streaming – The Trichordist

Songwriters Are Being Asked to Accept Something We’ve Never Seen Before

The freeze is back.

The first settlement in the Phonorecords V mechanical royalty proceeding is now on file (see below). A settlement is supposed to result from a “voluntary negotiation,” so the document raises a simple question: when exactly did the negotiation happen?

78742 Download

The parties describe “conversations” with other participants. Maybe there were conversations. But conversations are not the same thing as negotiation. A proposal presented as essentially a finished product, with little or no opportunity to influence its terms, is notification—not negotiation.

The Parties have had settlement conversations regarding the so-called Subpart B rates and terms with the other copyright owner Participants in the Proceeding (Songwriters Guild of America, World Collections, Inc., Eight Mile Music Companies, and George Johnson), who declined to join this settlement.

That distinction is crucial because this settlement would establish the statutory mechanical royalty rate for physical records and permanent downloads starting in 2028 through 2032. Those rates affect every songwriter, including those ex-US songwriters whose songs are exploited in the US. According to sources overseas, ex-US songwriter groups were not consulted, although it is customary for NMPA and NSAI to not engage with them even though they are a significant group (other than major mostly English language songwriters who are represented in the US by major publishers).

This means that it is likely that an alternative proposal or several alternative proposals will come to the Copyright Royalty Board in coming days from those who were not included in the NMPA’s settlement. As the settlement itself anticipates, whatever deal the Judges end up adopting will be published as a tentative ruling allowing public comment, but that’s down the line. Watch this space or the CRB website for Phonorecords V for more on deadlines, etc., if you want to comment.

To our knowledge, this is also the first time we’ve seen multiple competing settlements in a CRB phonorecords proceeding. Multiple settlements are common in webcasting and other CRB cases because different categories of music users—commercial broadcasters, NPR, college radio, religious broadcasters, and others—often negotiate different deals tailored to their own services. Mechanical royalty proceedings have traditionally been different. Everyone is negotiating one statutory rate that applies across the board divided into two broad categories by music user: labels (who pay for physical and downloads), and digital services like Spotify, Apple, Google, Amazon, and Meta (who pay for streaming mechanicals and control the global streaming market and some of which largely control AI models so lead the charge on AI theft for training).

The settlement itself also leaves some obvious questions unanswered.

Artificial intelligence is rapidly changing every aspect of music licensing, yet AI is not mentioned at all in the settlement. If downloads or streaming services increasingly contain AI-generated tracks that may not even qualify for copyright protection, should those recordings receive statutory licenses or royalties at all? The Copyright Office has repeatedly stated that works lacking sufficient human authorship cannot be registered for copyright to enjoy the protections of the Copyright Act, and the statutory license is part of the Copyright Act. If that principle eventually affects downloads or streaming (which we think it does right now), it is difficult to imagine that it will never influence the economics of physical or download mechanical royalties as well. That issue received no attention in the NMPA’s settlement.

Then there is another provision that deserves far more discussion.

The settlement continues the existing CPI adjustment mechanism that songwriter’s fought for in the last rate setting that increased the mechanical rate from the frozen 9.1¢ proposed by the NMPA and major labels to 12¢ plus a “Cost of Living Adjustment” (or “COLA”) thanks to the Judges rejection of the extended freeze. In other words, they did the opposite of what we recently suggested in Don’t Freeze Mechanicals Again.

Adopting a 12¢ base rate makes no sense—that’s the same rate as the Judges took as the base rate for the first year of the five year rate period starting in 2023 and then applied the COLA to that rate in subsequent years. Of course, that 12¢ rate has been eroded by inflation every year and is now worth about 10¢ without the COLA, but songwriters negotiated and received that COLA which sustained the value of the rate. That’s how we got from 12¢ in 2023 to the current 13.1¢ rate in 2026 that will probably increase again for 2027 (our guess is somewhere in the 13.4¢ to 13.6¢ range). Why wouldn’t you just take that highest rate achieved during the last year of the Phonorecords IV period (2027) and start applying the COLA to that in the first year of the Phonorecords V period (2028)? Rather than go back to the arbitrary 12¢ reference rate? Huh?

On its first glance, adopting a COLA for the new rates sounds reasonable because it protects songwriters against inflation. But the formula contains no floor preventing the statutory rate from declining if cumulative CPI were ever to fall.

