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.
Save the date! September 25, 2020 at 1:35 pm ET Chris Castle will moderate a panel for the Music Business Association Entertainment & Technology Law Conference, an online event. Registration is required at the even site.
Panelists are Rick Lane, CEO, Iggy Ventures, LLC, Gwendolyn Seale, Attorney, Mike Tolleson & Associates, David Sterns, Partner, Sotos Class Actions, and Trent Teyema, Principal, Global Threat Management and former FBI Special Agent.
The panel will cover:
1. TikTok Data Functionality: Trent and Chris
2. The TikTok Executive Orders: Rick and Chris
3. Copyright Infringement on TikTok: Chris and Gwen
4. Copyright Infringement Class Actions in the US and Canada: Chris and David
The meltdown of WeWork’s CEO and Mark Zuckerberg’s bizarre threat to sue the U.S. offer a teachable moment: When you concentrate vast and unaccountable control over major companies in founders — no matter how creative or capable — bad things happen.
In Silicon Valley, the problem starts with “supervoting” stock structures that let the CEO (mostly) boy wonders raise mountains of cash from star-struck investors without giving up meaningful control over the company. The trick is a gimmicky “dual-share” stock structure in which the insiders’ own shares have powerful voting rights but ordinary investors are stuck on the sidelines. SEC Commissioner Robert Jackson has warned this dual class in effect creates “corporate royalty.”George Orwell would probably say it’s just another example of the “Some Animals Are More Equal Than Others” corruption that eventually poisons pretty much every revolution.
Attorney and artist advocate Chris Castle received a confirmation via tweet that the Official Receiver was also tasked with determining “the cause of its failure.” Further, “if unacceptable conduct is identified she can seek to have the directors banned from running other companies for up to 15 years.” That’s not exactly the punishment that those affected had hoped for it wrongdoing is proven but also does not rule out further legal or government action against the PledgeMusic board and executives.
SoundExchange’s new Music Data Exchange (MDX) is a promising idea that gets at the real problem with mass infringement of songs by digital services. It also gives some hope of actually reducing the “pending and unmatched” (or “black box” in the vernacular) at the source–before the songs are infringed.