How Spotify (and others) Could Have Avoided Songwriter Lawsuits, Ask The Labels.

This is simply a story about intent. Daniel Ek is the co-founder of Spotify, he was also the CEO of u-torrent, the worlds most successful bit-torrent client. As far we know u-torrent has never secured music licenses or paid any royalties to any artists, ever.

Spotify could have completely avoided it’s legal issues around paying songwriters.  The company could have sought to obtain the most recent information about the publishing and songwriters for every track at the service.  The record labels providing the master recordings to Spotify are required to have this information. All Spotify (and others) had to do, was ask for it.

Here’s how it works.

For decades publishers and songwriters have been paid their share of record sales (known as “mechanicals”) by the record labels in the United States. This is a system whereby the labels collect the money from retailers and pay the publishers/songwriters their share. It has worked pretty well for decades and has not required a industry wide, central master database (public or private) to administer these licenses or make the appropriate payments.

This system has worked because each label is responsible for paying the publishers and songwriters attached to the master recordings the label is monetizing. The labels are responsible for making sure all of the publishers and writers are paid. If you are a writer or publisher and you haven’t been paid, you know where the money is – it is at the record label.

Streaming services pay the “mechanicals” at source which are determined by different formulas and rules based upon the use. For example non-interactive streaming and web radio (simulcasts and Pandora) are calculated and paid via the appropriate performing rights society like ASCAP or BMI. These publishing royalties are treated more like radio royalties.

The “mechanicals” for album sales from interactive streaming services are calculated in a different way. It is the responsibility of the streaming services to pay these royalties. CDBaby explains the system here and here. Don’t mind that these explanations are an attempt to sell musicians more CDBaby services, just focus on the information provided for a better understanding of this issue.

Every physical album and transactional download (itunes and the like) pays the “mechanical” publishing to the record label directly, who then pays the publishers and writers.  This publishing information exists as labels providing the master recordings to Spotify have this information. All Spotify (and others) have to do, is ask for it.

Record labels have collectively and effectively “crowd sourced” licensing and payments to publishers and songwriters for decades. Why can’t Spotify simply require this information from labels, when the labels deliver their masters? It’s just that simple. Period.

The simple, easy, and transparent solution to Spotify’s licensing crisis is to require record labels to provide the mechanical license information on every song delivered to Spotify. The labels already have this information.

The simple solution is for Spotify to withdraw any and all songs from the service until the label who has delivered the master recording also delivers the corresponding publisher and writer information for proper licensing and payments. Problem solved!

No need for additional databases or imagined licensing problems. Every master recording on Spotify is delivered by a record label. Every record label is required by law to pay the publishers and songwriters. This is known and readily available information by the people who are delivering the recordings to Spotify!

There is no missing information, and no unknown licenses. Why is this so F’ing hard?

This system would mean that the record labels would have to provide this information. It’s also possible that some of that information is not accurate. Labels would probably fight against any mechanism that would make them have to make any claims about the accuracy of their data, which is fine. If it’s the most update information it’s a great place to start.

Of course, we know that both sides (both labels and streamers) will reject any mechanism that introduces friction into the delivery of masters. However, with the simple intent of requiring publisher and songwriter info for every song master delivered there will no longer be a problem at the scale that currently exists.

To be completely fair to Spotify they did work to make deals with the largest organizations representing publishers and songwriters (NMPA and HFA). However those two organizations leave out a lot of participants. So back to square one. If publishing information is required upon the delivery of masters, the problem is largely solved. Invoking a variation on Occam’s Razor, the best solution is usually the most simple one.

You’d think that in the times before computers this would have been harder than it is now, but like all things Spotify you have to question the motivations of a company whose founder created the most successful bittorrent client of all time, u-torrent.

Oh, and of this writing Spotify is now claiming they have no responsibility to pay any “mechanicals” at all. Can’t make this up.

 

The 21st Century Marketing Restriction: No licensing for Artificial Intelligence — Artist Rights Watch

If you let your record company license your recording for AI algorithmic music a la Orwell’s “versificator”, it’s like Silicon Valley making you train your replacement.

By Chris Castle

After the money, one of the most important parts of a recording artist negotiation is the “marketing restrictions”.  These are restrictions on what the record company or music publisher can do with your work–what type of licenses they can, or more frequently cannot, grant to third parties, for example.  Essentially, whatever is not prohibited is permitted.

Marketing restrictions also have a temporal element–during or after the term, recouped or not recouped.  There are some restrictions that are acknowledged to be verboten and are usually easy and unrestricted concessions.  An example of these would be licensing for certain types of commercials such as tobacco, firearms, grooming or hygiene products and alcohol.

