Spotify Blog Post Insults Songwriters by Attempting to Deceive Them – A Fact Check

March 12th, 2019 by Amy Lee

Spotify released a blog post attempting to spin why it is fighting against songwriters and trying to reverse the CRB decision which granted songwriters only their second meaningful rate increase in history. Let’s fact check their blog:

SPOTIFY SPIN:  Is Spotify suing songwriters? No, Spotify is not suing songwriters. Spotify, Amazon, Google, and Pandora have each individually appealed the CRB outcome. The National Music Publishers’ Association, or NMPA, also filed an appeal. An appeal is the only avenue for anyone to clarify elements of the CRB ruling.

TRUTH: Spotify is appealing the decision of the CRB to the US Court of Appeals for the DC Circuit in order to reduce or eliminate the royalty rate increases granted to songwriters by the CRB.  It’s that simple.  Everything else –including Spotify’s attempt to describe its filing as “clarifying elements” of a ruling—is misleading spin.

Simple question for Spotify – do you want to reduce or eliminate the rate increase?  If the answer is anything but an unqualified “no”, then all songwriters should see right through Spotify’s attempt to divert and distract.  Further, NMPA made clear it would not appeal unless the digital services appealed first.  If the digital companies withdraw their appeal, so will NMPA.

SPOTIFY SPIN:  Does Spotify think songwriters deserve to be paid more? Yes – this is important to songwriters and it’s important to Spotify. The industry needs to continue evolving to ensure that the people who create the music we all love — artists and songwriters — can earn a living. The question is how best to achieve that goal.

TRUTH: Let’s start with the most obvious falsehood. Spotify put on a case at the CRB trial where it had an opportunity to propose any rate structure it wanted. Did Spotify propose paying songwriters more? No. Spotify actually proposed a REDUCTION from the old rates. If Spotify thinks songwriters deserve to be paid more, and it’s just a question of by how much and how best to achieve that goal, why did it propose to the CRB to CUT what songwriters earn?  Spotify claims songwriters deserve to be paid more, but Spotify fought in the CRB to cut rates, and now Spotify is fighting in an appeal to prevent the rate increase ordered by the CRB.  Spotify should understand that actions speak louder than words. There is no way to spin this Spotify.  

SPOTIFY SPIN:  Do you support the CRB rates? We are supportive of US effective rates rising to 15% between now and 2022 provided they cover the right scope of publishing rights. But the CRB’s 15% rate doesn’t account for all these rights. For example, it doesn’t consider the cost of rights for videos and lyrics.

TRUTH: Spotify’s answer is an attempt to trick you.  Let’s be clear, Spotify knows Section 115 doesn’t include the video and lyric rights of songwriters. So, Spotify tries to fool you into thinking it supports the 15% rate as long as it includes the “right scope” of rights, and then names two rights over which the CRB has no authority. The CRB ordered a 15.1% rate for ONLY the Section 115 mechanical reproduction rights structure. If Spotify wants the video and lyric rights of songwriters, Spotify knows it has to negotiate for those rights in a free market, on TOP of the Section 115 compulsory rate.  What Spotify is saying is that it doesn’t want to pay any more for your lyric or video rights, even though every other digital service must do just that.  No one should be fooled by this smokescreen.

SPOTIFY SPIN:  So why is Spotify appealing? The CRB rate structure is complex and there were significant flaws in how it was set. A key area of focus in our appeal will be the fact that the CRB’s decision makes it very difficult for music services to offer “bundles” of music and non-music offerings. This will hurt consumers who will lose access to them. These bundles are key to attracting first-time music subscribers so we can keep growing the revenue pie for everyone.

TRUTH: Let’s talk about “bundles.”  Spotify complains it will be difficult for music services to offer “bundles” of music and non-music offerings under the new rate structure.

