It seems like forever since that casual conversation I had as a new NSAI President with the big kahunas of two major music business trade organization about the upcoming 2006 CRB trial. In fact in music business time, it was forever, fourteen years ago. The conversation / conflict back then was about the statutory rate on physical product vs. a mechanical right in an interactive stream, just a chat about how the future might play out. Streaming was in its infancy, so it didn’t seem like a big deal back then, and we were still managing to sell a few CD’s.
I (and many others) really believed at that time that the future of music consumption was streaming, and that physical sales would continue to drop. Not exactly an astonishing prediction, all I had to do was look at my royalty statements. We needed a mechanical right in an interactive stream. Much smarter people than me were already working on it but from a songwriter perspective I knew it was life or death.
Word from the labels back then was “Impossible!” How do we figure out the PRO / Mechanical splits? How do we figure out promotional streams with the services? I figured next they’d be talking about “returns” and “breakage.” (For you youngsters those are old school terms that purportedly kept labels from paying for physical product damaged in shipping J)
These guys’ salaries were bigger than our organization’s entire budget, so I guess there are some advantages to volunteering for a gig like NSAI president. You really have nothing to lose if you push too hard and they fire you. I had no reason to be careful, so I said something to the effect of, “You guys have been able to figure out promotional rates and controlled comp and contract loopholes that have ripped off songwriters for seventy-five years. This shouldn’t be so hard. And it’s the future of songwriting.”
In the coming weeks, a groundswell of peer pressure grew around this issue and at that year’s CRB, we settled for status quo on physical product and opened the door to mechanical rights in an interactive stream. It was a life-changing moment for me, realizing that someone who fed his family from the royalties off songs he created might be able to influence or even outgun the big boys in New York and DC. I still say it was the heat in the courtroom that final day of the 2006 CRB trial, but songwriter urban legend still tells the story of the RIAA lawyer asking me the wrong songwriter question, and when the answer created a Perry mason moment, she fainted dead away and exited on a gurney.
It was the first step on our fifteen-year journey to the next CRB and after that, the historic Music Modernization Act.
Now that I’m an “ex officio” songwriter advocate, I’ve been reflecting on the amazing journeyman’s journey I’ve had in this business. The people whose lives I’ve touched and those who’ve touched mine seemed so ordinary at the time, but when I look back or tell a story to a younger co-writers (only if they ask, I’m not “that guy” yet,) I’m beginning to see how remarkable the trip has been and still is. Of late, I’ve been asked by music and songwriting programs at Vanderbilt, Belmont, Loyola, and University of Miami to come talk about the Copyright Laws and how they affect the Business and how that in turn affects the Art and Craft of Songwriting. It’s not a tough connection for me, since I’ve written hundreds of songs that have been recorded from the time I was a teenager to (thank God the cuts are still coming) now. Music is all I’ve ever done, so when my friends tell their tales of working construction and baling hay I have to keep quiet because I was always playing in bands, singing in clubs and writing music.
But I don’t take that for granted, so I’m embarking on a new avocation to speak to groups, especially young folks who aspire to a music career, about the past, present and future of the business I love from my perspective – in the trenches. From my first record deal with my home town Tampa Florida band, to playing with Charlie Rich and Jerry Lee Lewis in Memphis, to working at Criteria in Miami with Tom Dowd and Jerry Wexler during the “Layla” days, all the way through my three plus decades in Nashville working for twenty-two years with Warner Chappell and up to my current BBR / Magic Mustang family, so many things have changed while so many important lessons have remained.
I think that today it’s more important than ever for a young person to know where Songwriting fits into his or her career path and to make informed decisions. And I think it’s vital to American culture that we keep the great songs coming. So I want to share some of my experiences. With a little help from my friends, I put together a little teaser video demo and the link is below if you want to check it out. It’s been a lot like writing a song, you never know if it’s going to be of real value to anyone, but there’s a chance it might, and it’s always a labor of love.
More than at any time in my fifteen plus years of volunteer songwriter advocacy, there is a growing awareness in Washington DC of the desperate need for sweeping changes in our antiquated Copyright System. Because we have a true believer and forward thinker in our Register of Copyright, Maria Pallante, legislators and stakeholders can finally refer to an updated 400+ page report on the flaws in our system and the changes that need to be made.
