First off, there is no guarantee that these promotional streaming companies can achieve authentic spins. Think of boiler room scenario where computers are set to repeat on your song. Is that worth it to get to 1,000,000 streams? Sure it is worth about $5,000, but that is what it cost you. So did you gain any fans? Will you be able to point to the analytics that Spotify provides and show promoters that your fanbase is active in a certain city? Can you spend money on Facebook advertising your merchandise in a specific market based on the analytics you get from those spins? No to all of the above.
There are ways to get authentic fans and via those fans, authentic spins. One way is to reach out directly to folks at a platform. Spotify employees repeatedly tell us they are far more likely to open a personal email versus a canned announcement or press release form a label or management company. Identify a playlist that you really like and try to find out the editor of that playlist. No guaranty that you will hear back from them but it is definitely worth a shot. Also look to distributors for help. If you have a track record of selling your music independently or getting tens of thousands of streams, you may be able to entice a distributor to put your music out to all outlets. These companies have teams that are in constant communication with streaming services. They will pitch your music to playlists and have the relationships to actually get it done. Finally, when you release your music, make sure you direct everything, your press/social posts/interview answers etc. to the platform on which you want the most spins. Use embeddable codes from your chosen platform on every post to maximize spins. All of these and the help of a solid squad will help to maximize spins, revenue and happiness (well maybe not the last one).
As seen from our last L4M post, success in the music industry is often dependent upon the people around you; managers, lawyers, and booking agents make up your “team”. But what about those other musicians that help you create the sound? The artist’s you work with to make a song. Collaborations are so common these days even bands with numerous members are bringing in teams of producers, a second percussionist or guitarist, and additional vocalists. So why does it matter? You work with your friends to create great music, right? Its true, but defining roles and ownership is essential in protecting your music. Some of the biggest disputes in the industry today involve payments to collaborators, the rightful ownership to a song involving guest musicians and artists.
Take for example the dispute between Jack Urbont and Sony Music Entertainment over the theme song for Iron Man. (Urbont v. Sony Music Ent., 100 F.Supp.3d 342 (2015)). Sony released a song by hip-hop artist, Ghost Face Killah, which used a portion of the Iron Man theme song and only received permission from Marvel Television but not Urbont. The main issue being when Urbont worked on the original theme song with Marvel was whether his contribution was considered a work for hire or should he own part of the composition with Marvel. The parties ended up settling out of court after Sony was granted the right to use a work for hire defense against Urbont. So what’s the takeaway? You need to decide prior to releasing any music whether your bestie is taking a fee, getting any rights to the composition or both.
“Work for hire” is a legal term in the copyright act that in a nutshell means you are being paid for your services as a musician but will not own any of the intellectual property to the song. Think of it as any service you pay for, if a carpenter makes you an original table, you pay him or her for the workmanship and the table, but the carpenter doesn’t receive ownership in the table and doesn’t receive a portion of the funds when you resell it. Same for a work for hire musician or vocalist. Work for hires are the most common when the musician doesn’t create anything original, they are just playing or singing what you put in front of them. However, work for hires are becoming more and more common with writers, musicians and producers who contribute original material to the song. Why would they do that? First because you give them a big paycheck and second because they don’t think the song will make more money then the paycheck, it’s a win-win for them.
On the other hand, if you are a songwriter and you ask your friend the guitar player to come in and write the melody, it makes more sense to split the ownership of the composition. This is when you want a guest artist agreement in place so that you won’t have to track down the guitar player every time you receive a license request or want to make a remix. What if you want to use part of that melody in another part of a song? You will need to ask the guitar player for permission and he or she can argue that they want their ownership percentage to stay the same even though your using only a portion of the melody. A guest artist agreement will prevent this headache as you can outline each individual’s rights and permissions involved with the song.
Sometimes artists will collaborate and give both a fee and ownership over the composition. In this case, the fee is treated as an advance that needs to be recouped against profits. Think of it as paying the artist upfront for what you think they will make off of the sale of the song in the future. Until the song recoups the advance amount they won’t receive payment from a label or you, even though they own rights to the composition.
So how do you ensure that all of this is done correctly? Unfortunately, a handshake will not suffice. A legal document signed by both of you will be necessary. Lots of writers and producers use session sheets to delegate publishing splits, but this doesn’t clarify who can do what with the copyright and definitely doesn’t help you in a work for hire situation. Having a lawyer draft this for you is the safest bet, but the good news is that often you can reuse work for hire agreements by changing the name and the fee instead of paying for a new document every time (don’t tell your lawyer I said that). The most important thing is to read the agreement and make sure you understand it!! Ask questions, do your research, and know what rights you have or are giving up. Just make sure that on the day you hit number one you’re not scrambling to get your former bestie to sign a work for hire agreement.
by Lauren Schulz (firstname.lastname@example.org)