PROFESSOR PLUMB MUSIC

Educator, Consultant, Songwriter, Rock Band

March 2018

March 23, 2018

All Streams Are Not Created Equal: Why YouTube’s Plan To ‘Frustrate’ Viewers May Delight The Music Biz

YouTube Plans More Ads Between Videos to ‘Frustrate’ Some Viewers Into Paying (Billboard)

YouTube’s Global Head of Music, Lyor Cohen, says his strategy to improve royalty payouts to music rights holders is to “frustrate” and “seduce” YouTube’s non-paying active users to become paying subscribers.

His plan? More ads on the free, ad-supported service. The idea seems to be that more ads to wade through, the more attractive an ad-free monthly subscription becomes to users.

YouTube is hands down the most-used music streaming platform in the world. So any moves it makes is significant. But this is particularly meaningful because the difference between ad-supported and paid/premium streaming is a real hot button topic in the music industry. That’s because it has real consequences on royalty payouts.

Many people don’t realize that music rights holders are paid differently for subscription-based streams vs. ad-based streams, even when both are on-demand.

For instance, rights holders receive between $0.004 to $0.007 on YouTube from users who pay a monthly fee. This is the “all-in” rate, divided between the sound recording and the musical composition.

But they only earn between $0.002 - $0.003 from free-tier users supported by ads.

That means royalties paid on 1 million streams from paying users range from around $3,000 to $6,000 for the sound recording, and $800 to $1,500 for the composition.

But 1 million ad-supported streams contribute only about half that--$1,750 - $2,500 for the sound recording, and $450- $650 for the composition.

And since the vast majority of YouTube’s music streaming activity comes from its ad-free tier, this is a point of contention in the music biz.

YouTube receives a great deal of criticism from the music biz for the relatively low royalty payments it makes compared to other streaming services. According to IFPI estimates YouTube pays seven times less than Spotify for every 1,000 plays (and Spotify has both ad and paid tiers).

Yet its effort to establish its own music subscription services to compete with Spotify (“Google Play” and “Red”) have struggled. Will its plan to ‘frustrate’ and ‘seduce’ users actually equate to more paying subscribers (and with it higher royalties for rights holders)?

We’ll see. Many hope so, because subscription-based streams are the key to the music industry’s recovery.

And now for this week’s other headlines:

Benom Plumb, Assistant Professor of Music Industry Studies at the University of Colorado Denver, reviews the biggest stories of the week affecting music royalties. He is a music industry professional, not an attorney. For more info about Benom, visit his website at www.professorplumbmusic.com.

 

March 9, 2018

Streaming Dollars Don’t Just Go To The Artists Streamed. Is That A Good Thing?

New Study Explores Impact of “User-Centric” Music Streaming Payouts (Music Ally)

A study published in Finland this week has provided incredibly helpful data for the streaming royalty payment debate.

Using data provided by Spotify, the Finnish research conducted by Aalto University examined the differences between a “pro-rata” and a “user-centric” royalty payment model.

The pro-rata model, which is the current standard, compiles the revenue generated by monthly subscription fees into a big pot, and distributes to artists based on total listening time. This model favors higher royalty payments to tracks with the most plays and listening time.

The streaming service keeps around 30% of revenue, with the remaining 70% shared between the interested parties of the musical composition and the sound recording. If we break this down by Spotify’s $10/month subscriber fee, that means Spotify keeps $3, the songwriters and publishers keep approximately $1 to $2, and the remaining $5+ goes to record companies (and then artists, according to their contracts).  

According to this study’s findings, the top 0.4% of songs receive 10% of the streaming royalties under this model.

The user-centric model would create a more direct connection, based on individual listener choices. This model would require a direct and transparent royalty payment for every stream on a user’s account.

For example, if you listen to just one artist for an entire month, that artist would receive 100% of your monthly subscription fee allocated to them. Under this model however, the royalties paid from your account could only add up to the $10/month fee.

So, instead of one massive royalty pool in which the top dogs get most of the money based on overall listening time, the user-centric model would essentially create a small royalty pool for every subscriber and allocate the royalties exactly as that user streamed.

