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If the CRB Raises Streaming Royalty Rates, Innovation Will Suffer.

By: Mike Montgomery

Music royalty payments are at an all-time high. So why are artists turning on the streaming companies?

According to the companies that collect royalties for songwriters and publishers, times are good. ASCAP and BMI, the two performance rights organizations (or PROs) that represent almost all songwriters and publishers, are falling over each other to brag about how much money they’ve collected.

In March, ASCAP announced that it was the first PRO in the world to report $1 billion in revenues. The nonprofit boasted of “historic high” distributions of over $883 million to its members. In September, BMI also announced “record breaking revenues” of $1 billion with digital revenues exceeding $100 million for the first time ever.

And yet, songwriters and musicians are complaining loudly that they aren’t getting their share of the pie. They are demanding royalty rate increases and a larger direct cut of streaming companies’ revenues, which already operate at half-mast by paying out 50% or more of revenue to royalties.

Where is this disconnect coming from? On the one hand, it seems like streaming is the engine that is finally starting to turn things around for the suffering music industry. Consumers are embracing platforms like Pandora, iHeart and Soundcloud instead of piracy and as a result, they are once again paying for music with subscriptions or by willingly listening to ads.

Read the full article here. 

(This article ran in the TheHill.com on December 3, 2015)

By: Mike Montgomery

Recently, the idea of felony streaming once again reared its ugly head. Making streaming copyright infringement a felony is a terrible idea and an example of backward thinking that creates further rifts between tech and entertainment at a time when these two sectors are not only reliant upon one another, but melding. As some may recall, this kind of backward thinking famously and furiously failed before when it was a key part of the ill-conceived effort known as SOPA-PIPA (Stop Internet Piracy Act / Protect IP Act). So strong was the backlash against these would-be laws and their breathtaking overreach, to this day, the term “SOPA-PIPA” sends chills down the spines of lawmakers.

And rightly so.  When it was first proposed in 2011, millions of Internet users demanded it be shut down. YouTubers, on the forefront of the new entertainment industry, worried that uploading images of video games or parts of songs could suddenly land them in jail. Wikipedia, Google and an estimated 7,000 other websites coordinated a day-long service blackout in protest against the bill. One petition drive attracted seven million signatures. Companies and organizations that supported the legislation were boycotted. Even the White House’s Senior Intellectual Property Enforcement official at the time, responding to a We The People Petition against the legislation, vowed to oppose any legislation that would chill innovation and free expression. Much to the relief of many lawmakers, the bill was quietly set aside.

…

Read the full article here.

A number of prominent members of the songwriting community will descend on Capitol Hill today to lobby lawmakers that streaming music platforms (not to mention many other businesses that play music, from restaurants to hotels to local coffee shops) should pay out more of their revenue to publishers and songwriters. Of course songwriters deserve their fair share, but are they are pointing their fingers at the wrong culprit?

First, let’s acknowledge that artists and record labels earn exponentially more from streaming than songwriters and publishers, so it’s only natural for songwriters to balk at the state of affairs in music streaming royalties.

However, some streaming services currently pay upwards of 50 or even 70 percent of their revenues towards royalties, and depending upon the results of a looming decision by the Copyright Royalty Board, these percentages could rise substantially.
Spotify reports that it has paid over $3 billion in royalties, and Pandora recently announced that it has paid out a total of $1.5 billion. But in unpacking the problem, one realizes the tension between songwriters and the digital platforms is misplaced.

The frustration for songwriters and publishers is that they don’t know where that money is going. There is no transparency and no way for songwriters to track what they are earning from royalty payments.

Read the complete article here.

Artists are starting to realize that the real enemy isn’t streaming companies,
it’s record labels.

By Mike Montgomery, Executive Director CALinnovates

When Taylor Swift won her brief battle against Apple Music in June, she was hailed as the savior of music. Thanks to Swift, artists will now be paid royalties during Apple’s three-month trial period of its new streaming music service.

But that will hardly save music. Artists are increasingly up in arms about the paltry paydays they are collecting from streaming music. Back in the day, a band could earn $2 for every CD sold. Today, artists are lucky to get a fraction of a cent for each stream.
Most of the music world’s anger has so far been directed at streaming companies. From the outside, it’s easy to see why. It looks like tech companies are bringing in millions and handing very little of it over to the people who create the music that makes these companies possible in the first place.

But a closer look shows that’s not exactly the case. Streaming companies hand out (on average) 70% of all revenue to rights holders. Spotify has distributed more than $2 billion in royalties. According to Spotify, as of June 2013 it was paying out $425,000 per month for an average global hit album and $145,000 per month for a Spotify Top 10 album. And while Apple, which won’t have a free option after the trial period, will pay $7 of every $10 monthly subscription fee to the music industry, it’s an open question as to how much of that revenue the artists will actually see.

It’s starting to become clear that the money isn’t getting log jammed at the streaming sites; it’s getting log jammed at the record companies. The recent massive Sony hack revealed that the record labels are receiving tens, if not hundreds, of millions from Spotify. A leaked version of Sony’s contract shows that Spotify paid Sony $42.5 million in advances for the rights to Sony’s music catalogue, and a ‘most favored nation’ clause gives Sony the opportunity to earn millions more. Spotify also gave Sony an additional $9 million in ad inventory that it could use or sell at a profit. But how much of those millions make it to the artists?

Read the full article here.