Deflation may be unlikely. That’s not the concern. But the COLA could still cause rates to decline. All that has to happen is that inflation doesn’t rise at the same rate or greater from one year to the next and then the COLA-adjusted statutory rate will decline.

The point is that, for what may be the first time in the history of the statutory rate and certainly since the modern Copyright Act took effect in 1978, songwriters are being asked to accept a statutory mechanical royalty structure under which the minimum statutory rate could actually move backward, and very likely will decline.

A simple solution exists. The regulation could easily provide that each year’s rate is the greater of (1) the COLA-adjusted calculation or (2) the prior year’s rate. That would preserve the existing inflation formula while ensuring the statutory royalty never declines.

Why wasn’t that included? Or better yet, why wasn’t an actual value based increase included since we are still digging out of two prior freezes of the statutory rate one from 1909-1978 when the rate froze at 2¢ and the other from 2006-2022 when the rate froze at 9.1¢.

That’s a fair question.

So is another one.

If we’re going to lock in the statutory mechanical royalty through 2032, shouldn’t there have been a meaningful discussion—not just among the settling parties, but across the songwriting community—about AI, future valuation, whether there should be a statutory minimum for streaming and whether the statutory minimum itself should ever be permitted to decrease?

Those conversations are coming. The only question is whether they should have happened before the settlement was filed instead of afterward. We had hoped for a longer table with more voices. Whether that happens remains to be seen.

USCO Mechanical Rates -w- Supplement Download

July 2, 2026 by Trichordist

A Subtle Shift in US AI Policy and Why Artists Should Pay Attention

Something is moving in Washington.

A recent report suggests that the Trump administration is considering a new executive order on artificial intelligence. On its face, that might sound like more of the same—another round of AI policy chatter promoted by David Sacks, the Silicon Valley lobbyist and billionaire investor who has been pushing a “don’t slow it down” approach.

But this time feels different.

Sacks appears to have gotten pushed out at least a bit. Don’t count the chickens just yet. But the shift in tone matters. And the timing matters even more. The order is reportedly being weighed ahead of Trump’s visit to China, where AI development has become a central axis of geopolitical competition.

That context changes the story. For the past several years, the dominant policy posture around AI has been simple: don’t slow down innovation. Because China.

That argument has been doing a lot of work. It has been used to wave away concerns about training data, to discourage state and local oversight of data center buildouts, and to greenlight massive infrastructure commitments—including dedicated nuclear power for AI campuses run by Google, Microsoft, Meta, and Amazon.

In other words: build the machine first. Deal with the consequences later.

Artists have been the raw material for that strategy.

Musicians, book authors, visual artists—these are not just inputs. They are the training ground for systems that are now capable of producing substitutive outputs that overwhelm creators and flood markets. And until now, the White House policy conversation has largely treated that massive theft as an acceptable cost of staying ahead led by David Sacks, R Street Institute and the hyperscalers.

What makes this potential executive order interesting is that it suggests a shift away from that posture. If the administration is preparing to meet with China on AI, it has an incentive to show that the United States takes control, governance, and strategic resources seriously. And in this context, creative works start to look less like “free fuel” and more like national assets.

That may matter for artists.

Because once you recognize that AI systems derive value from the signals embedded in creative works—voice, tone, style, expression—you start to see those works differently. They are not just content. They are repositories of identity and cultural value.

And they are being extracted at scale.

A more protective policy framework—whether it focuses on model review, training data standards, or provenance—creates an opening. It creates space for the idea that artists are not just upstream contributors, but stakeholders whose work underpins the entire system.

This doesn’t mean the executive order, if it comes, will solve the problem. It won’t.

But it could mark an inflection point.

If policymakers begin to treat AI not just as a technology race but as a resource competition, then the role of creators becomes harder to ignore. You can’t claim to lead in AI while simultaneously disregarding the human material that makes those systems work.

That contradiction is starting to surface. The industry allowed artists and even copyright itself to be lumped in with zoning boards as “bureaucracy” which in turn allowed David Sacks and his ilk to try to create an alternate universe where “innovation” ran wild to “beat China” while also selling chips to China out the back door.