The three main issues being pressed before our legislators right now, and their importance to the American Music Community if this were a medical triage situation are as follows:
Pre 1972 recordings in the digital space – These artists and labels are being denied their Sound Recording payments because services claim that they were made before the Sound Recording Copyright went into effect, when it’s clear the right was meant to be retroactive. This is an injustice to legacy artists and labels: Triage Class: Cut finger, needs stitches.
Terrestrial Performance in a Sound Recording: Labels and artists deserve to be paid for providing the content that makes America listen to the radio, just a s songwriter are. Much progress has been made in the free market toward this end in the free market, (labels are not under the government’s thumb, unlike songwriters and publishers.) Legislating this is the right thing to do and will especially help small and independent labels and artists. We are also leaving hundreds of millions of dollars on the table in almost every other country, since they pay this royalty, but don’t pay it to Americans because we don’t pay it to them. Keeping in mind that labels and artists have multiple income streams and are killing it in the digital world and terrestrial radio is in slow decline: Triage Class: really bad cold.
The Songwriter Equity Act allows rate court judges to look at the marketplace value of the SONG as compared to the sound recording, which they cannot by law do at the present time. This step would help change the 14:1 to 17:1 disparity in Sound Recording payments to Songwriter payments on streaming services like Pandora and Spotify. All indications are that streaming is the music consumption model of the future, as these services grow exponentially. If this is the case, and downloads and physical sales continue to decline, maintaining the status quo marks the end of the non-performing songwriter in America. These rates are unsustainable. No songwriter can subsist on these rates. Logically it also means America will no longer produce great performing artists who don’t write their own tunes, (Elvis, Sinatra, Strait.) The SEA is a very good interim step and vital to America’s Music. Triage Class: Stage 4 Cancer – something has to be done quickly.
Ironically, the answer to all these complex Copyright issues was expressed in a simple exchange today at a House Judiciary hearing. Chairman Goodlatte asked Register of Copyright Maria Pallante a very simple question? I paraphrase, “Should all these issues be left up to the free market, with strict attention to anti-trust concerns?” Ms. Pallante’s answer was, “Yes.”
It is the ultimate irony that songwriters, who are in my experience, the kindest, gentlest, least avaricious small business in America should be crushed beneath the governments regulatory thumb, while every other entrepreneur, business and industry is free to pursue Life, Liberty, and Happiness.
Though Paul Allen’s recent Tennessee Voice piece made some valid points, it omitted some very important facts regarding the current plight of music creators in Nashville. Yes, a terrestrial payment for radio is airplay long overdue for artists and labels. But the differences between these folks, operating under the 1978 Sound Recording copyright and songwriters and publishers operating under the original 1909 copyright are huge and grossly unfair to songwriters. This disparity in the ability to do business in a free market threatens to eliminate the non-performing songwriter as a viable part of American music. A world without Leiber & Stoller, Jimmy Van Heusen and Dean Dillon, means a world without Elvis, Sinatra and Strait
Like most American businesses, with the exception of songwriters and music publishers, the Sound Recording Copyright owner operates under the principle of willing buyer, willing seller. In fact, Big Machine Records has already negotiated several deals with big radio groups to pay BMLG artists for terrestrial airplay. Labels are also able to create multiple income streams, taking a piece of management, touring, merchandise, and even publishing income in 360 deals. All the non-performing songwriter has are his royalties, which are crushed under the heavy thumb of outdated government regulation.
In the only growth sector of music revenue, streaming, digital and satellite radio, Sound Recording copyright owners often make 14 to 17 times what the folks who created the words and music make. It’s as if you paid the people who painted your new car 17 times what you paid for the body, the engine, the wheels and the seats!
The 1909 songwriter copyright owners are handcuffed in their performance and sales income by government constructs such as Copyright Royalty Boards and Rate Courts, where the true value of their compositions are kept artificially low.
The most important piece of pending legislation for the health of American Music is the Songwriter’s Equity Act, which instructs these CRB’s and Rate Courts to take into consideration what other stakeholder are paid, something they are currently prohibited by law from doing.
American songwriters have survived for over a hundred years on the pennies on the dollar trickling down from the many business models that have grown up around the words and music that spills from our hearts and souls. We’ve made it through piracy, file sharing, and illegal downloads. We cannot survive on the micro-pennies that the 1909 Copyright Law tosses our way in the age of Pandora and Spotify.
In the world of “sync,” (putting music with commercials, film or video) the songwriter is like any other free American citizen. He can say yes or no to a negotiated price for his work, usually the same fee as the owner of the sound recording master. This is a fair model that encourages creativity by compensating all creators.
