According to a new report from the Music Managers Forum (MMF), produced by CMU Insights on 9th May at The Great Escape music business conference in Brighton, UK, songwriters and music composers could be losing out on millions in streaming royalties due to the way in which songwriters’ repertoire is licensed to digital music services.
The report explores how money flows from streaming services through to artists via the ‘Dissecting The Digital Dollar’ series of reports and guides.
The review includes the debate around how the ‘digital pie’ is sliced, i.e the ongoing discussions over how streaming income is shared out between the different stakeholders, including artists, songwriters, music composers, labels, publishers and the streaming services themselves.
A key part of that debate is how money paid into the music industry by the streaming services is respectively allocated to the recording copyright – which is ultimately shared with the artist – and the separate song copyright – which is ultimately shared with the songwriter. In the main considerably more is allocated to the former.
Streaming – a growing industry globally
As streaming has become the fastest growing recorded music revenue stream there has been much debate about the fairness of these splits.
However, while there is still an argument that the digital pie should be further re-sliced to the benefit of the songwriter and music composers, it is also true that more money is already being allocated to the song on streams compared to what was passed to the publisher and the writer from the sale of a CD. In fact in some cases, with the more recent streaming deals, the song allocation on a stream is more than double that on a CD.
Meanwhile, streaming income now generates nearly half of recorded music income overall and continues to rise month on month.
This creates a conundrum. As streaming becomes the biggest recorded music revenue stream – and with the song share on that income being double that on a CD – songwriters should be slowly starting to see a benefit. But songwriters and their managers insist that is not happening.
There are a number of factors that in part explain this conundrum, including the increasing number of co-writers on songs in some genres and the way monies are shared out between the different works on an album in the streaming domain. However, perhaps the biggest factor is the inefficient process via which song royalties from streams are processed and paid.
In most cases, sitting between a streaming service and the music composers, artists and songwriters whose music they stream will be a number of music industry institutions. These are the entities with which the streaming services negotiate licensing deals.
Once the deals are done, each month the services pass data and money over to each licensing partner. These licensing partners then pass money along to the artists and songwriters, sometimes directly, sometimes via other companies or organisations. This therefore creates a royalty chain – a number of entities through which data and money must pass as it goes from streaming service to artist or writer.
Co-ownership of songs, the way copyrights are split, territorial licensing and poor data all contribute to an overly complex system, and cause the disputes, delays and deductions that stop songwriters getting properly paid when their music is streamed.
Clearly, there are no silver bullets. A plethora of reforms are needed, some of which are already under way in some territories with some repertoire.
But to ensure every songwriter is treated fairly, there is an urgent need for a wide-ranging plan of action – led by writers and their managers and other professional advisors (lawyers and accountants), alongside music publishers, collecting societies and streaming services.
Laying down the gauntlet, MMF would suggest the following areas as an immediate priority:
1. Shine a light on global royalty chains
Given the complexities of the global digital licensing landscape, it has become too onerous and expensive for all but the most successful songwriters and music composers to track and trace their royalties.
This needs to change. Collecting societies and music publishers must embrace transparency and move towards making crucial data freely available as standard practice – and especially information relating to the ownership of rights, the royalty chains being employed, and any deductions and delays that occur as money moves along those chains.
2. Reveal the disputes
Music publishers, collecting societies and their royalty processing hubs currently control the flow of songs data between the music industry and the streaming services, and are therefore the first to see the common data clashes that can delay or stop payments.
It is unacceptable that they sit on these issues and we need them to proactively alert songwriters and music composers whenever data clashes occur so they know to resolve them and remove any blockages that are stopping royalties getting through.
3. Shorten the chains by embracing global licensing
If you were starting from scratch, no one would invent the current song licensing framework for streaming services.
The current territorial approach and the employment of multiple royalty chains for single streams of single songs is the byproduct of systems, institutions and reciprocal partnerships that were created for an analogue era.
4. Speed up the flow of payments
While many artists are now receiving payments within weeks of their music being streamed, it frequently takes writers years to receive all their song royalties.
This is completely unacceptable. Even in the current environment, we should be setting goals that writers should never have to wait more than nine months after a song is streamed to receive payment in full.
5. Reduce black box collections and distribute unattributed revenues fairly
In theory, in the streaming space there should be no unallocated royalties, ie monies that we know need to be paid, but where we don’t know which songs or songwriters those revenues should be allocated to. There should be no black box for streaming.
6. Campaign for change
Finally, we need songwriters – and their managers and other professional advisors – to push each of the publishers and collecting societies they work with to actively and urgently address the issues outlined in this guide.
And to celebrate those who are making positive changes to ensure that ongoing growth of the music industry is equitably shared by all.
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