For artists, the takeaway is simple: pay attention to the shift in tone. Policy signals often precede legal ones. What gets framed as a national priority today can become a regulatory framework tomorrow.

For the first time in a while, there are signs that the conversation may be moving—however slightly—toward recognizing the value that artists bring to the AI ecosystem.

Sacks may not be gone. Silicon Valley rarely loses outright, just look at the MLC. But even a partial shift away from the “move fast and ingest everything” playbook is meaningful.

Because for artists, the question has never been whether AI will be built.

The question is whether it will be built on you or with you.

May 12, 2026 by Trichordist

@hypebot: Jay Gilbert, Ryan Vaughn, & Benji Stein Share Expert Tips for Artist Growth in 2026

Check out a great discussion from our friends at Hypebot: The latest panel from MusicPro ’26 offers a useful snapshot of where “artist growth” advice stands heading into 2026—and where it may still be missing the mark.

In this Hypebot discussion, Jay Gilbert, Ryan Vaughn, and Benji Stein walk through the evolving toolkit for independent artists: data, audience development, and the growing skepticism around social media metrics. The throughline is clear—streams and followers don’t build careers; real fans do. The panel repeatedly returns to the importance of identifying and nurturing “actionable” fans over vanity metrics.

But the more interesting takeaway may be what sits beneath that advice. As platforms flood artists with data, the real advantage increasingly lies in owning the relationship through email lists, direct engagement, and signals that actually convert into tickets, merch, and sustained attention. (And in our experience, owning the relationship is the one thing Spotify doesn’t want you to do.)

The result is a subtle but important shift: away from platform-defined success, and toward artist-controlled audience infrastructure.

The question, of course, is whether the current system actually rewards that shift—or quietly undermines it.

Read the post on Hypebot

April 15, 2026 by Trichordist

@johnpgatta Interviews @davidclowery in Jambands

David Lowery sits down with John Patrick Gatta at Jambands for a wide-ranging conversation that threads 40 years of Camper Van Beethoven and Cracker through the stories behind David’s 3 disc release Fathers, Sons and Brothers and how artists survive the modern music economy. Songwriter rights, road-tested bands, or why records still matter. Read it here.

David Lowery toured this year with a mix of shows celebrating the 40th anniversary of Camper Van Beethoven’s debut, Telephone Free Landslide Victory, duo and band gigs with Cracker, as well as solo dates promoting his recently-released Fathers, Sons and Brothers.

Fathers, the 28-track musical memoir of Lowery’s personal life explored childhood memories, drugs at Disneyland and broken relationships. Of course, it tackles his lengthy career as an indie and major label artist who catalog highlights include the alt-rock classic “Take the Skinheads Bowling” and commercial breakthrough of “Teen Angst” and “Low.” The album works as a selection of songs that encapsulate much of his musical history— folk, country and rock—as well as an illuminating narrative that relates the ups, downs, tenacity, reflection and resolve of more than four decades as a musician.

August 31, 2025August 31, 2025 by Trichordist Editor

Spotify’s Royalty Threshold Is Conscious Parallelism Reshaping the Music Business—But Not in a Good Way

by Chris Castle

Spotify recently rolled out a quiet but seismic change to its royalty system: if a track doesn’t get at least 1,000 streams in a 12-month period, it earns no royalties. Zero. The company claims this policy is about reducing “fraud” and redirecting money to “working artists,” but behind that PR gloss is a shift that disproportionately harms independent musicians and smaller rightsholders.

Let’s be clear—this isn’t just about removing noise from the system. It’s about redrawing the map of who gets paid in the streaming economy and who gets pushed out.

The Hidden Impact on Artists

At first glance, 1,000 streams might sound like a modest hurdle. But in the aggregate, this threshold excludes potentially millions of tracks from ever receiving a dime—even though Spotify continues to profit from their presence through ad revenue and user engagement. It’s easy to assume the affected tracks belong only to DIY artists or obscure creators. But that’s not necessarily true.

Spotify’s royalty model is track-focused, not artist-focused. You could have a single that racks up a million streams while the rest of the album struggles to clear a few hundred. Those lower-performing tracks—despite being part of a cohesive release—won’t earn a cent. Left to its own devices, the platform favors individual track performance over albums or an artist’s entire catalog. And that has sweeping implications not only for how artists are paid, but for how music is created, released, and valued in the streaming age.