Using this model, the study found that instead of the top 0.4% of tracks receiving 10% of the royalties generated by premium users, those tracks would collect closer to 5.6% of the royalties. The assumption is that the other 99.6% of tracks would receive more.

Will interested parties then receive more or less royalties under a user-centric model?

It all depends. The study makes clear that a user-centric model would likely increase royalties for those in the middle and at the bottom, while reducing royalties for those at the top of the food chain.

Other experts also believe the user-centric model would help prevent fraudulent streams and accounts created by hackers, such as the Bulgarian playlist scam. This scam robbed legitimate artists of an estimated $1 million in streaming royalties.

From a paying subscriber and music creator perspective, the user-centric model seems sensible. Most of the general listening public likely already assumes that their streaming activity is directly helping and financially supporting the artists they love. They want to know the money they pay goes directly to their artists.

From the music creator’s perspective, it simply means giving payment where payment is due, no matter how big or small.

And now for this week’s other headlines:

Benom Plumb, Assistant Professor of Music Industry Studies at the University of Colorado Denver, reviews the biggest stories of the week affecting music royalties. He is a music industry professional, not an attorney. For more info about Benom, visit his website at www.professorplumbmusic.com.

March 2, 2018

Once Again, The U.K. Music Biz Shows the U.S. How It’s Done

U.K. Performance Royalty Societies Create Joint Venture to Streamline Licensing 

(Music Business Worldwide)

This week’s news out of the U.K. is a good reminder that sometimes, less is more.

The British way of collecting and distributing public performance royalties is already much easier than that of the U.S., and just got a whole lot easier.

As a quick primer - public performance royalties are due whenever any business uses music to enhance their business to the public and to their customers. That includes music played on radio, online streaming, TV, concert venues, bars, clubs, restaurants, coffee houses, airlines, etc.

Licensing this music can be complicated for businesses. It’s not always clear that there are at least two licenses required--one for the musical composition and one for the sound recording--and each license comes with its own terms, royalty rates, administration.

This gets more confusing in the U.S., where there are four collection societies (ASCAP, BMI, SESAC and GMR) for the musical composition. And the public performance right for the sound recording doesn’t even exist for FM/AM radio.

Things are much more simple in the U.K. There is one society for the musical composition (PRS for Music) and one society for the sound recording (PPL).

The announcement that the two have created a joint venture means the U.K. is creating one license to cover both the sound recording and the musical composition for virtually all music publicly performed throughout the British territories.

“This is an important moment for the music business at large and is a move towards greater efficiencies for our licensees and greater returns for our members who create the music enjoyed by those we license all around the UK.”

Dubbed “TheMusicLicence,” the PPL/PRS joint venture mimics similar moves in other countries (such as New Zealand, which created a joint venture called OneMusic).

Of course, the catchy names are meant to alert music users they only need one license to be legal and free to play whatever music they want.

The “one license” idea aims to not only improve the current licensing and royalty collection system, but also to incentivize businesses to acquire these licenses (and use more music as a result). Most businesses want to follow the rules and pay music creators, but get stymied by a process that’s often too confusing for those not in the music business.

The more these businesses see the new process as virtually painless, the more likely they are to get licensed (rather than risk flying under the radar). As a result, more royalty income is collected and there is less legal trouble for the unlicensed business.

Unfortunately, the chances of applying this in the U.S. are rather slim.

1. None of the new copyright reform legislation bills suggest merging musical composition and sound recording licenses.

2. The discrepancy in U.S. government regulation between the musical composition and the sound recording makes it legally impossible. Too many holes and contradictions exist under U.S. Copyright to make a “one license” even possible.

For example, it would be impossible to reconcile under one license the U.S. government’s regulation of FM/AM radio royalties via ASCAP/BMI. The U.S. government doesn’t even recognize an FM/AM radio performance royalty for the sound recording. You can’t make “one license” if one of those rights doesn’t even exist under U.S. law.

