For some reason, there’s a focus at the moment on songwriter royalties and in particular for streaming royalty rates. Notice that I said “rates” not “share” or the one I find particularly irritating, “share of the pie.” Let us be clear—there is no “pie” there are only “rates”. Or should be. Let’s investigate why.
To frame this idea (speaking for the U.S. market), let me take you back to a conversation I had with a Nashville session musician and hit songwriter many years ago back before physical mechanical royalty rates were frozen.
He looked at me and said, “Why do I have to take this government cheese royalty rate? I get double scale when I play a date, why can’t I get double stat?”
What he was really saying was why can’t I set my own price as a songwriter for mechanical royalties? And the answer is the same today as it was then: Because songwriters allow the U.S. government to set the price and terms for mechanicals. Or rather the “minimum statutory rate” which is a joke because the “minimum statutory rate” has never been a minimum, it has always been both a minimum and a maximum.
There has also long been an obsession with songwriters and publishers comparing their rates to what artists and record companies get. This comparison was only compounded in the digital era particularly for interactive streaming. If you combine song rates and recording rates, some people get a pie. Other people (like me) get an error message. I’ll explain why.
After a decade in which it seemed like illegal downloading had made it all but impossible for record companies to eke out a profit, recent years have seen things improve for the music industry. The rise of streaming services like Spotify have helped restore the major labels—now fused into three massive conglomerates—to their nineties-era wealth, with untold riches beckoning on the horizon. Despite this, the situation for musicians has never been grimmer. Streaming has failed to match the income that artists once garnered from album sales. Constant touring has replaced some of this, but for many, especially older performers, it can’t make up the gap.
While musicians struggle to bring attention to these untenable conditions, the industry’s C-suite has focused their efforts elsewhere. As firms like Spotify and Pandora glided to multi-billion-dollar valuations, hailed in the press as “saviors” of the industry, they failed to pay for all of the intellectual property on which their products were based. This gave rise to a slate of expensive and potentially destabilizing litigation that threatened such companies—and the major labels’ projected earnings. Faced with these pressing concerns, record label executives, music publishers, tech moguls, and telecommunication lobbyists came together to create legislation to address what they perceived to be the pitfalls of music’s new digital economy.
See the helpful HFA rate charts to explain how mechanical royalty rates are calculated.
The coordinated moves by Silicon Valley to silence Donald Trump are having unintended consequences, but consequences that the legions of Big Tech lawyers must have thought through. Setting aside the fact that they took down so many accounts so quickly on Twitter that they must have been working from a list prepared long ago, and setting aside the obvious collusive signaling by the Big Tech oligarchs that bad things might happen to anyone who didn’t follow suit (anyone remember SOPA and GoDaddy?), there are existential issues for these companies regarding Senator Ron Wyden’s singular legislative achievement, Section 230 of the Communications Decency Act.
European Commissioner for Internal Markets Thierry Breton sets out this discussion–can one call a statement of fact an argument?–in an op-ed posted in Politico’s European edition titled Capitol Hill — the 9/11 moment of social media. Although 9/11 was the Internet’s 9/11 moment, I take his point. However, as Mr. Breton makes clear, Europe is proposing legislation in the form of the Digital Services Act that would hold Big Tech accountable way before there’s a riot.
Mr. Breton writes:
The dogma anchored in section 230 — the U.S. legislation that provides social media companies with immunity from civil liability for content posted by their users — has collapsed….
Regardless of whether silencing a standing president was the right thing to do, should that decision be in the hands of a tech company with no democratic legitimacy or oversight? Can these platforms still argue that they have no say over what their users are posting?
While it may be “too soon” to have these clear eyed discussions that Mr. Breton forces us to face up to, it is important to understand his essential point. These are not lemonade stands. Apple, Facebook, Google and Amazon are well known defense contractors. Amazon has suffered during the Trump administration in its quest for a place at the government trough. All of these companies that are participating in crushing their competitor Parler have skin in the Section 230 game and opposing any legislation to roll it back. Any lobbyist who’s being candid with you will acknowledge that stopping legislation to roll back Section 230 is at least a two Tesla job if not a two Gulfstream job with a Vineyard house bonus.
So let’s heed Mr. Breton’s admonishment to focus on what really just happened. They all acknowledged they don’t qualify for Section 230 anymore and Europe intends to hold them accountable. As he says:
These last few days have made it more obvious than ever that we cannot just stand by idly and rely on these platforms’ good will or artful interpretation of the law. We need to set the rules of the game and organize the digital space with clear rights, obligations and safeguards. We need to restore trust in the digital space. It is a matter of survival for our democracies in the 21st century.
Europe is the first continent in the world to initiate a comprehensive reform of our digital space through the Digital Services Act (DSA) and the Digital Markets Act, both of which the European Commission tabled in December. They are both based on one simple yet powerful premise: What is illegal offline should also be illegal online….
The DSA [gives] online platforms clear obligations and responsibilities to comply with these laws, granting public authorities more enforcement powers and ensuring that all users’ fundamental rights are safeguarded.
With the DSA, Europe has made its opening move. Our democratic institutions will work hard and fast to finalize this reform. But the challenges faced by our societies and democracies are global in nature.
.Any guesses on who is fighting the DSA with all guns blazing?
[Editor Charlie sez: We all owe a huge thank you to the massively effective campaign by the Copyright Alliance to pass the CASE Act and outflank the unscrupulous grift by Senator Data Center (@ronwyden) and Google’s Army of the Dead. Their summary of the terms of the new copyright small claims court in the CASE Act is a must read!]
On December 27, creators across the country collectively celebrated as the CASE Act was signed into law. Naturally, many of you have questions about the how the new small claims process will work. Below, we answer some of the questions we’ve heard so far, and provide some need-to-know details.
Read the post on the Copyright Alliance blog.