It’s Not About Growing the Pie—It’s About Cutting Out the Bottom

The most revealing part of this policy isn’t what it claims to fix, but what it quietly avoids. Spotify is likely under enormous pressure—from major labels and rights holders—to raise the artist payouts. No matter how much Spotify denies the per-stream rate, there will always be a per-stream rate even if they pay a “stream share” to a label for the very simple reason that the label has to convert that revenue share into a per stream rate in order to allocate it to their several artists. That’s as simple as gross vs. net.

Plus we know just how bad the gross is from indie artists who get paid 100% of the “stream share”. It’s shit, ok? That’s why we know Spotify are under pressure to increase royalties.

But arbitrarily raising the total royalty pool would have consequences: it could trigger most-favored-nation clauses, obligate Spotify to pay more across the board.

Another way to raise royalties would be to “flatten” some of the minimum guarantee, i.e., make a portion of it nonrecoupable from future royalty payments. This was the practice with record clubs—a nonrecoupable payment has the added benefit of not being shared with artists as a kind of catalog-wide payment. This would also likely trigger MFNs, so that’s not super appealing either.

So by excluding low-performing tracks from the royalty pool, Spotify isn’t reducing fraud or increasing fairness. It’s reallocating revenue. And not randomly—it’s redistributing it upward. The money those artists would have earned is now being handed to the top-performing tracks, which overwhelmingly belong to major labels and large catalog owners.

Don’t you think that if the goal was to reduce costs, Spotify would just shrink the pie and pocket the difference? It seems to me that more money to fewer people is likely the real purpose of the 1,000-stream rule.

The Threat of Industry-Wide Collusion

Spotify isn’t alone. Amazon Music and Deezer have introduced similar thresholds, raising serious concerns about whether this is a coordinated move by dominant platforms to marginalize smaller rightsholders. When multiple major services adopt the same gatekeeping metric at the same time, and benefit in the same way, it’s not unreasonable to ask whether they’re acting in lockstep. In fact, this concept in antitrust law is called tacit collusion (or “conscious parallelism”) which occurs when competitors coordinate their behavior—such as pricing or output—without explicit agreements or communication. Instead of entering into a formal cartel, companies mirror each other’s pricing or business strategies, knowing that mutual restraint benefits all of them

Even if there’s no smoking gun, the outcome is clear: fewer royalties paid to emerging and independent creators, and more concentrated control over who makes money from streaming.

Playlists, Penalties, and Platform Power

Here’s the twist: just because a track falls below 1,000 streams and no longer qualifies for royalties doesn’t mean Spotify stops using it. These sub-threshold tracks don’t vanish—they become part of what we might call Spotify’s “shadow catalog”: music that still populates playlists, fuels the recommendation algorithm, and keeps users listening, but doesn’t generate payouts.

Every time a user plays a low-performing track, Spotify collects engagement data. That information feeds into its personalization systems, sharpening the algorithm’s ability to retain users and increase time-on-platform. That extra engagement helps Spotify serve more ads, train better models, and keep listener churn down. It also enriches Spotify’s advertising and data ecosystem, especially on the free tier where listening time directly translates to ad revenue.

In other words, these unpaid tracks are still part of the machine. Spotify uses them to optimize engagement and advertising—but without paying the creators a cent. It’s profit without payout. Value extraction without compensation. And in the long tail of the music economy, that adds up to millions of tracks silently pulling their weight for free.

So it seems that this is the quid for the pro quo.

A Cautionary Tale for Songwriters

The 1,000-stream threshold is a cautionary tale for songwriters as they approach Phonorecords V. What began as a “fraud prevention” tool is now a benchmark for excluding smaller rights holders from royalties altogether. Streaming services will point to these thresholds as precedent—arguing that if labels can accept payout limits, publishers should too. Without strong opposition, platforms could push for mechanical royalty thresholds that mirror streamshare rules, cutting off compensation to low-earning songs. This isn’t just about recorded music anymore. It’s a warning: once a gate is built, it can be copied—and used to lock out songwriters next.