Let’s be straight about how Spotify (and Amazon) want “bundles” to work. Say that Spotify wants to partner with a non-music service, like a gym. You join the gym, and pay $50 every month, and you get Spotify for “free”, something that would cost $10 a month if you paid for it alone. Let’s also say the rate stays at the 15% of revenue. For a music service alone, Spotify would owe the songwriters/publishers 15% x $10 which would equal $1.50. Simple, right?  So if the $10 Spotify service is “bundled” with a $50 a month gym membership, and the rate is 15%, how much should Spotify pay the songwriters/publishers?  Under the CRB ruling, Spotify would have to value the music service at $10 per month, and still owe $1.50. That’s what Spotify calls “flawed.”  So, how does Spotify want it to work?  Spotify wants to be able to “deduct” the value of the non-music value from the revenue pool, before applying the rate. So, if the gym membership is arguably worth $50, Spotify wants to claim that the value of the music service is then $0, and 15% of $0 is … well… you get the picture. 

Spotify tries to deceive songwriters into thinking “bundles”, a topic few people understand well, is driving its decision to appeal, and makes NO mention of intending to fight against the rate increase.  

SPOTIFY SPIN:  So what’s the right way to split the pie? Music services, artists, songwriters and all other rightsholders share the same revenue stream, and it’s natural for everyone to want a bigger piece of that pie. But that cannot come at the expense of continuing to grow the industry via streaming. The CRB judges set the new publishing rates by assuming that record labels would react by reducing their licensing rates, but their assumption is incorrect. However, we are willing to support an increase in songwriter royalties provided the license encompasses the right scope of publishing rights.

TRUTH: Ok – there is spin, and then there is black and white falsehood.  Spotify alleges the CRB judges “assumed” record labels would react to the publisher rate increase by reducing their rates. Not only is that not true, the judges wrote the opposite in their opinion.  For those who want to fact check, read footnote 75 on page 35 of the CRB’s Final Determination. The truth is that unlike songwriters, Spotify and record labels are in a free market. What Spotify pays record labels is negotiated between the parties. How those two parties split the 85% of revenue left over after paying songwriters and publishers their 15% of revenue is irrelevant and has no relationship to the value of the songs to Spotify’s business model. Simple solution – let songwriters and publishers negotiate the value of their copyright the same way that record labels do – but Spotify opposes that.

SPOTIFY SPIN:  We hope this helps explain why we took this step, and what you can expect from Spotify as the industry works together moving forward. These are hard issues but we will listen and be open about what we think. Our mission is clear: we want to help more artists and songwriters make a living doing what they love.

TRUTH: What can we expect from Spotify?  We can expect them to attack songwriters to cut what it pays them, and then try to deceive you about what it is doing.  Yes – Spotify’s mission IS clear. And for songwriters, and those who care about songwriters, our mission is clear too. This fight has just started. 

David Israelite: The Music Modernization Act Marks a New Era for the Music Industry

October 23rd, 2018 by Amy Lee

9/26/2018 by 

The Senate’s passage of the Music Modernization Act (MMA) is a milestone by any measure. It is also just the beginning.

To put into perspective how astounding the MMA’s progress has been, first note that the MMA is the only music bill that has ever passed unanimously in United States history. Not only did the bill pass the House of Representative and Senate without one dissenting vote, it did so in an area where no compromise has been found in decades.

The MMA process began 12 years ago when piracy was the biggest threat to the music industry. The 2006 Section 115 Reform Act (SIRA) contained the same fundamental compromise that exists within the MMA — the ability for digital services to license legally all music and the assurance that all songwriters and copyright owners will be paid properly. That effort brought together songwriters, publishers, artists, record labels and digital services, but unfortunately it fell short of becoming law. The goal was not lost however, and it led to the effort that became the MMA.

This was not easy — and by no means did it happen without strong disagreements — but it does prove that progress is possible when everyone has something to gain and all parties have more to lose without meaningful compromise.

The amended version of the MMA that passed the Senate has now been reapproved by the House and is on its way to being signed by the President. While it’s appropriate to take some time to celebrate this achievement, it’s also not too soon to think about what’s next.

The next step after the President’s signature is the promulgation of regulations — essentially the federal government will determine the parameters around the many concepts in the MMA and how they will play out. The groups involved in getting the MMA signed into law will be laser focused on ensuring that the rules put in place are fair and transparent.