When it comes to the other two main income streams, Performance and Mechanical, with a very few hopeful exceptions, a professional songwriter is a sharecropper. He gets the share mandated by legislative and judicial decisions. He plants the seeds, the words and music, he puts in all the heart and soul and sweat to make his songs the foundation upon which the entire music ecosystem is built, but he can only earn what his landlords, federal rate court judges and royalty boards allow him to earn.
This is a completely different animal from the making and marketing of a sound recording. The Sound Recording Copyright allows the artist / businessman to sell his recording for whatever price he can get in the free market. That certainly sounds more “American” doesn’t it? Then the businessman / artist, who makes the recording pays the songwriter his government maximum (sharecropper) wage, no matter how much the record man charges for the sound recording. In the growing digital marketplace, this puts a MUCH higher value on the recording than on the song that makes the recording possible.
Songwriting, the creation of the words and music that mark the moments of our lives, may well be the only American business that is not allowed to negotiate and charge what its product is worth on the free market.
There is also no other American business that is forced to license and sell its product to anyone who wants to use it (compulsory license) at the price the government sets. Songwriters can either quit or take the share the master (as in master recording) is required to give us. We are not allowed by law to unionize, so collective bargaining is out of the question.
This is the land of the FREE but unfortunately for the American songwriter, master of the double entendre, only one meaning of the word applies. We’re a step up from slavery, we’re sharecroppers.
As our lawmakers contemplate a review of American Copyright, let’s all hope for and work toward a more simple and fair royalty system. The future of American Music depends on it.
I recently got to sit in with some of Music City’s entertainment industry power players for an introductory conversation with the new U.S. Secretary of Commerce, Penny Pritzker. She’s a music fan, interested in how our broken business works, but also a fan of the 30-something percent of the United States’ total exports that intellectual property represents. The Commerce Department has redefined our music as an asset and done a “green paper” analyzing problems and asking for input on solutions.
Cary Sherman from the RIAA was first of the group to speak, relaxed and eloquent as always, and after reminded us that the music industry has declined from a $15B business a decade ago to today’s$7B business today, Cary was rightfully proud of the strides the record industry has taken, adapting to the digital universe. Other record executives were also encouraged and hopeful, referencing their evolution into entertainment companies and expansion into new revenue streams. I’m with ‘em all the way. Music has done a better job than most IP industries adapting to digital life, mostly since we were the first endangered, so we’ve had more time. Fans, consumers and songwriters should all want the labels to do well. I know I made a lot more money when there were thirty labels in town than I do now with ten.
I’m a career songwriter who has seen both my mechanicals and performances royalties decline like a nickel rolling off a table. And I’m one of the lucky ones who’s still out there generating activity and getting cuts. Many of my contemporaries, some hall of famers have had to give it up. No money in it. So as I listened to everyone discuss their interests from the perspective of their slice of the pie, I did what songwriters do, slipped off into metaphor land.
The music business is a new car. The Sound Recording copyright is the body style, color, interior, stereo, blue tooth, cup holder part of the vehicle. During this tough decade plus, because of the miracle of free enterprise, the labels have been able to regroup, rebuild, renegotiate, bargain, and in general re-invent themselves. After all, the Sound Recording Copyright was largely a business invention, designed to stop unpaid reproduction of the recordings record labels invested in.
But the car’s engine is the SONG. What makes the car able to go is the words and music my peers and I come up with and can play on piano or guitar. Seems simple, just pull something from thin air and your emotions and create the motor that drives this music business. Aren’t cars a whole lot better because of the investment in engineering and redesign that makes their engines more modern, powerful and efficient? But the music business can’t do that. We’re a 2014 car with a 1976 engine.
Other than sync rights for film, TV and commercials, the Songwriter / Publisher Copyright is completely handcuffed by consent decrees, rate courts, and Copyright Royalty Boards. These government constructs tell us how much we are allowed to earn and when we have to take it. We can’t make the deals the Sound Recording folks can make. It’s interesting to note that in the sync world, the normal split between the song and the sound recording is 50 – 50. Makes total intuitive sense, doesn’t it. So, investment in the engine of music, the songwriter and publisher, is stuck in the past, a system that worked okay, (pennies are better than micro-pennies) when physical product sold and there was no piracy or streaming services. The songwriter / publisher makes between 1/14th and 1/17th of what the Sound Recording makes in digital streaming.