A Royalty System That Punishes the Wrong People

Spotify’s royalty threshold is spun as a way to fight fraud and reward “working artists,” you know, kind of like don’t be evil. But in reality, it codifies a system where only the most popular tracks get paid—regardless of how much they contribute to the overall value of the platform.

And when other streaming services follow the same path, it stops looking like business as usual and starts to resemble a coordinated effort to narrow the market and marginalize everyone but the top-tier players.

This isn’t a royalty system built on fairness or transparency. It’s a redistribution scheme—not to help more artists earn a living, but to serve bigger slices to fewer people.

And that should raise alarms far beyond the music industry. Looking at you, Gail Slater.

August 7, 2025 by thetrichordist

On the Internet, “Partners” Don’t Hear You Scream: Spotify CEO Makes a $350M “Bundle” While Sticking Songwriters with an ESG “Bundle” of Crap

Here’s a quote for the ages:

MICHAEL BURRY

One of the hallmarks of mania is the rapid rise and complexity
of the rates of fraud. And did you know they’re going up?

The Big Short, screenplay by Charles Randolph and Adam McKay,
based on the book by Michael Lewis

We have often said that if screwups were Easter eggs, Spotify CEO Daniel Ek would be the Easter bunny, hop hop hopping from one to the next. That’s is not consistent with his press agent’s pagan iconography, but it sure seems true to many people.

This week was no different. Mr. Ek cashed out hundreds of millions in Spotify stock while screwing songwriters hard with a lawless interpretation of the songwriter compulsory license. That interpretation is so far off the mark that he surely must know exactly what he is doing. It’s yet another manifestation of Spotify’s sudden obsession with finding profits after a decade of “get big fast.”

The Bunny’s Bundle

Let’s look under the hood at the part they don’t tell you much about. Mr. Ek evidently has what’s called a “10b5-1 agreement” in place with Spotify allowing staggered sales of incremental tranches of the common stock. Those sales have to be announced publicly which Spotify complied with (we think). And we’ll say it again for the hundredth time, stock is where the real money is at this stage of Spotify’s evolution, not revenue.

As a founder of Spotify, Mr. Ek holds founders shares plus whatever stock awards he has been granted by the board he controls through his supervoting stock that we’ve discussed with you many times. These 10b5-1 agreements are a common technique for insiders, especially founders, who hold at least 10% of the company’s shares, to cash out and get the real money through selling their stock.

A 10b5-1 agreement establishes predetermined trading instructions for company stock (usually a sale so not trading the shares) consistent with SEC rules under Section 10b5 of the Securities and Exchange Act of 1934 covering when the insider can sell. Why does this exist? The rule was established in 2000 to protect Silicon Valley insiders from insider trading lawsuits. Yep, you caught it–it’s yet another safe harbor for the special people. Presumably Mr. Ek’s personal agreement is similar if not identical to the safe harbor terms because that’s why the terms are there.

As MusicBusinessWorldWide reported, Mr. Ek recently sold $118.8 million in shares of Spotify at roughly the same time that he likely knew Spotify was planning to change the way his company paid songwriters on streaming mechanicals, or as it’s also known “material nonpublic information”.

As Tim Ingham notes in MusicBusinessWorldwide, Mr. Ek has had a few recent sales under his 10b5-1 agreement: “Across these four transactions (today’s included), Ek has cashed out approximately $340.5 million in Spotify shares since last summer.” Rough justice, but I would place a small wager that Ek has cashed out in personal wealth all or close to all of the money that Spotify has paid to songwriters (through their publishers) for the same period. In this sense, he is no different than the usual disproportionately compensated CEOs at say Google or Raytheon.

Stock buybacks artificially increase share price. Now why might Spotify want to juice its own stock price?

Spotify Shoves a “Bundled” Rate on Songwriters

Spotify’s argument (that may have caused a jump in share price) claims that its recent audiobook offering made Spotify subscriptions into a “bundle” for purposes of the statutory mechanical rate. (While likely paying an undiscounted royalty to the books.)

That would be the same bundled rate that was heavily negotiated in the 2021-22 “Phonorecords IV” proceeding at the Copyright Royalty Board at great expense to all concerned, not to mention torturing the Copyright Royalty Judges. These Phonorecords IV rates are in effect for five years, but the next negotiation for new rates is coming soon (called Phonorecords V or PR V for short). We’ll get to the royalty bundle but let’s talk about the cash bundle first.