Next, we will focus on the creation of the Mechanical Licensing Collective (MLC) which will be the central hub from which streaming services will obtain permission to use the millions of songs found on their platforms, and through which songwriters will be paid. This includes identifying, nominating and electing the members of the MLC’s board and developing bylaws and processes that will govern the collective.

Finally, the most important step will be the engagement of the music community in standing up and supporting the mission of the MLC. Never before have we committed as a unified community to delivering an open, accessible database to ensure musical work owners are paid and information — and the royalties stemming from that information — is not lost. This is a problem that has plagued our industry since its beginning and this is the year that we as a community work together to fix it.

The challenge of matching sound recordings to musical works and copyright ownership will not be solved overnight, but it can be solved. The only way to do this is with the knowledge and commitment of everyone involved. American music has given the world an incalculable cultural contribution, but the people creating that music have never seen the fair fruits of their labor.

Speaking of those individuals, while the MMA becoming law is meaningful for everyone from songwriters to legacy artists and engineers, the process by which it happened is in many ways more meaningful.

Music’s creators — historically less involved in the business and politics of Washington — have found their voice. In a town traditionally dominated by publishers and labels, lawyers and lobbyists, what is exciting is that the most powerful advocates have become the songwriters and artists.

Their grassroots movement was galvanized through the MMA — championed by the Nashville Songwriters Association International (NSAI) and the Songwriters of North America (SONA) and individual creators like Ross Golan, Ryan Tedder and Paul Williams who unleashed a righteous fury that is unprecedented. Calls to arms spread like wildfire and everyone from composers to major artists got involved and educated. The power of that creator army overwhelmed and outfought the powerful interests who opposed the MMA.

The MMA does not solve every problem in the music industry. There will always be more work to do. But the MMA proves that not only is it possible to enact transformative reform in an age and area of disagreement, but we will be working hand in hand with the creators who will benefit most from it.

Today marks a new era. An industry that was used to fighting internal battles has now become a unified force to be reckoned with.

David Israelite is the President & CEO of the National Music Publishers’ Association (NMPA) — the trade association representing U.S. music publishers and songwriters.

Link to article can be found here.

David Israelite: The Music Modernization Act Marks a New Era for the Music Industry

October 23rd, 2018 by Amy Lee

9/26/2018 by

The Senate’s passage of the Music Modernization Act (MMA) is a milestone by any measure. It is also just the beginning.

To put into perspective how astounding the MMA’s progress has been, first note that the MMA is the only music bill that has ever passed unanimously in United States history. Not only did the bill pass the House of Representative and Senate without one dissenting vote, it did so in an area where no compromise has been found in decades.

The MMA process began 12 years ago when piracy was the biggest threat to the music industry. The 2006 Section 115 Reform Act (SIRA) contained the same fundamental compromise that exists within the MMA — the ability for digital services to license legally all music and the assurance that all songwriters and copyright owners will be paid properly. That effort brought together songwriters, publishers, artists, record labels and digital services, but unfortunately it fell short of becoming law. The goal was not lost however, and it led to the effort that became the MMA.

This was not easy — and by no means did it happen without strong disagreements — but it does prove that progress is possible when everyone has something to gain and all parties have more to lose without meaningful compromise.

The amended version of the MMA that passed the Senate has now been reapproved by the House and is on its way to being signed by the President. While it’s appropriate to take some time to celebrate this achievement, it’s also not too soon to think about what’s next.

The next step after the President’s signature is the promulgation of regulations — essentially the federal government will determine the parameters around the many concepts in the MMA and how they will play out. The groups involved in getting the MMA signed into law will be laser focused on ensuring that the rules put in place are fair and transparent.

Next, we will focus on the creation of the Mechanical Licensing Collective (MLC) which will be the central hub from which streaming services will obtain permission to use the millions of songs found on their platforms, and through which songwriters will be paid. This includes identifying, nominating and electing the members of the MLC’s board and developing bylaws and processes that will govern the collective.