Stewart Dredge has an excellent article this week in the Guardian which brings to mind Laura Kobylecky‘s post on MusicTechPolicy drawing comparisons between Spotify’s “fake artist” problem and “The Next Rembrandt” with echoes of the fictional  “versificator” operated by Big Brother’s “Music Department” in 1984.  According to Stewart, there are dozens of AI music startups getting funded that all essentially do the same thing.  Using a library of recordings (sometimes called a “corpus”), the algorithms “create” new recordings based on the songs and recordings in the corpus.  Google is, of course, a leader in the space (not that different from how they used Google Books to train their translation algorithm, a process called “corpus machine translation”–the librarians will be next).

Those recordings can then be sold or licensed at a very low price which, as Laura and others have noted, can be used to drive down the royalties payable to all other artists on digital music services.

This is, of course, not dissimilar to Silicon Valley companies hiring lower paid foreign workers and ordering the employees who they are to replace participate in training their replacements.  The difference is, of course, that those recordings have to come from somewhere.

It’s time to start adding to the list of marketing restrictions that the song or recording cannot be licensed for AI purposes of any kind.

via The 21st Century Marketing Restriction: No licensing for AI — Artist Rights Watch

If Only Artists and Managers Had Listened To Us : Spotify Per Stream Rates Keep Dropping

We hate to say we told ya so, but… Below is our post from September 2015. Two years ago we predicted the inevitable truth of the all you can eat Spotify subcription model. Like many of our predictions and proposals (example; windowing titles) we’ve had to wait for the industry to catch up to us. Today, two years later, Digital Music News confirms our prediction.

Read the report from Digital Music News by clicking the headline link here.

Exclusive Report: Spotify Artist Payments Are Declining In 2017, Data Shows | Digital Music News

Our original post from 2015 is below…


Spotify Per Play Rates Continue to Drop (.00408) … More Free Users = Less Money Per Stream #gettherateright

Down, down, down it goes, where it stops nobody knows… The monthly average rate per play on Spotify is currently .00408 for master rights holders.

PerStreamAvg_Jun11_July15

48 Months of Spotify Streaming Rates from Jun 2011 thru May 2015 on an indie label catalog of over 1,500 songs with over 10m plays.

Spotify rates per spin appear to have peaked and are now on a steady decline over time.

Per stream rates are dropping because the amount of revenue is not keeping pace with the  number of streams. There are several possible causes:

1) Advertising rates are falling as more “supply” (the number of streams) come on line and the market saturates.

2) The proportion of  lower paying “free streams”  is growing faster than the proportion of higher paying “paid streams.”

3) All of the above.

This confirms our long held suspicion that as a flat price “freemium” subscription service  scales the price per stream will drop.  As the service reaches “scale” the pool of streaming revenue becomes a fixed amount.  The pie can’t get any larger and adding more streams only cuts the pie into smaller pieces!

The data above is aggregated. In all cases the total amount of revenue is divided by the total number of the streams per service  (ex: $4,080 / 1,000,000 = .00408 per stream). Multiple tiers and pricing structures are all summed together and divided to create an averaged, single rate per play.

Labels / Spotify Admit Windowing is Streaming Solution (while cutting royalty rates)

It’s amazing how long it takes the industry to catch up to us. We strongly suggested windows and pay-gates at ad supported streaming services (Spotify) to drive conversion rates to subscription revenues back in 2014 and again in 2015, twice!

Well guess what is being reported in Digital Music News this week…

“According to details tipped, the Swedish streamer would restrict the biggest album releases to only paid subscribers for a period of time.”

Wow, windowing works! Who knew?!

But here’s the real kicker, the labels are LOWERING royalty rates in exchange for the ability to window hit records! It’s unbelievable that the industry must always take two steps back for every one step forward. Does it really need to be this hard?

Read the full story at Digital Music News below:

Spotify Finally Finds a Way to Lower Licensing Deals and Go Public

 

After 16% drop in Per Stream rates, Spotify asks for another 14% Reduction…

We can’t make this up. We’ve stated many times before, as the consumption of streams increase (and those services grow) the per stream rate will drop as revenues level off. This is simply because revenues can not keep up with consumption, and there is no fixed per stream rate.

In our latest look at streaming rates we found that Spotify streaming rates had dropped 16% from 2014 to 2016. Now, Hypebot is reporting that Spotify is asking for another 14% reduction in royalty payments.

Please someone break out a calculator… that would be a 30% reduction in per stream rates in two years! It’s just math. Wow.

Read the full story at Hypebot:

Spotify’s Latest Offer To Labels: A 14% Lower Royalty Rate | Hypebot

Gently Down The Stream (Songwriters Streaming Royalties Explained) | SONA [VIDEO]

Thank You Songwriters Of North America (SONA)

Windowing Works! 9 of the Top 13 UK Albums NOT on Spotify…

Windowing isn’t just for Adele and Taylor Swift anymore, Music Business Worldwide reports the following:

Four of the Top 5 current UK midweek albums aren’t on Spotify – and are, streaming wise, particularly fragmented.

A quick scan down the rankings, sent to labels today, shows that the same fact applies to five of the Top 6, six of the Top 10 and nine of the Top 13.

