Survey Results: Physical and Download Mechanical Rates Survey–Artist Rights Watch

Many readers participated in the Physical and Download Mechanical Rates Survey that various organizations have sent to their members over the last few weeks. Here are the results of the main questions for which we had 361 respondents who self-selected their participation. (Other answers included comments which we chose not to publish for privacy reasons.). 

The results suggest that participants were mostly informed songwriters who had never been asked before what they thought about the issues in the Copyright Royalty Board. We would have to conclude that any of our regular readers would be a bit skewed toward knowledgeable because between the Trichordist, MusicTechPolicy, ARW, Hypebot and Celebrity Access we were probably carrying a very high percentage of the available information on the frozen mechanicals issues.

It also is striking how few respondents said they had ever been asked what they think about any mechanical rates (physical, download, streaming), an important and easily measurable issue. This is something to add to the learning from this episode. It may be that our data is skewed, but even so we didn’t expect that 68% would say they’d never even been asked their opinion. An easy way to find out what people think about something is to ask them. 

A new proposal for songwriters in the Imperial City

[This post first appeared on MusicTechPolicy]

By Chris Castle

As MTP readers will recall, the National Music Publishers Association and the Nashville Songwriters Association International purported to agree on behalf of a “consensus” that never seemed to materialize to extend the long-frozen 9.1¢ mechanical rate for physical and downloads in the form of a settlement agreement in the Copyright Royalty Board’s Phonorecords IV proceeding.  I thought this deal reeked and so did a number of other people, including the Copyright Royalty Board itself which rejected the settlement.

To their great credit, Sony, Universal and Warner stepped up and agreed to offer all the world’s songwriters increased rates of 12¢ plus inflation indexing for the next five years which they didn’t have to do (and was a deal that the CRB hinted that they would find acceptable when they resoundingly rejected the first settlement).  Assuming the Copyright Royalty Board accepts the deal—a step you might miss out from the press coverage–this had the effect of a quick end to a process the labels had every right to litigate at the CRB.

The other benefit to the settlement is that it should—if it doesn’t get screwed up again—it should take away a major argument that the digital retailers are using against songwriters in the streaming part of the Phonorecords IV proceeding.  That argument is the most obvious negotiating tactic in the world:  What’s good for the goose is good for the gander.  The services are essentially saying that if the rates should be frozen when the labels are paying the mechanical (which they are on physical and downloads), then the rates should be frozen when the services are paying the mechanical (which the services are on streaming).  And no inflation adjustment. Well, no kidding.

In one power move, the labels did something fair for songwriters and incidentally also helped publishers in spite of themselves by taking away a major argument from the digital retailers.  Rather than play a schoolyard game of high/low bargaining and stretching out the process for another couple years, the labels cut to the chase and closed. Hopefully the CRB will agree (again, don’t forget that the CRB still has to approve the proposed deal.)

Do we still have bones to pick with the labels?  Absolutely.  Could the rate have been even more fair?  Sure.  Might it have been if the publishers had actually done their job and negotiated in the first place?  Maybe.  Probably.  But they didn’t so we’ll never know.  However, credit where credit’s due, the labels pulled this one out and saved the publishers’ bacon in spite of themselves.

I do have to note in passing that when you read the press coverage on the filing of the settlement, there’s not one US group with a press release today that actually picked up a pen and filed a comment at the CRB when they were needed and duty called.  The awesome UK songwriter group Ivors Academy stepped up and bled with songwriters like Rosanne Cash, George Johnson, Helienne Lindvall, David Lowery and Blake Morgan and all the other commenters who took one for the team when it was unpopular to do so. And as that guy said, he who sheds his blood with me shall be my brother.

You’ll hear a lot of hoorah about how streaming is what’s important from people who are trying to CYA today.  Here’s a hot tip:  IT’S ALL IMPORTANT IF IT’S YOUR MONEY.  Why is that so hard to understand?

Which is why going forward all songwriters and all publishers need to be involved with the rate-setting proceedings at CRB including on streaming.  The CRB knows this and acknowledges.  I think the labels know this on their side.

The question is whether the publishers do.  The announcement of this settlement proposal is both inauspicious and true to form.  Remember—they had practically nothing to do with making the deal they celebrate today.  But don’t let that stop anyone.

We need fairness at the Copyright Royalty Board.  Notice I’m not using the word “transparency” which means whatever the speaker wants it to mean.  I’m very specifically talking about a seat at the table not just for songwriters, but for independent labels and publishers as well as the majors.  As Ann Richards used to say, if you’re not at the table you are on the menu, and this was a very, very close run thing in Phonorecords IV. 