Finally, the most important step will be the engagement of the music community in standing up and supporting the mission of the MLC. Never before have we committed as a unified community to delivering an open, accessible database to ensure musical work owners are paid and information — and the royalties stemming from that information — is not lost. This is a problem that has plagued our industry since its beginning and this is the year that we as a community work together to fix it.

The challenge of matching sound recordings to musical works and copyright ownership will not be solved overnight, but it can be solved. The only way to do this is with the knowledge and commitment of everyone involved. American music has given the world an incalculable cultural contribution, but the people creating that music have never seen the fair fruits of their labor.

Speaking of those individuals, while the MMA becoming law is meaningful for everyone from songwriters to legacy artists and engineers, the process by which it happened is in many ways more meaningful.

Music’s creators — historically less involved in the business and politics of Washington — have found their voice. In a town traditionally dominated by publishers and labels, lawyers and lobbyists, what is exciting is that the most powerful advocates have become the songwriters and artists.

Their grassroots movement was galvanized through the MMA — championed by the Nashville Songwriters Association International (NSAI) and the Songwriters of North America (SONA) and individual creators like Ross Golan, Ryan Tedder and Paul Williams who unleashed a righteous fury that is unprecedented. Calls to arms spread like wildfire and everyone from composers to major artists got involved and educated. The power of that creator army overwhelmed and outfought the powerful interests who opposed the MMA.

The MMA does not solve every problem in the music industry. There will always be more work to do. But the MMA proves that not only is it possible to enact transformative reform in an age and area of disagreement, but we will be working hand in hand with the creators who will benefit most from it.

Today marks a new era. An industry that was used to fighting internal battles has now become a unified force to be reckoned with.

David Israelite is the President & CEO of the National Music Publishers’ Association (NMPA) — the trade association representing U.S. music publishers and songwriters.

Link to article can be found here.

 

Billboard Op-Ed: It’s Time for Facebook to Accept Songwriters’ Friend Request

January 17th, 2017 by Amy Lee

Facebook was built on sharing.

One of the most commonly shared things on Facebook is music. Specifically, covers of songs. Fan versions of hits have produced some of today’s biggest stars, but — there’s one problem, Facebook hasn’t licensed with any of the publishers who represent the songwriters behind that music. With views in the millions, it’s time for Facebook to answer songwriters’ friend request and properly license their platform. Otherwise, it may find itself de-friended by the music industry.

Since its launch in 2004, Facebook’s timeline has been dramatic. Today the company is valued at around $350 billion, with analysts projecting that going to over a trillion dollars in the near future. In the U.S. alone, Facebook currently has over 170 million users.

One of the reasons Facebook has been so successful is because it allows talent to travel fast. Likes propel videos to the top of friends’ and fans’ feeds. In a recent snapshot search of 33 of today’s top songs, NMPA identified 887 videos using those songs with over 619 million views, which amounts to an average of nearly 700,000 views per video. In reality, the scope of the problem is likely much greater because, due to privacy settings on Facebook, it’s almost impossible to gauge the true scale.

Additionally, while we don’t know the full extent of what is posted, we do know that engagement and viewership on Facebook often outpaces other social media video platforms. In fact, in a recent study of the popularity of copies of Adele’s music videos, of the 60,055 copies of “Hello” found that while “Facebook had only 64 percent of the number of copies published to YouTube, Facebook still garnered over two times more video views than YouTube. On average, Facebook racked up 73,083 views per video, whereas each YouTube amassed an average of 23,095 views per video.”

For these reasons, we wrote to Facebook in July of 2015, asking them to work with music publishers to ensure songwriters were respected and paid. At that time, Facebook was in the process of negotiating deals with major record labels in order to license the distribution of music videos, but had not yet approached publishers about also compensating songwriters. Unfortunately, over a year has passed and nothing has changed. Facebook has even added to its repertoire of broadcast capabilities. Facebook Live has launched, but due to the nature of live broadcasts, they are almost impossible to monitor. Today the live streaming platform produces millions of videos and billions of views.