We started suggesting that windowing was one of several viable solutions to combat the negatives effects of streaming music ubiquity as early as 2013 when we stated “Why Spotify Is Not Netflix, But Maybe It Should Be“.

We were told we were “out of touch”, “luddites” and we “didn’t understand the new digital economy.” But we persisted on this point with additional writing in 2014, “How To Fix Music Streaming In One Word, Windows“.

Again, many resisted what is just common sense. The record industry always had utilized windows (or windowing as some prefer), but it just looked a little different than the way the film business did it. But it was there, and it always had been there.

In a December 2015 post we got more specific, suggesting that record labels experiment with more disruption and innovation following Taylor Swift and Adele successfully windowing off of Spotify during the initial release window of their latest releases. We wrote, “Three Simple Steps To Fix The Record Business in 2016… Windows, Windows, Windows…“.

In that post we included this:

This is not a philosophical discussion. This is financial reality. Respected stock analyst Robert Tullo who is the Director Of Research at Albert Fried & Company says this:

Longer term IP Radio and Spotify are good annuity revenue streams and great promotional tools. However, we believe the system works better for everyone when artists have the right to distribute their Intellectual property how they see fit.

Ultimately we think windows for content will form around titles that look much like the Movie Windows and that will be great for investors and the industry as soon as all these so called experts get out of the way and spot trading fashionable digital dimes for real growth and earnings.

So here we are in the spring of 2016. As simple math and economic reality effects more artists, managers and labels first hand the truth becomes self evident.

YouTube is the next windowing battle to a restoring a healthy economic ecosystem for artists. You can’t window if you can’t keep your work off of YouTube. That’s not YouTube, that’s YouLose…

Fight For The Future Of Corporate Astroturf Ripping Off Creators!

Musicians, know who your friends are and are not. Here is another example of big tech money, corporate astroturf, attempting to remove your rights. In the last hours of the submissions to the Copyright Office for comments on the DMCA a webform was introduced.

Note the fear-inducing reference to “robots”–“robots” must refer to the tools that Google itself gives to big companies to automate sending DMCA notices to Google for infringing links.  So by definition, “corporations” use Google’s own “robots” at Google’s request.  80 million infringing links this month alone!  (And remember, the Google “transparency report” does not include DMCA notices sent to YouTube, Blogger or any other Google property, it just covers Google search.)  EEP! ROBOTS!  DON’T BREAK THE INTERNET!

Google DMCA 3-31-16

This letter is exceptionally misleading because Google doesn’t allow independent artists to use these tools.  That means even the handful of artists who can monitor Google search 24/7 have to send manual notices.  So what the astroturf group is really complaining about is that EVERYONE should have to send notices manually which would increase the amount of time that Google has to profit from links to infringing content by data profiling or advertising sold on pirate sites.

This webform did not even verify if those sending the automated letter to the US Copyright Office were actually US Residents or machines…or made an intelligible comment on the questions the Copyright Office asked for public comment.  So, we had some fun with it, see bel0w.

David Newhoff at The Illusion Of More has an excellent piece looking much deeper at how these corporations and their funded organizations are working aggressively to take away the protections granted to individual creators in copyright.

Read it here, at the link below.

Astroturf Organizations Typically Hysterical on DMCA | The Illusion Of More

 

fightforthefuture....png

After Skipping Spotify, The 1975 Scores a Number 1 Album | DMN

“After avoiding Spotify entirely and focusing the release on iTunes and a variety of physical formats, the band achieved a number one album in several countries.  According to Billboard and its counting partner Nielsen Music, The 1975’s just-released album, I Like It When You Sleep, for You Are So Beautiful Yet So Unaware of It, sold 98,000 units in the US alone, a chart-topping tally.”

READ THE FULL STORY AT DIGITAL MUSIC NEWS:
http://www.digitalmusicnews.com/2016/03/08/despite-skipping-spotify-the-1975-gets-a-us-number-one/


 

Three Simple Steps To Fix The Record Business in 2016… Windows, Windows, Windows… (2015)

 

How to Fix Music Streaming in One Word, “Windows”… two more “Pay Gates”… (2014) 

 

Why Spotify is not Netflix (But Maybe It Should Be) (2013)

If Streaming Is The Solution To Piracy, Why Is Piracy Still Increasing?

Music Business Worldwide is reporting that “GLOBAL MUSIC PIRACY DOWNLOADS GREW BY ALMOST A FIFTH IN 2015″.

The amount of music downloaded on illegal piracy sites grew by 16.5% in the second half of 2015 compared to the year’s opening six months.

That’s according to leading content protection and market analytics company MUSO, which tracked web activity on 576 sites which were ‘wholly dedicated to music piracy or contained significant music content’.

Across these sites, MUSO analysed over 2 billion visitor traffic hits globally.

READ THE FULL STORY AT MUSIC BUSINESS WORLDWIDE:
http://www.musicbusinessworldwide.com/global-music-piracy-downloads-grew-by-almost-a-fifth-in-2015/