You Didn’t Build That

Don’t get it wrong, we don’t begrudge Mr. Ek the opportunity to be a billionaire. We don’t at all. But we do begrudge him the opportunity to do it when the government is his “partner” so they can together put a boot on the necks of songwriters. This is how it is with statutory mechanical royalties; he benefits from various other safe harbors, has had his lobbyists rewrite Section 115 to avoid litigation in a potentially unconstitutional reach back safe harbor, and he hired the lawyer at the Copyright Office who largely wrote the rules that he’s currently bending. Yes, we do begrudge him that stuff.

And here’s the other effrontery. When Daniel Ek pulls down $340.5 million as a routine matter, we really don’t want to hear any poor mouthing about how Spotify cannot make a profit because of the royalty payments it makes to artists and songwriters. (Or these days, doesn’t make to some artists.) This is, again, why revenue share calculations are just the wrong way to look at the value conferred by featured and nonfeatured artists and songwriters on the Spotify juggernaut. That’s also the point Chris made in some detail in the paper he co-wrote with Professor Claudio Feijoo for WIPO that came up in Spain, Hungary, France, Uruguay and other countries.

Spotify pays a percentage of revenue on what is essentially a market share basis. Market share royalties allows the population of recordings to increase faster than the artificially suppressed revenue, while excluding songwriters from participating in the increases in market value reflected in the share price. That guarantees royalties will decline over time. Nothing new here, see the economist Thomas Malthus, workhouses and Charles Dickens‘ Oliver Twist.

The market share method forces songwriters to take a share of revenue from someone who purposely suppressed (and effectively subsidized) their subscription pricing for years and years and years. (See Robert Spencer’s Get Big Fast.). It would be a safe bet that the reason they subsidized the subscription price was to boost the share price by telling a growth story to Wall Street bankers (looking at you, Goldman Sachs) and retail traders because the subsidized subscription price increased subscribers.

Just a guess.

The Royalty Bundle

Now about this bundled subscription issue. One of the fundamental points that gets missed in the statutory mechanical licensing scheme is the compulsory license itself. The fact that songwriters have a compulsory license forced on them for one of their primary sources of income is a HUGE concession. We think the music services like Spotify have lost perspective on just how good they’ve got it and how big a concession it is.

The government has forced songwriters to make this concession since 1909. That’s right–for over 100 years. A century.

A decision that seemed reasonable 100 years ago really doesn’t seem reasonable at all today in a networked world. So start there as opposed to the trope that streaming platforms are doing us a favor by paying us at all, Daniel Ek saved the music business, and all the other iconographic claptrap.

Has anyone seen them in the same room at the same time?

The problem with the Spotify move to bundled subscriptions is that it can happen in the middle of a rate period and at least on the surface has the look of a colorable argument to reduce royalty payments. If you asked songwriters what they thought the rule was, to the extent they had focused on it at all after being bombarded with self-congratulatory hoorah, they probably thought that the deal wasn’t “change rates without renegotiating or at least coming back and asking.”

And they wouldn’t be wrong about that, because it is reasonable to ask that any changes get run by your, you know, “partner.” Maybe that’s where it all goes wrong. Because it is probably a big mistake to think of these people as your “partner” if by “partner” you mean someone who treats you ethically and politely, reasonably and in good faith like a true fiduciary.

They are not your partner. Don’t normalize that word.

A Compulsory License is a Rent Seeker’s Presidential Suite

But let’s also point out that what is happening with the bundle pricing is a prime example of the brittleness of the compulsory licensing system which is itself like a motel in the desolate and frozen Cyber Pass with a light blinking “Vacancy: Rent Seekers Wanted” surrounded by the bones of empires lost. Unlike the physical mechanical rate which is a fixed penny rate per transaction, the streaming mechanical is a cross between a Rube Goldberg machine and a self-licking ice cream cone.

The Spotify debacle is just the kind of IED that was bound to explode eventually when you have this level of complexity camouflaging traps for the unwary written into law. And the “written into law” part is what makes the compulsory license process so insidious. When the roadside bomb goes off, it doesn’t just hit the uparmored people before the Copyright Royalty Board–it creams everyone.