Facebook’s inactivity and unresponsiveness has left publishers no other choice but to attempt to remove the music that amounts to stealing from their songwriters. To aid in this effort, NMPA and our member publishers have sent thousands of takedown requests, but this is merely a drop in the bucket.

For the most part, Facebook has remained passive in its approach and largely has left it to copyright owners to report cases of infringement rather than tackling the issue directly. Under the Digital Millennium Copyright Act (DMCA), which Facebook has claimed provides it with “safe harbor” protection from copyright liability, Facebook is responsible for terminating the accounts of repeat infringers. But these whack-a-mole efforts have been proven insufficient and ineffective. Issuing takedowns and haphazardly removing accounts of serial infringers are not long-term solutions.  More importantly, it is not what the music industry wants.

We have seen what Facebook may soon become in the form of YouTube. However, unlike Facebook, YouTube took steps to license with record labels and publishers. While the percentage they pay is only a fraction of what it should be, even that fraction today generates hundreds of millions of dollars for the music industry. Facebook would be wise to befriend songwriters and publishers as partners now — not pursue the path taken by other digital services who now find themselves at odds with the creative community.

The publishing and songwriting industries do not want to discourage fans from enjoying — and covering — their songs. They don’t want to take down videos or punish those who post them. Unfortunately, because Facebook has failed to license properly, it’s been the only recourse. This doesn’t have to be so.

Many digital music services have been down this road. Asking forgiveness instead of permission is a common path for tech companies. The reality is, songwriters and music publishers want Facebook and other tech startups to be successful, but creators cannot be a casualty of that success.  Facebook has been warned, and now must face the music and work on a solution. The breadth of Facebook’s influence is enormous — and an industry-wide settlement would empower the platform to encourage the legal sharing of its users’ talents.

Great artists and entertainers have been discovered by posting videos to social media and attracting an audience that eventually filled stadiums. This kind of organic, local-to-global music scene is vibrant and should be cultivated and grown. However, it can only happen if Facebook decides to recognize the important contribution of songwriters.

David Israelite is the President and CEO of the National Music Publishers’ Association (NMPA). Founded in 1917, NMPA is the trade association representing all American music publishers and their songwriting partners.

For full article on Billboard, click here.

David Israelite Op-ed in Billboard: America’s Songwriters Deserve Better Than This

July 8th, 2016 by Amy Lee

David Israelite, head of the National Music Publishers Association, argues that the Dept. of Justice’s recent pre-holiday decision is tone deaf at best, disastrous at worst.

The Department of Justice (DoJ) has dealt a massive blow to America’s songwriters. After a two year review of the consent decrees that govern ASCAP and BMI, career lawyers who were never elected nor confirmed to their positions, led by a lawyer who previously represented Google, determined that songwriters should have even fewer rights, less control over their intellectual property and be treated more unfairly than they already are. The Department ignored the voices of copyright experts, members of Congress and thousands of songwriters and delivered a huge gift to tech companies who already benefit from egregiously low rates.

When the DoJ began its review of the consent decrees, songwriters and publishers hoped for modifications and relief in the face of dramatic market changes to performance rights licensing which made it clear that fair royalty rates were not being paid. At best, we had hoped that the WWII-era decrees would be done away with to permit songwriters the same freedom to license works as other property owners enjoy. At worst, the decrees would be updated to reflect the current digital marketplace and give songwriters and publishers more flexibility to negotiate market-driven rates with global digital services. After all, the consent decrees were put in place before the transistor radio was invented. They were never meant to, nor could they envision, existing in a world of iPhones, streaming and instant access to practically all music.

Unfortunately, the DoJ went the opposite direction and chose the outcome most harmful to songwriters and the creative community.

The Department has determined that no changes will be made to the current decrees. And they have also now interpreted those decrees to demand that all works must be licensed on a 100 percent basis, meaning that the traditional and logical practice of fractional licensing — or licensing only the share of a song a PRO represents — by ASCAP and BMI will be done away with.