If it weren’t for all the people who commented negatively and resisted the rates that had been bootstrapped in the past and would have been again, I don’t know where songwriters would be today. You gave the Judges the truth, straight from the heart and they responded. So thank you, all of you. And thank you to the readers of MTP and The Trichordist who raised hell right along side. It’s a good day for everyone.

Remember–keep coming back because it works if you work it.

Guest Post by @georgejohnson: The only songwriter in Phonorecords IV speaks his mind

[You may have never heard of George Johnson, but you should have. He’s the only songwriter in the Phonorecords III and IV rate proceedings at the Copyright Royalty Board, representing himself. It’s also important to understand that if George wasn’t carrying the flag as a “participant” in the proceedings, it’s unlikely that the Copyright Royalty Judges would have rejected the bizarre “settlement” proposed by the major labels and publishers paving the way for the second proposed settlement announced today that raises the mechanical rate to 12¢. George asked us to post a short comment on today’s settlement.]

Unfortunately, as glad as I am to see the labels finally offer a slightly better rate of 12 cents, the Judges have not even ruled on the last unreasonable settlement that they rejected, nor had time to hear a back from the Register on the Novel Question of Law proposed by the 3 Major Record Labels. Therefore, it would be premature for me to agree to any rushed deal before first hearing the Register‘s and the Judges’ rulings of law on this issue, and the many other problems the Judges pointed out with these extremely flawed settlements.

Furthermore, the multiple conflicts of interest, self dealing, vertical integration “warning flags”, side deals, and other problems may still need to be resolved by the Judges before any new settlement can be approved.

NMPA CEO David Israelite even stated in 2015 that the rate should be 50 cents, yet he continues to fight me to keep the rate frozen and below market, despite now being forced to offer 12 cents to the Judges which he absolutely did not want to do and fought every step of the way. He is no songwriter advocate whatsoever. He also makes $2 million dollars a year in salary and extra compensation to keep songwriters frozen at 9.1 cents all these years because he really works for the parent record labels, not their vertically integrated publishing division as he claims. It’s a total waste of time for songwriters and I hope Congress puts a stop to this self-dealing and increasing antitrust issues created by these two-timing lobbyists’ behavior.

Btw, when the rate is accurately calculated for inflation since 2006 it’s actually 13 cents, not 12 cents like they offered, but it’s still way below market considering the rate was 2 cents in 1909.  A rate based on today’s marketplace reality would place the rate at a break-even point of 58 cents per song to make up for 89 ignored years of zero inflation adjustments for songwriters, who are entitled to a raise, much less a simple cost of living adjustment for 2022 real world prices. Plus there is no legal difference between adjusting from 2006 or 1909.  NMPA, NSAI, and RIAA just don’t want to increase the profits for their own songwriters, much less all their competitors who have to have their rates frozen by NMPA, NSAI, and the RIAA, which is extraordinary and must end.

There is also the issue of the free unlimited “limited download” loophole which must be paid a mechanical and, of course, the labels completely ignored this core issue which goes hand in hand with a properly adjusted 58 cent inflation royalty rate which all songwriters and publishers deserve now.  Apple and the other Services need to reduce their 30% per dollar fee on downloads to help share in the cost of the Judges’ ruling of no more static rates for songwriters.  If the labels offer a reasonable rate and fix their self dealing conflicts and side deals, along with a paid mechanical for limited downloads, then I would sign a deal like that. Plus, the labels refuse to address the issue of old controlled composition clauses at 75% of the lawful statutory rate or any new controlled composition clauses to reduce any new agreed increases.

Keeping the Songwriter Survey Open!!

Thanks for the HUGE response to the songwriter survey on what you think the new unfrozen mechanical rate should be!! The response has been so strong we’re going to keep the survey open so more of you can participate.

This Survey Monkey questionnaire is anonymous and easy to take–3 minutes to complete–and you could really help a lot by giving your opinions on what you think the rate should be! We will post the results so everyone can see.

You can start the survey at this link. Thank you!

Please take our physical and download mechanical royalty rates survey and help decide the new rates!

We are participating in a survey being conducted by a number of songwriter groups around the world to ask our readers what you think the new un-frozen mechanical royalty rate should be since the Copyright Royalty Judges rejected the settlement that would have extended the 9.1¢ freeze. Trichordist readers have heard a lot about the frozen mechanicals but after the Judges rejected extending the freeze we have moved on now to a new phase–if the rate isn’t 9.1¢ anymore, what should it be?

