British artists, managers and artists have called for streaming revenues to be split 50/50 between labels and artists.
The request was made in a joint submission to the European Commission copyright consultation, via the new AMP coalition.
Some suggested that this was a contractual dispute and not a problem for the EC. Independent label group Beggars has been paying its artists 50% of streaming revenue for quite some time, though it recently cut it, with streaming becoming a larger share of revenue.
The reason the issue goes beyond simple negotiation is that it is about figuring out what a flow is. It is the continuation of a debate which also relates to the downloads.
Remember that paid MP3 downloads are only around ten years old – in most countries even younger. Streaming subscriptions have been around for about half that time. The market has changed so quickly that the rules seem to have been invented on the shoe – with labels unsurprisingly setting tariffs that allow them to keep the most royalties.
The labels decided that a download was a sale, and therefore pay the artists around 5-20% depending on the deal. Some labels even continued to deduct costs associated with physical distribution, including packaging deductions. Artists whose deals were signed before the downloads became a reality argued that this was a license and therefore should receive 50% of the royalties. FBT Productions, which produced some of Eminem’s early recordings successfully continued Universal Music Group for the underpayment of royalties on this premise.
Other artists have made similar statements, including “Weird Al” Yankovic, who also asked to get part of the Sony-YouTube deal in proportion to the value of his videos at the time he was hit. Almost all of them, including Yankovic, end up settling with their labels. This, of course, is the label’s preferred outcome, as no precedent is set for other artists to come after them – and there is no admission of guilt.
The two Sony Music and Warner Music made class action settlements – both without acknowledging any wrongdoing on their part – which include royalty increases of a few percent for digital (given that many artists who signed deals from the 1960s through the 1980s have royalties as low as 5% makes little difference).
But recently 19 Recordings, representing a large number of former American Idol contestants, including Kelly Clarkson and Carrie Underwood, have brought a massive trial against Sony after auditing the label – and the question of what a stream is is right in the middle of it.
Richard Busch of King & Ballow, who has successfully represented FBT, Yankovic and a number of other artists, represents 19, which was founded by music mogul Simon Fuller and is now controlled by the owner of American Idol, Core Media Group. The lawsuit establishes that streaming “can only be fairly described as” transmissions “or” broadcasts “and, upon information and belief, are so described in licenses or other agreements between Sony and the streaming services.” He continues, “However, Sony nonetheless accounted for 19 for all streaming revenue received at the lower album rate as if the operation between the streaming service and the end user was described as a ‘distribution’ or ‘sale’. and in doing so, Sony violated the registration agreements.
There is a good chance that Sony will choose, once again, to settle and pay the $ 10 million that 19 seeks damages, rather than risk the court finding that a flow is not akin to a sale. Perhaps it is this lack of precedent that explains why the AMP, which is a coalition of the Union des musicians, the Music Managers’ Forum and the Featured Artists Coalition, decided to submit the issue to European lawmakers once again. once and for all.
Obviously, streaming on demand is not the same as direct radio broadcast – although the fact that the BBC iPlayer, which is on demand, is still covered by the broadcast license may suggest that ‘it is – but it’s not the same as selling it, either. It’s something in between and should be explained to artists accordingly.
Interestingly, publishers and songwriter collectives have recognized this when it comes to paying royalties to songwriters, with a flow requiring a mechanical license (which historically covers sales of single records, i.e. reproduction) as well as a performing rights license (which covers public performance, including television and radio broadcasts ). They don’t even consider a download to be purely a sale.
However, the amount of a stream or download is considered to be a ‘reproduction’ and to what extent a ‘performance’ differs from country to country in Europe. In the UK, when it comes to songwriting, a download is considered 75% mechanical and 25% performance. The reverse is true for a pure streaming service (Spotify, for some reason, is considered 50/50 mechanical and performing). It should also be noted that in the UK 50% of the performing royalties go directly to the songwriter, but 100% of the mechanical royalties go to the publisher in order to recoup the advances he paid. to the songwriter.
To put it simply, labels decided that royalties for downloads and streams should be charged to the artist as sales, while publishers and songwriters’ collectives decided they were something. thing in between. Maybe it’s time we decided once and for all what they are, instead of forcing artists to take legal action.
There’s no denying that labels save money by not having to squeeze CDs, haul them to stores, and foot the returns bill, when it comes to downloads and streams. Still, record companies are making substantial investments in artists, including marketing and promotion, so it can be a bit difficult to expect them to reduce their share to 50%. How about 30% to 40%?
More importantly, if all labels – not just some of the independents – were ready to sit down at the artists’ table and craft a royalty distribution model suitable for the digital age, the EU might not have be no need to get involved. Working in partnership to increase value for all parties involved, instead of constantly resorting to litigation is a new idea.