Regardless of how one feels about the profession of songwriting and the innate right a creator has to control their creation, any legal body should be deferential to the office created to examine and advise on copyright law. That body, the U.S. Copyright Office, was asked to weigh in on the DoJ’s proposed changes, and said that, “an interpretation of the consent decrees that would require these PROs to engage in 100-percent licensing presents a host of legal and policy concerns. Such an approach would seemingly vitiate important principles of copyright law, interfere with creative collaborations among songwriters, negate private contracts, and impermissibly expand the reach of the consent decrees.” The defiance displayed by these career antitrust lawyers in ignoring the legal opinion of the Register of Copyright is shocking.

In addition to disregarding the Copyright Office, the manner in which the decision was made and delivered was insulting to those most invested in the futures of songwriters. Members of Congress who had expressed interest in knowing the outcome of the review were apparently caught off guard and not given the chance to appeal to the Department. They were simply alerted that a determination had been made and given no recourse to reason with the DoJ.

Congressman Doug Collins of Georgia’s office said that the DoJ “sent an email to Congressional staff assuring that the review was not complete and that parties and stakeholders would have a chance to provide their views before the review was completed. However, reports from the meeting and DoJ’s own positioning appear to indicate that DoJ has already determined what direction they will take.” Additionally, Congressman Collins stated that the “Department of Justice’s position is arrogance at its worst.”

This move also threatens transparency because while songwriters may have chosen to join one PRO, now their payments may be coming from another. And if each PRO can license an entire song, even if it only controls a small portion of it, then licensees may have the ability to license where rates are lowest in a royalty race-to-the-bottom.

The DoJ does not have the protection of songwriters in their interest, so we must take this to another forum. Public opinion is powerful and the antitrust attorneys at DoJ must understand that their decisions will have a ripple effect through the fields of creativity for decades. In the coming weeks and months, it will be more important than ever to express the problems associated with the Department’s declaration, which was conveniently disclosed just before the holiday weekend.

As we’ve come to know all too well, Washington bureaucrats should not be in the business of regulating music as they are neither capable of understanding or fixing the problems they’ve created. We are hopeful that through our upcoming conversations, our allies in Congress who support the creative community, and ultimately the voices of those most affected, the creators themselves, we can find a path forward. Until then, there will be no justice for America’s songwriters.

David Israelite is the President and CEO of the National Music Publishers’ Association (NMPA). Founded in 1917, NMPA is the trade association representing all American music publishers and their songwriting partners.

Billboard op-ed link can be found here. 

BILLBOARD: NMPA Head Says ‘Free’ May Work for Pandora But is Devastating to Songwriters

September 24th, 2015 by Amy Lee

NMPA Head Says ‘Free’ May Work for Pandora But is Devastating to Songwriters: Op-Ed

 

In his editorial in Billboard on Wednesday, Pandora CEO Brian McAndrews writes that this is a transformative period in the music industry. On this we agree. Unfortunately Pandora is transforming the industry into a place where songwriters have no say in how their work is given away, and can barely make a living, all while the streaming giant touts the benefits of giving their music out for free.

Pandora argues that “all evidence indicates that the overwhelming majority of Americans cannot, or will not, pay a monthly subscription fee.” Perhaps one of the reasons many Americans do not pay for music is because Pandora has told them they no longer need to, since Pandora expects songwriters to subsidize its business by paying them almost nothing – and fighting to pay them even less.

Pandora’s CEO Explains Why ‘Free’ Music Is Worth So Much: Op-Ed

How egregious are Pandora’s payments to songwriters? Pandora is proud to point out that they have paid out $1.5 billion in royalties, but what it doesn’t disclose is that only a tiny fraction of that went to the songwriters who made their business possible. Today, while record labels and artists receive around 42% of Pandora’s revenue, songwriters and music publishers get only around 4%. Let that sink in.

Pandora is keeping 54% of its revenue, and sharing only around 4% with the creators who write the songs. That means Pandora believes that delivering songs over an Internet connection is somehow worth more than 13 times the songs themselves. There is no news, no sports, no weather, no comedy – only music. Yet the music creators get less than 5% of the revenue generated from the service.

