Why Is It So Hard To Get Paid In the Music Industry?

Guest Post: Why Getting Paid In The Music Industry Is So Complicated, And How It Can Be Better

Guest Post: Why Getting Paid In The Music Industry Is So Complicated, And How It Can Be Better

 

David Balto is a lawyer and consumer advocate based in Washington, D.C., who previously served as the policy director of the Federal Trade Commission.

In Recording Academy CEO Neil Portnow’s recent op-ed called The Penny Paradox, he asked, “Isn’t a song worth more than a penny?” The problem, as outlined by Portnow, is that artists aren’t being paid enough for their work. However, this is a gross oversimplification of a more complicated issue of payment in the music industry. An issue that, unfortunately, consumers (and artists) are caught in the middle of as powerful and less powerful interests fight over how to divide payments amongst themselves.

When Portnow is talking about a song being worth a penny he is, of course, not talking about someone being able to own a song for an actual penny. He is talking about the cost per listen of a single license. An interactive music streamer like Spotify needs two licenses to serve a single song to a customer, and three licenses under certain circumstances. When a consumer buys a song, they make one payment and own it forever. Streaming a song is not ownership, and royalties must be paid for each listen.

This leads to a complex picture of how artists earn money. They can get one payment from a fan that buys their album or a recurring payment as a fan continues to play their songs on a streaming service. Artists can also get paid both ways from a single fan — a correlation between internet radio “spins” and sales were found in 2014.

It gets even more complicated. Artists own different copyrights and get paid differently based on whether they wrote the song and/or recorded the song. They deal with different middlemen and the licensing is handled through different organizations: SoundExchange for sound recording rights, a publishing rights organization like ASCAP or BMI for the performance right and individual publishers for each song’s mechanical rights.

ASCAP and BMI are currently regulated through agreements made with the Department of Justice that are regulated by federal courts which stress fairness and transparency. These agreements were necessary because collective bargaining — like that done through ASCAP and BMI — is illegal under antitrust laws, but all parties considered it necessary to have a collective bargaining system to cut down contracting costs in a complex industry. In other words, it’s a narrow exception to the general rules of a competitive market.

And now it’s getting even more complicated. Publishers, some of which have market power, are lobbying the DOJ to make changes in the consent decrees to allow them to withhold music from radio, venues and streaming services. These changes would let publishers jump out of ASCAP and BMI when it suits them. So much for fairness and non-discrimination. And so much for fair prices for consumers.

Publishers will also be able to agree amongst themselves not to license a performance right unless all owners of a copyright assent. This will give even small owners of a copyright complete control, not just over performance rights but over the sound recording as well. If a five percent owner of the performance rights to Justin Bieber’s “Love Yourself” refuses to license, for instance, that not only affects other owners of the performance rights, but also Justin Bieber’s royalty payments for the sound recording. A music user has to license all rights to play a song, and if any fractional owner had veto rights they would be able to control the destiny of the entire song and every sound recording, not just what they own.

This didn’t matter when radio and venues could contract with ASCAP and BMI, each of which has to license to all comers at a fair rate. But in a world where publishers can be in and out of ASCAP and BMI, it suddenly matters a great deal. This has the potential to not only hurt consumers, but also artists who can’t get their song played because an owner of a small piece of it refuses to license. Ultimately, both consumers and artists will lose.

I do not agree with Portnow on the simple solution that payments for songs need to increase. This is the solution before the DOJ right now, and it will likely lead to tremendous harm to consumers and potentially artists (we don’t know how much of that increase, if any, will filter through to them and how much will be pocketed by the powerful publishers). However, I do agree that we can do better and that solutions must come from Congress.

Congress, for example, could set up a one-stop shop for the complete bundle of rights needed to play a song, and all the rights owners could divide those payments among themselves. This would make it easy to agree on a payment that is good for artists while still allowing streaming services to be profitable (important after the Copyright Royalty Board’s rate increase led to the closure of many smaller independent and local services). Congress also has many more options to make sure the most vulnerable parties, consumers, and artists, are protected.

Article Via Billboard.Biz

 

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CD Baby: $58M in 2013 Revenue

And WHY aren’t you using CD Baby Anymore…..

CD Baby has shared some behind the scenes stats that also provide a seldom seen view of the vibrancy of independent and D.I.Y. music.

The company currently distributes 5 million digital tracks on behalf of 330,000 artists. In 2013, those artists generated $58 million in revenue, up from $53 million in 2012. This year, 77% of artist revenue came from were digital downloads, 8% from streaming and 15% from physical goods.

