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.
Tag: Statutory Mechanical
@tnnaterau: Nashville songwriters rip Sony over royalties
The executive director of Nashville Songwriters Association International sent a blistering letter Wednesday to the CEO of Sony Music over the record company’s decision to intervene in rate-setting hearings for digital services such as Spotify, Apple Music and Tidal.
Songwriters and publishers are in the early stages of pleading their case for an increase in royalty rates for interactive streaming services. Sony Music is the only record label to intervene in the case. NSAI Executive Director Bart Herbison said in his letter to CEO Doug Morris that Sony’s “proposal to the (Copyright Royalty Board) would actually lower the rates songwriters currently receive from digital interactive streaming services.”
Morris has said his goal is to increase the rate that Spotify, Apple and other interactive streaming services pay.
@RobertBLevine_ : Apple Proposes Simplified Statutory Licensing Scheme to D.C.
Further reading from Chris Castle on music tech.solutions: Are Legacy Revenue Share Deals More Trouble then They Are Worth?
“It’s entirely possible that the transaction costs of reporting royalties in revenue share deals (including productivity loss and the cost of servicing songwriters and artists) likely exceeds the royalties paid. My bet is that the costs vastly exceed the benefits.”
Robert Levine’s post about Apple’s new proposal for a simplified mechanical royalty rate for streaming services:
This afternoon, Apple submitted a preliminary proposal to the U.S. Copyright Royalty Board to simplify the way music-streaming companies pay songwriters and publishers — in a way that could make it more expensive for rivals like Spotify and YouTube to keep offering free streaming.
Right now, streaming companies pay songwriters and publishers between 10.5 percent and 12 percent of their overall revenue, according to a complicated formula. (Labels and other owners of recording copyrights negotiate their own terms.) The money is divided into public performance and mechanical royalties, then paid to collecting societies and publishers.
Apple, which has always had a gift for creative simplicity, wants to make this process easier and more transparent, according to a copy of the filing obtained by Billboard. The company’s proposal to the Copyright Royalty Board suggests a simple, “all-in” statutory rate that would be “fair, simple and transparent, unlike the incredibly complicated structure that currently exists.” It suggests a rate of $0.00091 per interactive stream, or 9.1 cents per hundred plays. The songwriting royalties for 100 streams would equal those for one download, which has an appealing simplicity.
Apple’s suggested royalty structure would make accounting simpler and more transparent, but it would also make it more costly to run a free service, since streaming companies would have to pay a minimum rate, rather than a percentage of revenue.
@sisario: Apple, in Seeming Jab at Spotify, Proposes Simpler Songwriting Royalties
Apple, in a government filing on Friday, proposed simplifying the highly complex way that songwriting royalties are paid when it comes to on-demand streaming services like Apple Music, Spotify and Tidal.
According to Apple’s proposal, made with the Copyright Royalty Board, a panel of federal judges who oversee rates in the United States, streaming services should pay 9.1 cents in songwriting royalties for every 100 times a song is played. This formula would replace the long passages of federal rules for streaming rates, which often leave musicians bewildered about just how the money flows in streaming music.
But even in this seemingly innocuous proposal, which was not made public but was obtained by The New York Times, Apple’s target is clear: Spotify, its archenemy in streaming music. The proposal would significantly raise the rates that Spotify pays, and the filing includes lines that are clearly directed at Spotify and its so-called freemium model.
“An interactive stream has an inherent value,” Apple wrote, “regardless of the business model a service provider chooses.”
A spokeswoman for Apple confirmed the filing but declined to comment further.
Apple’s streaming service, Apple Music, was introduced a year ago, and it has earned the support of many power players in the music industry — including Taylor Swift — because it does not offer a free version, but instead charges about $10 a month. Spotify, begun in Europe in 2008, has both free and paid versions. This has led to a tense relationship with record companies and music publishers, who say the service’s free tier does not pay enough in royalties and devalues their music across the board.
Read the post on the New York Times.