So, as we think about U.S Copyright Law and the music industry moving forward, we need to seriously consider both the cultural and commercial rewards (they go hand in hand,) of spending some time and money on R&D for the ENGINE – the SONG. In a healthy music ecosystem, there’s plenty of money to go around. I remember. Let’s rethink and restructure investment in songwriters and publishers as we’re keeping artists, record labels, and digital entrepreneurs on track for success. It’s not a zero sum game. Better songs = better music = a healthier music culture and more COMMERCE for a more creative America.
On a writing trip with Dusitin Lynch in Texas, Opening with Jason Sever
I recently had an interesting hour and a half coffee / conversation with Jamie McGee, who covers entertainment, technology and tourism for the Nashville Business Journal. It felt way more like a friendly exchange between two (new) old friends with similar interests than like an “interview.” And as opposed to many articles I’ve been questioned for, I read these two pieces and said to myself, “Wow, that’s just the takeaway I’d have wanted people to get.” Great job by Jamie Here are the links:
I was listening to a really cool “Ted Talk” the other day. It included interviews and comments from people doing SETI research, physicists, and scientists who know about quantum physics and all kinds of cool stuff about the nature of the universe. The discussion turned to “dark matter” as the fabric of the universe. It turns out this “dark matter” has an actual physical weight. One scientist was particularly fascinated by the fact that the number that expresses this weight is so small it’s beyond the comprehension of most research scientists, let alone the layman.
So the number in grams that expresses the weight of a particle of dark matter is: decimal point, 122 zeros, 1. It’s smaller than most of us can imagine, right? Not so for the professional songwriter, trying to figure out his royalties from services like Pandora and Spotify. We recently calculated that over 600 million streams on Pandora in one recent quarter added up to about $600 for five hit songwriters. So we have the “right” to a share of ad and subscription dollars, which is good, but the division of royalties, (1/17th of what labels get for songwriters on Spotify, 1/14th of the label share for Pandora) is so absurdly skewed, it’s nearly irrelevant. It’s like setting the federal minimum wage at a nickel an hour.
It’s clear to most predictors and pundits that “access” is the music model of the future. We want any music we want any time any place we want it. And we can have it. So let’s do a quick “divide the pie – 101.”
So today, essentially without that “big” mechanical, (the songwriter who’s not and artist, on a 3-way write, with a co-pub makes $22,750 on each MILLION copies his song sells. Without radio play, that’s IT!) Here’s how it breaks down:
Artist and Label have a double platinum album. Artist writes 7 of the ten songs on the Album, Artist tours, sells merch, gets Artist performance royalties from digital performances. His artist label royalty is between 12% and 18% per unit sold.
Songwriter, on a DOUBLE Platinum album: $45,550 in mechanicals. IF he gets a single, since he gets performances for terrestrial radio, another $50k to $250K.
That means if I write a big hit with an artist, I might be looking at $300k – $400k in publishing royalties.
The artist I wrote the song with gets the same publishing royalties, which is only fair. But wait, he ALSO gets digital artist royalties, add $200K, and Artist Label royalties, @ 16%, which, 2M albums is $320k per song.
On the strength of the songs, His touring and merch for he and his label can add up to another $10M to $20M a year for a mid level artist.
Songwriter / Pub with one hit that year (tough to get) ——————————–$244.5K
Artist (one song) – pub, $244.5K, Sound Exchange, $200 K, 1/10 of album artist royalties, $320K, 1/10 (one song) of touring & merch, $1.5M so for the SAME song,
Artist / Label ————————————————————————- $2,264,500.00
If you asked the person on the street if the creative work for an artist and label to make a sound recording for Spotify is worth 17 times more than the creative work the songwriters put in to creating the music and lyrics, what would he say? I really doubt that he’d agree with that huge difference in value, especially when you consider all the other income streams the labels and artists have available that the “stand alone “ songwriter doesn’t have.
Why can’t we put all the RECORDED MUSIC money into one bucket and divide it more like the iTunes model? ITunes pays about 2/3 of a $.99 download to the label, $.65. That seems fair to start with, but then the artist might get a dime, the songwriters and publishers split $.091 and the label gets the rest ($.40) If iTunes is happy with 1/3 of the take, why can’t this be the model for all digital payments going forward? The record label today has access to and takes full advantage of all the artist income streams mentioned above. The songwriter / publisher doesn’t touch any of that.