Physical good sales stats would not include at direct and at-gig sales and other transactions made outside of CD Baby‘s distribution network.

CDBaby-Infographic_FINAL

via our friends @hypebot

So I ask you again….Why Aren’t You Using CD Baby?

Give Us Feedback……

Top 10 Music Marketing Trends for 2012

2012 Music Marketing Trends

2012 will be a year of opportunities for the artist who isn’t afraid to embrace all aspects of the digital lifestyle. The successful artist will be the one who is not afraid to take chances and be creative in the online world.

Here are some of the Top Trends in Music Marketing for 2012

1.   MONETIZE MUSIC

  • Facebook‘s “Listen With” feature will be a great asset to artists and encourage streaming service usage and subscriptions.  This will also help artists accrue fans to whom they can publish news feed links to concert tickets, merchandise, and their websites. Driving traffic to these additional revenue streams is crucial since streaming royalties are a very small fraction of a cent per listen.
  • Sync licensing of music for uses in traditional broadcast media, film, and on YouTube will put some $$$ in the pockets of many artists.
  • Artists will continue to make money from the non-digital aspects of music such as tapes, CDs, live shows, events, appearances, collaborations, and, of course, merchandise will continue to offer musicians new ways to make money.
  • Direct-to-fan This is not easy or fast, but necessary.  Sales will coexist with “traditional” online retail outlets to offer places for consumers to find, hear, and buy music.
  • Fan Funding is a great way to generate funds. The key here….the building and maintenance of  your fan base.

2.   MUSIC SUBSCRIPTION SALES WILL CONTINUE TO BUILD

Subscription-based streaming sites (Spotify, Rhapsody, Rdio, MOG, Slacker) are great for music consumers but not necessarily the artists. The key here…find new and creative ways to get your fans to share your music and then focus on diversifying your revenue streams!

 

3.  GO MOBILE 

We all know that the mobile-thing is not new but it will soon become your #1 source for creating content and engaging with your fans.  Smart artists/marketers will need to have a mobile strategy moving ahead.

 

4.   LOCATION-BASED MARKETING

As location awareness becomes more prevalent and seamless in mobile technology, artists will be more in tune with where fans are. The places you love say a lot about who you are. So if fans are able and willing to share geosocial info, musicians can perform and interact with their fans at places their fans love the most.

 

5.  BEFORE WE GO ON….please make sure that you are actually marketing good music!  Need I say more? (I do, but will save it for another post!)

Ok…..

 

6.   MERGING PLATFORMS

A digital and connected life has become the norm.  With all of our gadgets, software, games, smartphones, etc. – it only makes sense to merge all of the various platforms we all use.  For example, attend an event, sign up for a mailing list and simultaneously link your Facebook account, or opt in to receive text message alerts, and so on.

 

7.  LIVE PERFORMANCES in SMALLER VENUES 

It’s crucial for artists to do live performances in order to connect with their fans on a more authentic level and to move outside of the digital clutter on the internet and other devices.  Remember to work each show with a plan and a purpose.

This will happen in a more intimate setting specifically targeting fan-based crowds and music supported by a more deeply defined audience.  Focus is more on the niche than the numbers.

 

8.  BEING OVERWHELMED

If you’re pushing a grass-roots campaign or focused on a DIY strategy…unfortunately, this is a feeling you will be all too familiar with in 2012. Without a lot of money, large staff, or an abundance of time – organization, prioritization, and creativity are your best and most reliable avenues.

There are way too many social networks,new tools and services out there that becoming overwhelmed is very easy if you aren’t in control. Don’t do like so many others… sign up for everything, forget about it, and use nothing.

Stay Positive….”The positive thinker sees the invisible, feels the intangible, and achieves the impossible”!

 

9.   FOCUS ON THE BASICS 

Remember, the core fundamentals of music are still the same – meaning, the main focus will always be to build your fan base. Best tools…your website (Is it consistently updated?), your mailing list (Is it growing? Do you communicate regularly?) and your products (hopefully you’re offering more than music)!

 

10.   HUSTLE, HUSTLE, HUSTLE!

The successful artist will do what others are not willing to do. There are no quick and easy ways (no matter what anyone tells you) but in this digital world…all of the tools and resources are available and at your disposal. Use them.

Now Get To It!

We’ll be looking for you in our digital world!

Need help? Contact Us!

 

Coming up…”How To Know If You Are Promoting the “Right” Song?”

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