Recording Streaming Music: latest articles about the peculiarities of this industry followed by (soon coming) How-to guides!
According to a recent report by The Hollywood Reporter, bankrupt streaming service Rdio is accusing Sony Music of colluding with Universal and Warner Bros. in the recording streaming music market.
As it moves forward with its bankruptcy proceedings, the company, which has agreed to sell its assets to competing recording streaming music service Pandora for $75 million, has retained the well known law firm Winston & Strawn to investigate Sony's communications with other record labels and how that may have influenced music licensing negotiations.
The recording streaming music battles: the bad blood between Rdio and Sony Music began back in April, when Sony sued three Rdio executives alleging that the company withheld millions of dollars of payments leading into its bankruptcy filings along with alleging non-payment of minimum guarantees. Rdio responded to the claims by saying that it may sue Sony for what it sees as "anti-competitive conduct" by Sony along with its subsidiary Orchard:
"In particular, the Debtor believes that Sony and Orchard have engaged in anti-competitive conduct to fix and control prices and unreasonably restrain trade for the licensing, marketing, and use of music by services, like the Debtor, for the digital recording streaming music to consumers worldwide," states a Rdio motion aimed at compelling the production of documents from Sony. "For example, one of the Debtor’s preliminary antitrust theories relates to what are commonly known as Most Favored Nations clauses ('MFNs') which play a major role in Sony’s agreements with Rdio and in Orchard’s agreements with Rdio."
The 'MFN' clause is what was at the center of the Department of Justice's case against Apple and book publishers that saw an antitrust case brought against Apple alleging the company conspired to raise the price of e-books in violation of the Sherman Act. As a result of the case, Apple was forced to pay a $450 million settlement. For its part, Sony issued the following response in regards to the threat of a lawsuit and reference of the 'MFN':
Addressing the law review article that discussed the DOJ's case against Apple and the book publishers, Sony says that entailed a "completely different type of MFN — an MFN in which aseller promises to give a buyer the best price it offers anyone else."
Underneath the legal heavy details of the accusations brought by Rdio and the surrounding legal battles, this story raises an interesting question as to how much pressure the record labels are feeling from the streaming business and the steps they may take to ensure that they still control their industry.
Whenever lawsuits like Rdio v. Sony Music pop up, they serve as a friendly reminder that back in the late 90s/early 2000s, when the door was wide open for all of the major labels to get ahead of or work with tech companies and usher the recording industry into the future, instead of embracing change and progressiveness they fought, first, digital downloads and then later streaming. Oops.
by @brokencool, T.Dot's own
There is plenty of evidence that on-demand recording streaming music services like Spotify and Apple Music are disrupting the way people listen to music. Between them, the two companies have almost 50 million paying subscribers and are generating annual revenue in the billions.
As streaming grows, much attention is being paid to the problems between Spotify and recording artists. Whether it’s the arguments about "windowing" made by Adele and Taylor Swift, or complaints by artists like Radiohead about record labels not compensating artists for streaming, they get a lot of press.
While these are important issues, there is one troubling fact that gets lost in the shuffle: Songwriters have yet to benefit in any significant way from streaming. If we don’t change the current system for paying them, there’s a chance they never will.
Songwriters have yet to benefit in any significant way from streaming. The current system — without question — is unfair to songwriters, and it needs to change.
My company, Songs Music Publishing, represents a cross-section of today’s songwriters, from global superstars who write music for themselves — like The Weeknd, Diplo, Lorde and Desiigner — to many others working behind the scenes writing music for others to perform. So I see, in real time, the money they are paid by streaming services. The current system — without question — is unfair to songwriters, and it needs to change.
Apple recently made a proposal that could fundamentally transform the way streaming services pay songwriters and music publishers. As part of a government rate-setting process known as the Copyright Royalty Board tribunal (CRB), Apple recommended that services pay a fixed penny rate per stream. This structure is a major departure from the way streaming services have traditionally paid royalties. Moving to a penny rate would be a tremendous step toward transparency in music publishing. But be careful of the fine print. The mass recording streaming music makes the situation steadily worse.
A penny rate would bring some much-needed transparency to streaming royalties for music copyrights, which are absurdly opaque compared to the other compulsory licenses to which songwriters are subject. With digital downloads, for example, it’s pretty easy to determine how much revenue is owed to a songwriter. There is a statutory rate set by the CRB, currently 9.1 cents per song. SoundScan or BuzzAngle tell you how many downloads are sold on a daily basis. It’s easy math to know how much money is in the pipeline.