David and friends tried to make this point to the Copyright Royalty Judges in Phonorecords IV. They were not confused by the royalty calculations–they understood them all too well. They were worried about fraud hiding in the calculations the same way Michael Burry was worried about fraud in The Big Short. Except there’s no default swaps for songwriters like Burry used to deal with fraud in subprime mortgage bonds.

Here’s how the Judges responded to David, you decide if they are condescending or if the songwriters were prescient knowing what we know now:

While some songwriters or copyright owners may be confused by the royalties or statements of account, the price discriminatory structure and the associated levels of rates in settlement do not appear gratuitous, but rather designed, after negotiations, to establish a structure that may expand the revenues and royalties to the benefit of copyright owners and music services alike, while also protecting copyright owners from potential revenue diminution. This approach and the resulting rate setting formula is not unreasonable. Indeed, when the market itself is complex, it is unsurprising that the regulatory provisions would resemble the complex terms in a commercial agreement negotiated in such a setting.

PR IV Final Rule at 80452 https://app.crb.gov/document/download/27410

It must be said that there never has been a “commercial agreement negotiated in such a setting” that wasn’t constrained by the compulsory license. It’s unclear what the Judges even mean. But if what the Judges mean is that the compulsory license approximates what would happen in a free market where the songwriters ran free and good men didn’t die like dogs, the compulsory license is nothing like a free market deal.

If the Judges are going to allow services to change their business model in midstream but essentially keep their music offering the same while offloading the cost of their audiobook royalties onto songwriters through a discount in the statutory rate, then there should be some downside protection. Better yet, they should have to come back and renegotiate or songwriters should get another bite at the apple.

Unfortunately, there are neither, which almost guarantees another acrimonious, scorched earth lawyer fest in PR V coming soon to a charnel house near you.

Eject, Eject!

This is really disappointing because it was so avoidable if for no other reason. It’s a great time for someone…ahem…to step forward and head off the foreseeable collision on the billable time highway. The Judges surely know that the rate calculation is a farce

But the Judges are dealing with people negotiating the statutory license who have made too much money negotiating it to ever give it up willingly although a donnybrook is brewing. This inevitable dust up means other work will suffer at the CRB. It must be said in fairness that the Judges seem to find it hard enough to get to the work they’ve committed to according to a recent SoundExchange filing in a different case (SDARS III remand from 2020).

That’s not uncharitable–I’m merely noting that when dozens of lawyers in the mechanical royalty proceedings engage in what many of us feel are absurd discovery excesses. When there are stupid lawyer tricks at the CRB, they are–frankly–distracting the Judges from doing their job by making them focus on, well, bollocks. We’ll come back to this issue in future. The dozens and hundreds of lawyers putting children through college at the CRB–need to take a breath and realize that judicial resources at the CRB are a zero sum game. This behavior isn’t fair to the Judges and it’s definitely not fair to the real parties in interest–the songwriters.

Tell the Horse to Open Wider

A compulsory license in stagflationary times is an incredibly valuable gift, and when you not only look the gift horse in the mouth but ask that it open wide so you can check the molars, don’t be surprised if one day it kicks you.

A version of this post first appeared on MusicTech.Solutions

May 1, 2024 by Trichordist Editor

Spotify’s ESG Fail: Environment

Bu Chris Castle

[This is the first in a series of three short posts examining how Spotify scores as an Environmental, Social and Governance (or “ESG”) investment. “ESG” is a Wall Street acronym often attributed to Larry Fink at Blackrock that designates a company as suitable for socially conscious investing based on its “Environmental, Social and Governance” business practices, that is “ESG”. See the Upright Net Impact data model on Spotify’s sustainability score. As of this writing, the last update of Spotify’s Net Impact score was before the Neil Young scandal and, of course, rocketing energy prices that compound the environmental impact of streaming. These posts first appeared on MusicTechSolutions]

Spotify closes $24 higher than its first day of trading after destroying the incomes of thousands of artists and even more songwriters. pic.twitter.com/HeHXnEXVHh
— MusicTechPolicy.com (@MusicTechPolicy) January 28, 2022

Spotify has an ESG problem, and a closer look may offer insights into a wider problem in the tech industry as a whole. If a decade of destroying artist and songwriter revenues isn’t enough to get your attention, maybe the Neil Young and Joe Rogan imbroglio will. But a minute’s analysis shows you that Spotify was already an ESG fail well before Neil Young’s ultimatum.