It is a bold statement for a technology company to tell songwriters that what it is doing with the songwriters’ intellectual property is “good for them” while the songwriters vehemently disagree. Perhaps it should be up to the people who create the music to decide whether giving it away for free is the way of the future.Taylor Swift didn’t think so – which is why she pulled her music from Spotify. But because of how music is regulated by the federal government, Taylor Swift does not have any choice whether her music is given away on Pandora for free.

Swift famously said last year, “I’m not willing to contribute my life’s work to an experiment that I don’t feel fairly compensates the writers, producers, artists and creators of this music. And I just don’t agree with perpetuating the perception that music has no value and should be free.”

The truth is that when it comes to music streaming, subscriptions – even very low-cost ones – are the driving force for profit. Pandora’s paid users account for only 4.9% of listenership, but those 4.9% of users contribute over 20% of Pandora’s revenue. Spotify’s paid users account for 27% of listenership, and that contributes a whopping 91% of its revenue.  That is why it was such welcome news when Apple announced that its music subscription service does not have a free tier.

The other benefit Pandora boasts about its “freemium” model is exposure, however songwriters lose there as well. While Pandora claims it has upped ticket sales for touring artists – including those like The Rolling Stones who aren’t exactly struggling – remember that many songwriters who need streaming songwriting royalties to feed their families don’t tour, don’t sell merchandise and don’t sign endorsement deals. Improved ticket sales for artists don’t help the songwriters who write their hits, and who need it most.

How exactly does Pandora get away with its “freemium” service, all while pandering to music lovers in Billboard about how this is a good thing? Due to Justice Department regulations called consent decrees put in place during World War II, songwriters are not able to tell Pandora “no.” Pandora knows this, and is doing everything it can to keep the status quo. Instead of treating songwriters like business partners, as would happen in a free market, Pandora is actually fighting to reduce the tiny amount it pays songwriters through a three-front attack of litigation, lobbying and legal gimmicks like purchasing an AM/FM radio station in South Dakota to pay even lower royalty rates.

Ultimately, Pandora is correct that the Internet has opened up incredible opportunity for digital music platforms that enhance the industry for artists, songwriters and listeners. However, its defense of their “freemium” model leaves out the fact that it is devastating the songwriting community, which never consented in the first place.

There is a place for ad-supported streaming, subscriptions and other types of monetized music listening, but users should know the facts before listening to Pandora’s spins.

David Israelite is the President and CEO of the National Music Publishers’ Association (NMPA). 

http://www.billboard.com/biz/articles/news/digital-and-mobile/6707839/nmpa-head-says-free-may-work-for-pandora-but-is

 

Who Wants to Regulate Publishers? Tech-Funded Interest Groups Like ‘Public Knowledge’…

July 24th, 2015 by Charlotte Sellmyer

logo

Who Wants to Regulate Publishers? Tech-Funded Interest Groups Like ‘Public Knowledge’…

Thursday, July 23, 2015
by

David Israelite

 

The following response comes from David Israelite, President and CEO of the National Music Publishers’ Association (NMPA).   The NMPA is the trade association representing all American music publishers and their songwriting partners.

I read with interest the recent article by Sherwin Siy, speaking on behalf of the big tech companies that fund him, entitled, “The Argument for Regulating Music Publishers…”.

The only real “argument” for regulating music publishers is that doing so will allow giant digital services like Pandora and Spotify to continue profiting off of the backs of songwriters without having to pay them a fair market rate.

 

And just who is making this argument?  Public Knowledge calls itself a “consumer advocacy group”, however, despite its name, will not provide the knowledge to the public of who funds it.  The truth is that Public Knowledge is a Washington, DC interest group that lobbies hard against copyright protections and is funded by Big Tech interests that directly benefit from keeping songwriters regulated and under-paid.

