Radio’s relationship with the music industry has changed dramatically in a few short years.
In its prime, radio was the dominant medium for music discovery – both new hits and back catalog. Today, radio exists in a sea of options and online alternatives for music enjoyment.
For many people, radio is no longer the primary source for listening to music. Indeed, radio’s most frequent listeners are 20% to 30% less valuable to the music industry (in terms of per capita expenditures) than less frequent listeners.
“RATHER THAN RESIST THE DIGITAL AGE, RADIO MUST EITHER RIDE THE DIGITAL WAVE OR HAVE IT CRASH ON TOP OF THEM.”
We urge radio to adapt to the new digital reality because the global music ecosystem is better off with a vibrant, innovative broadcast radio industry.
But time is running out for broadcasters to change the way they do business.
New “CLASSICS” act is one of several before the 115th Congress seeking to fix laws hurting music creators
The music industry is on the road to recovery. Dramatic revenue declines, which plagued the business for more than a decade, have begun to turn around, driven by streaming and other digital formats. This development has been hard fought and is the result of a concerted multi-year industry effort to embrace new monetization opportunities. This road to recovery, however, is long and our journey is far from complete. Revenues are still significantly below the industry’s peak, and our public policy is far from where it should be.
In Washington, D.C., we have been working with the entire music industry, service providers and lawmakers on both sides of the aisle to reform public policy and fix antiquated laws that harm America’s music creators.
This effort is starting to bear fruit. Several bills have been introduced in the 115th Congress that seek to fix problems with the way our laws treat music creators. We hope that these bills are emblematic of a positive change in the policy environment. Each bill is a step along the way, fitting into a larger vision of reform to repair our laws’ historical mistreatment of music creators.
[Editor Charlie sez: This is why audits are important.]
In 2015, SoundExchange filed suit against Muzak, a wholly-owned subsidiary of Canada’s Mood Media Corporation, for underpayment. The lawsuit arose from Mood Media’s attempt to acquire new music services and pay for the use of sound recordings on these services at grandfathered, below market rates which were intended for a very limited set of companies. On April 25, 2017, the D.C. Circuit ruled in favor of SoundExchange.
Commenting on the ruling, SoundExchange President and CEO Michael Huppe said:
“On behalf of music creators, we are gratified by the D.C. Circuit’s ruling in our favor today. This important decision rejects Muzak’s effort to expand its limited grandfathered eligibility for below-market rates. As the Court properly recognized, Muzak’s position ‘threatens the very purpose of the [Digital Millennium Copyright] Act.’ Looking ahead, the decision will help SoundExchange continue its efforts to ensure that recording artists and rights owners receive proper compensation when their creative work is used.”
Technical background on the case
The passage of the Digital Millennium Copyright Act of 1998 (DMCA) set forth under the law that most subscription services (e.g. those services that deliver music content to cable and satellite television providers) would have their statutory rates set by a fair market value standard (i.e. willing buyer, willing seller). When the DMCA was passed, a small handful of “pre-existing” services, including Muzak and their provision of music to Dish Network, were grandfathered into an outdated standard for setting royalty rates – a standard that frequently results in artists and labels being paid less than a fair rate.
In 2011, Muzak was purchased by Mood Media who, in turn, also purchased DMX, a Texas-based company that also provided music for cable and satellite television networks, including DirecTV. DMX had previously been licensing music under the regular fair market standard. In 2014, Mood Media moved DMX’s cable and satellite music service contracts (including DirecTV) to Muzak, thereby converting a large part of DMX’s former business into a faux “pre-existing” service and dramatically slashing what it paid for the use of the music it was providing.
[Editor Charlie sez: Insightful must-read artist rights interview with Mike Huppe, the CEO of SoundExchange.]
During the following interview, held at the Omni Hotel in Nashville, we covered a variety of topics such as what Huppe calls the AM/FM Artist Loophole, the DMCA Safe “Ocean,” internet enabled auto dashboards and the organization’s new ISRC online searchable database. Read On…
NEKST: Do you expect SoundExchange’s distribution growth will continue?
Mike Huppe: We’ve had unbelievable double digit growth for the past 7 or 8 years which won’t continue forever, but we are on track to have another up year in 2016. We paid out about $803 million last year and should be in the mid-$800s this year. It will naturally level out as we get bigger and the market matures.