As the streaming market explodes in consumption, payments to many songwriters could — wait for it — decline on a per-work basis. In the meanwhile, consumers practice recording streaming music on a daily basis and without any consideration to the royalty rights of the song writers!
With streaming? Good luck. There are five rate structures that cover the different streaming music offerings (e.g., free with ads, paid with no ads, mobile streaming, etc.), and they are all complicated to the point of being useless. For example, the rate for the premium subscription services is the greater of 10.5 percent of the services revenue, 21 percent of its total content costs (i.e., how much a streaming service pays out to labels and publishers together), or 50 cents per subscriber.
Confused yet? Add to this the fact that these rates cover two types of payments: A mechanical royalty paid to us directly from the streaming services and a separate performance royalty that is paid to performing rights organizations (known as PROs, for example, ASCAP and BMI), large government-regulated bodies that collect public performance payments to songwriters.
So our fractions of a penny are divided in two and paid through two separate parties. To boot, we don’t know how much is for each, because the deals between the PROs and the streaming services are private. Remember in "The Karate Kid" when Mr. Miyagi teaches the kid to catch flies with chopsticks? We’re catching fleas with tweezers.
Even worse, this abysmal lack of transparency disguises a paradox in the way streaming services currently pay songwriters. As the streaming market explodes in consumption, payments to many songwriters could — wait for it — decline on a per-work basis. This is because current compulsory rates for songwriters and publishers are not based on consumption, but rather on revenue or content costs generated by a streaming service overall. Therefore, the royalty pool is a fixed amount, no matter how much music is consumed on a service.
Moving to a penny rate would be a tremendous step toward transparency in music publishing. But be careful of the fine print.
If people stream more music as they engage with services
(which they will) but subscriber growth slows (which eventually it
will), then the amount of money a songwriter is paid for an individual
stream will drop. We’ll be left fighting it out with one another as our
collective earnings are capped. Proponents of the current structure will
say that what you lose in price, you make up in volume, so economics
are equalized. However, as streaming services increasingly compete with
pop radio in playlisting and radio platforms, will demand increase
ratably across all genres? Or, as with every other medium, will it skew
disproportionally to top hits? This could easily result in the most
popular music getting paid way more while less-mainstream genres see
their per-stream earnings plummet. So much for democratization in the
Apple’s proposed structure accomplishes a lot in bringing transparency to rates and tying earnings to consumption — a good development. But as is often the case with digital music, the words giveth and the numbers taketh away. The rate Apple proposes is soundbite-worthy: 100 streams equals the current mechanical rate on a download ($0.00091 per stream X 100 = 9.1 cents). That’s the same 100-to-1 ratio used to determine stream equivalent tracks on the Billboard charts.
The problem is that streams, by law, require a performance license in addition to a mechanical license, and Apple’s not paying for that. If it did, the price would be much higher. With digital downloads — where there is only a mechanical right — publishers and songwriters collectively get paid about 13 percent of what labels and artists get paid ($0.091 to the former and $0.70 to the latter). Meanwhile, it has been widely reported that Pandora — which exploits only performing rights — licensed music publishers and the major PROs at a rate of 20 percent of the rate the service pays to artists and record labels.
Taken together, one could argue that the indicated price of performance plus mechanical rights rights could be as high as 33 percent of label earnings ($0.0023 per stream if one grossed up Apple’s offer 2.5 times higher than its current proposal). In the young, fast-developing streaming market, reasonable people may disagree about the value of the component rights of any offering. Nonetheless, it seems clear that Apple’s opening offer is not nearly where it needs to be to fairly value our music.
Matt Pincus is the founder and CEO of Songs Music Publishing, the world’s leading independent co-publisher. Its roster of songwriters includes The Weeknd, Lorde, Diplo, X Ambassadors, DJ Mustard, Desiigner and Phantogram. Pincus serves on the boards of both ASCAP and National Music Publishers Association. His advocacy for artist rights is extensive, and he is heavily involved in driving the conversations helping to regulate industry practices. Reach him @mpinc.
Have some vinyl you want to listen to anywhere in the house? The folks over at Mozilla (yes, that Mozilla) wanted to find a way to get one record player for recording streaming music throughout the entire office. Their solution was a Raspberry Pi.
You’ll need a record player with a USB port for this to work. Essentially, the record player connected to the Pi, then goes into Icecast, which streams the audio out into the network.
Sure, this is probably not going to replace the variety of recording streaming music software and (or) digital solutions to this problem, but it is a fun project nonetheless.
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