 

Mr. Siy’s argument for more restrictions on songwriters and publishers is not only disrespectful to those who create the music that make his patrons’ businesses possible, it is downright foolish in suggesting that publishers, whose entire industry amounts to $2.2 billion in the United States, have too much market power against giant digital companies like Google, Pandora, Apple and Spotify who are valued at almost a trillion dollars.  In reality, songwriters have always been the David to digital music company’s Goliath, with government regulation keeping our hands tied.

In fact, today songwriters and publishers are the most heavily regulated sector of the music industry.  Over 75% of a songwriters’ income is regulated and restricted by the federal government, and this started long before Pandora and Spotify.

 

Right around World War II, the Department of Justice put in place forced agreements between the major Performance Rights Organizations, ASCAP and BMI, who dole out royalties to songwriters, and those who wanted to license music for their businesses.  These incredibly debilitating regulations were created before the Digital Age was even conceived of, and today have resulted in hard-working songwriters having no ability to say no to, or to negotiate with, streaming services like Pandora – meaning they are paid a meager $0.00009 per stream.  The decrees, which were enacted in an effort to prevent price-fixing, backfired, and now have predetermined below-market prices for songwriters across the entire industry.

These regulations are so limiting, even top songwriters cannot earn an honest wage.  Today, Pandora pays songwriters just around 4% of revenues, while paying record labels and performing artists around 50%, and keeping around 46% for itself.   That means simply to deliver a song over the internet, Pandora is paid more than 11 times the value of the song itself.  Clearly this is because songwriters and publishers have too much influence.

This anomaly exists because decades-old consent decrees prevent songwriters and publishers from licensing their work in a free market.  Today, if a songwriter does not like the government-mandated rate for streaming their songs, they cannot say “no”.  And due to the shift towards streaming by music listeners, soon streaming royalties are going to be all that matters.  Therefore, if we do not change how songwriters are paid by market-dominators like Pandora, we put the entire music-making industry at risk.

That’s why the Nashville Songwriters Association estimates we have already lost 80% of America’s songwriters.

The publishers who represent songwriters are on the front lines of this battle to give creators negotiating power.  Of course, this terrifies special interest groups like Public Knowledge whose supporters have enjoyed the government-set prices for music for many years.  Today, it is as if the major streaming companies expect songwriters to subsidize their businesses.  Everyone from small independent publishers, of which there are hundreds, to the major publishers, are in agreement that the market cannot work if songwriters continue to have no voice and no choice.

What publishers and songwriters are asking is to let the market decide what these rights are worth (if this sounds familiar, it’s because that’s how all other property owners do business).  Doing so would do the exact opposite of what Public Knowledge warns against – it will allow emerging streaming companies to be competitive with market-dominators like Pandora and Spotify by giving them the ability to negotiate deals to offer diverse services and songs to listeners.

Right now there is hope – the DOJ has seen how dysfunctional the music marketplace has become because WWII-era rules are regulating a completely different digital industry – and they are considering making changes.  The fact that someday soon, songwriters may actually be able to stand up to the giant tech companies that refuse to pay them fairly, and work with new entrants to the streaming market is hugely exciting for anyone who loves music.  Keep in mind – songwriters and publishers are not asking for more money – they are only asking for a fair market negotiation.

 

Public Knowledge will continue to try to cloud the issue with claims about how songwriters and music publishers have too much clout.

The reality is, if that were true, legendary songwriters like Pharrell wouldn’t be making $2,700 in songwriter and publisher royalties from 43 million streams of “Happy” on Pandora.

If songwriters and publishers had the power that Public Knowledge claims, they wouldn’t be fighting this decades-long battle for songwriter freedom in the first place.  After all, an interest group led by the former Director of Global Public Policy at Google – one of the world’s largest tech companies – writing pieces about the dangers of monopolistic power is almost as ironic as a group called Public Knowledge offering misinformation in the name of transparency while refusing to disclose from where their funding comes.

Top image by Racchio, licensed for commercial use under Creative Commons Attribution 2.0 (CC by 2.0).                                   

http://www.digitalmusicnews.com/permalink/2015/07/23/who-wants-to-regulate-publishers-tech-funded-interest-groups-like-public-knowledge