This Survey Monkey questionnaire is anonymous and easy to take–3 minutes to complete–and you could really help a lot by giving your opinions on what you think the rate should be! We will post the results so everyone can see.

You can start the survey at this link. Thank you!

Stay tuned for a songwriter royalty questionnaire!

After all the effort and achievement by our great audience in support of songwriters getting paid fairly in the #FrozenMechanicals crisis, we are finally coming to where the rubber meets the road and trying to decide how much songwriters should get paid by record companies selling music in three ways (called “configurations”): 

permanent downloads, like iTunes and Amazon; 

vinyl discs, like you buy in record shops on Records Store Day;

and compact discs (CDs).

We’re expecting the final proposal to get made in a matter of days, and we thought it would be good to start with a short Survey Monkey questionnaire to get an idea of what this audience thinks. We’re collaborating with a number of songwriter organizations to distribute the questionnaire to their members and friends.

All the data will be anonymous and will be released when the questionnaire is done!

The plan is to get some more evidence of what we all think about a few core pricing ideas, thanks to the awesome Copyright Royalty Judges who have rejected extending the 16 year freeze in response to comments from the public and objections by George Johnson, the only songwriter in the Phonorecords IV proceeding.

Watch this space!!

Is @UMG coming to the party on unfrozen mechanicals?

By Chris Castle

[This post first appeared on MusicTechPolicy]

I have it on good authority from someone close to the talks not authorized to speak on the record that Universal is taking the lead on solving the now un-frozen mechanicals crisis. This obviously needs to be confirmed and may not be final, but I think it’s well worth posting about.

Recall that the crisis pertains to the so-called “Subpart B” mechanical royalties paid by record companies for permanent downloads, vinyl and compact discs. The mechanical rate has been frozen at 9.1¢ since 2008 and the Copyright Royalty Judges recently rejected a settlement among the NMPA, NSAI, Sony, Universal and Warner to extend the freeze in the Phonorecords IV proceeding. Having rejected the proposed settlement, the next step could be knock down, drop dead, drag out litigation that would, in my view, be totally unnecessary. Or the next step could be the labels and publishers submitting a new proposed settlement and asking for the Judges’ approval. 

Also recall that the Judges hinted at a potential deal they would like to see in their rejection of the proposed settlement that would essentially uplift the current 9.1¢ rate by an inflation factor since the rate was set in 2008, bringing the minimum statutory rate for all “Subpart B” configurations to 12¢ that would be further uplifted by an annual cost of living adjustment based on the Consumer Price Index (CPI-U in this case).

We’ve written about this topic so much that you’re probably sick of hearing about it–but if this source turns out to be correct, it’s a real step in the right direction by Universal taking a leadership role that will no doubt be controversial.

As I understand it, Universal may propose a minimum statutory rate of 10¢ for permanent downloads and 12¢ for both vinyl and CD configurations. All three rates would be adjusted annually by the Consumer Price Index (in a similar way that the Judges just indexed the webcasting royalty in Webcasting V applicable to sound recordings). This rate would apply to all songs–not just to George Johnson–as one would expect.

There’s no way to know at this point today whether all the participants in the Phonorecords IV proceeding will accept these terms, including George Johnson who has held out for a much higher minimum statutory rate. Some may scratch their head over why the download rate is less, but my suspicion is that it’s because Apple and Amazon have been inflexible on increasing the wholesale price and I could understand why a label would give themselves some headroom on downloads going into what will surely be highly inflationary times but at the same time agreeing a cost of living adjustment. (When the dust settles, it may be worth a discussion in the artist rights community about whether to campaign against Apple and Amazon.)

I do think it’s commendable if Universal is taking the first step toward bringing fairness to a process that has been unfair for many years. We’ll see what happens, but it looks like it could be light at the end of the tunnel. Watch this space.

@artistrightsnow Op-Ed: Spotify’s New ‘Discovery Mode’ Is Just Payola — Artist Rights Watch

Getting discovered in the music business has never been easy. Before the pandemic, artists could at least rely on the industry’s historic mainstay to break through — playing as many gigs as possible and hoping to build a following. But with that path closed for now, artists and their label partners are increasingly dependent on Spotify, the undisputed king of music streaming, and its black box algorithms.

That’s why Spotify’s cynical decision to use this moment to launch a new pay-for-play scheme pressuring vulnerable artists and smaller labels to accept lower royalties in exchange for a boost on the company’s algorithms is so exploitative and unfair. Artists must unite to condemn this thinly disguised royalty cut, which apparently has just been released in “beta” mode and is soon expected to enter the market in full force. 

Read the post on Rolling Stone