Digital Recorded Music Payment structure:
Content Provider: 1/3
Artist and Label: 1/3
Songwriter and Publisher: 1/3
This would not affect the publishing income of an artist /writer. In fact his publishing money would increase. The artist who doesn’t write would benefit from a thriving songwriting / publishing business with more great songs to choose from. America and the world would reap the cultural benefits of a larger more incentivized creative class.
Such a restructuring will require massive licensing reform and legislative changes. The music industry would have to play nicely together and do most of the work themselves. Most importantly, it would require a true appreciation of the men and women who actually make up the words and music that mark the moments of our lives.
The totally UNFAIR “Internet Radio Fairness Act” was defeated in Congress this week, thanks to efforts by NSAI, NARAS and other groups that support the value of music. So now Pandora, a great music service, can continue to pay artists and writers at least a small portion of what their work is worth. And Big Tech learns the lesson they’ve been trying to teach the music industry for years, they can’t legislate profits, they have to earn them.
This year overall music sales are up, digital tracks and album sales being the main factor, with the addition of the growth of on demand and subscription services like Pandora and Spotify. If we can get the royalty structures to make sense through marketplace negotiations, we could be on the verge of a new Guttenberg Era for America’s Creative Class. Musicians, tech and entrepreneurs CAN collaborate to satisfy consumers and maintain America as the wellspring of the world’s greatest music.
On November 15th and 16th I was invited to a private conference on Music Licensing by the Berkmann Center at Berklee College of Music on the Harvard University campus in Boston. Arriving in Cambridge, feeling the history all around me, knowing I was at the wellspring of our nation’s political and intellectual history was both daunting and inspiring. The architecture, statues, even the streets filled with eager, bright young students form around the world was an energizing force.
This was my first event as the Director of the Copyright Forum, thought I would soon discover that any notoriety I had was inextricably tied to my years representing songwriters as President of NSAI. Berklee and the Berkmann Center for the Internet and Society are by reputation very much the home of the open source, “free” thinking side of the more than a decade long copyright debates in this country. So I was expecting lively debate, to say the least. But as the day and a half conference went on I discovered one important concept. Despite the historic tension between the business / label side of the music industry and the tech sector, songwriters are like Sara Lee. Nobody doesn’t like songwriters.
So in this mixed bag of Internet and music biz luminaries, I was very much taken with the consensus that creators should be compensated. These are folks who start their businesses with a computer keyboard and an idea. They recognize the kindred spirits of songwriters, who start their businesses with a computer keyboard and an idea. Whether due to a growing wave of popular opinion, or a sincere belief in the concept, everyone there subscribed to the overarching tenet that creators of professional content must be compensated; a great starting point.
And the music community owes it to themselves to embrace the ideas of folks like Jeff Price, who founded TuneCore and Adam Pamess with Rhapsody, who have a sincere love of music, play by the rules, and know they can’t eat the goose that laid the golden egg. Even Joe Kennedy, CEO of Pandora, seems to be a music lover, though obviously greed has corrupted the good intentions of that outfit. He asked me my main concerns about Pandora right now, in a real attempt at meaningful dialogue. When I expressed that my main problem was his ASCAP lawsuit that would make the gross underpayment of the songwriter copyright, and the disparity between it and the sound recording copyright even worse, he commented that he couldn’t be expected to pay 44% of revenue to BOTH sides. I thanked him for refuting an argument that no one had ever made. I simply think that as professed music lovers and big licensors of music, Pandora might be helpful in rethinking the structure. That’s what we were there for.
Except for Pandora, the problem that Film and TV music supervisors, content aggregators, music services and video game companies share is not that they pay too much, or that they don’t want to pay creators for their music. It’s that it’s so difficult to get the rights to both copyrights for all those songs in an efficient and timely manner to start and grow their businesses. The most promising conversations I had were with Lee Knife, President of DiMA, the Digital Media Association. He gets it. My takeaway:
The Music Business needs the Tech Side’s help to create efficiencies in licensing.
The Tech Sector needs the Music Business to streamline licensing.
The Music Business doesn’t have any money.
The Tech Side has lots of money.
Wouldn’t it be a beautiful irony if the original vision of the ‘97 DMCA, a thriving Internet economy feeding a vibrant Creative Class, with consumers benefiting from great, affordable content, were to actually come to life? And wouldn’t it be cool if the same technology sector that some have said “destroyed” the music business helped to create a new, better music business?
It’s called collaboration. Songwriters do it every day.