Streaming is an Environmental Fail

I first began posting about streaming as an environmental fail years ago in the YouTube and Google world. Like so many other ways that the BIg Tech PR machine glosses over their dependence on cheap energy right through their supply chain from electric cars to cat videos, YouTube did not want to discuss the company as a climate disaster zone. To hear them tell it, YouTube, and indeed the entire Google megalopolis right down to the Google Street View surveillance team was powered by magic elves running on appropriate golden flywheels with suitable work rules. Or other culturally appropriate spin from Google’s ham handed PR teams.

Greenpeace first wrote about “dirty data” in 2011–the year Spotify launched in the US. Too bad Spotify ignored the warnings. Harvard Business Review also tells us that 2011 was a demarcation point for environmental issues at Microsoft following that Greenpeace report:

In 2011, Microsoft’s top environmental and sustainability executive, Rob Bernard, asked the company’s risk-assessment team to evaluate the firm’s exposure. It soon concluded that evolving carbon regulations and fluctuating energy costs and availability were significant sources of risk. In response, Microsoft formed a centralized senior energy team to address this newly elevated strategic issue and develop a comprehensive plan to mitigate risk. The team, comprising 14 experts in electricity markets, renewable energy, battery storage, and local generation (or “distributed energy”), was charged by corporate senior leadership with developing and executing the firm’s energy strategy. “Energy has become a C-suite issue,” Bernard says. “The CFO and president are now actively involved in our energy road map.”

If environment is a C-suite issue at Spotify, there’s no real evidence of it in Spotify’s annual report (but then there isn’t at the Mechanical Licensing Collective, either). “Environment” word search reveals that at Spotify, the environment is “economic”, “credit”, and above all “rapidly changing.” Not “dirty”–or “clean” for that matter.

The fact appears to be that Spotify isn’t doing anything special and nobody seems to want to talk about it. But wait, you say–what about the sainted Music Climate Pact? (Increasingly looking like a PR effort worthy of Edward Bernays.) Guess who hasn’t signed up to the MCP? Any streaming service as far as I can tell. There is a “Standard Commitment Letter” that participants are supposed to sign up to but I wasn’t able to read it. Want to guess why?

That’s right. You know who wants to know what you’re up to.

If you haven’t heard much about streaming’s negative effects on the environment, don’t be surprised. It’s not a topic that’s a great conversation starter and very few journalists seem to have any interest in the subject at all. I wonder why.

But if you’re an artist who is concerned about the impact of streaming your music on the environment or an investor trying to see your way through the ESG investment, this should give you a few questions to ask about Spotify’s ESG score. And if that slipped by you, don’t feel bad–Blackrock reportedly holds 3.8 million shares of Spotify that are worth less all the time, so they didn’t catch it either. And Blackrock coined the phrase.

Next: Spotify’s “Social” Fail: Rogan, Royalties and The Uyghurs

March 12, 2022March 12, 2022 by thetrichordist

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.

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.

May 18, 2017May 18, 2017 by trichordist

Songwriter Would Need 288 Million Spins To Equal Average Spotify Employee Salary

Spotify just posted their financials and Paul Resnikoff at Digital Music News was quick to point out that the average Spotify employee salary is $168, 747.

Contrast that to the plight of songwriters. There would be no music business without the fundamental efforts of songwriters. Yet, there is not a free market in songs. The federal government sets compensation for songwriters/publishers based on a percentage of revenue. An abysmal below market rate. In effect a subsidy for streaming services. Last I checked this rate was working out to about $0.00058 per spin. This includes both the public performance (BMI/ASCAP) and the streaming mechanical (IF they happen to pay it).

Best case scenario, if a songwriter retains all publishing rights to their song then a songwriter would need 288,104,634.15 spins to earn the reported average salary of a Spotify employee.

Any questions?

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Related see this post on failure of techies to understand that streaming services are subsidized by government mandates

Clueless Spotify Defender Illustrates Tech Ignorance about Federal Cap On Songwriter Pay

May 26, 2016May 29, 2016 by Dr. David C Lowery

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/

January 26, 2016January 24, 2016 by Trichordist Editor