What’s more, it would prove quite difficult to get all four PROs (ASCAP, BMI, SESAC, & GMR), as well as the sound recording groups in SoundExchange and the major record labels, to agree on the same terms and royalty rates.

Nevertheless, U.S.-based artists and writers should benefit from the joint venture whenever their music is played throughout the U.K.

And now for this week’s other headlines:

Benom Plumb, Assistant Professor of Music Industry Studies at the University of Colorado Denver, reviews the biggest stories of the week affecting music royalties. He is a music industry professional, not an attorney. For more info about Benom, visit his website at www.professorplumbmusic.com.

February 2018

February 23, 2018

We Might Finally See Sweeping Copyright Reform. Here’s What That Would Mean.

Rep. Goodlatte to Unveil Sweeping Music Copyright Reform Package Next Month (The Tennessean)

Just before Christmas, we were pondering what 2018 would bring in the world of copyright and royalty legislation.

Among the various copyright reforms proposed is the upcoming proposed “omnibus” legislation by Rep. Goodlatte (R-VA).

Next month will give us more details about Rep. Goodlatte’s reform package. What we do know is that the package would combine five bills (and possibly more). Here’s what combining them would look like:

MMA (Music Modernization Act)

The basic idea of the MMA is to pay higher royalties to songwriters and music publishers, while easing the licensing burdens and legal liabilities of the music streaming companies. Here’s what MMA would bring to Goodlatte’s package.

#1 - Rate courts will consider sound recording royalty rates paid to record labels and artists as a factor when rates are set for songwriters and publishers.

Plumb’s take: Good news for songwriters and publishers. Recent news of the Copyright Royalty Board increasing on demand streaming mechanical royalties is a good example of this already being implemented.   

#2 - ASCAP and BMI would have their rate-setting disputes heard by any federal judge, instead of a single federal judge assigned for each PRO.

Plumb’s take: This will improve efficiency of common rate-setting proceedings, allow for quicker hearings and resolutions, and should help mitigate stalemates while waiting for hearings.

#3 - The Copyright Royalty Board would start considering a willing-buyer, willing-seller standard during rate-setting proceedings.

Plumb’s take: This concept helps attain a fair value for a song, with fees negotiated in the free market.

#4 - Create a new mechanical digital rights organization, run by music publishers but funded by streaming companies, to identify the copyright owners of songs that digital services want to license. Streaming companies would attain a blanket digital mechanical license and avoid future lawsuits. The new agency would be governed by a 10-member board consisting of ten music publishers and four songwriters.

Plumb’s take: This provision has many concerned. First adding another collection society within the U.S. licensing system could add confusion to an already confusing system. But the primary complaint is that the bill gives another “safe harbor” to digital streaming companies through immunity from copyright infringement lawsuits under the blanket license.

For more on the downsides of the MMA from the songwriter and independent creator’s perspective, see Billboard’s guest column this week titled, “The Music Modernization Act: We Can & Must Do Better.”

The CLASSICS Act

Plumb’s take: This piece of legislation would federalize sound recording copyrights before Feb. 15, 1972. That means requiring digital radio and streaming services to pay artists and record labels public performance royalties whenever those pre-1972 recordings are broadcast. All I can say is, it’s about time!

The AMP Act

Plumb’s take: The AMP Act would amend copyright law to pay a portion of sound recording royalties to the producers, mixing engineers and sound engineers who were behind the creative process of producing sound recordings. Though it is industry practice to pay the producers some royalties, this would codify into copyright law and recognize the recording engineer’s important role.

Register of Copyrights Selection and Accountability Act

Plumb’s take: This would place the power to appoint the Register of Copyrights under the office of the President, with the advice and consent of the Senate (as opposed to the Library of Congress where it currently resides). This could give copyright owners and creators more consistent leadership in the Copyright Office, as well as more of a direct line to the ear of the President.

The CASE Act

Plumb’s take: Rolling this into Goodlatte’s reform package would create a small claims court for copyright royalty disputes under $15,000. These are common, but independents can’t afford court and attorney’s fees. Due to the high cost of chasing down these small claims, it hasn’t been worth the effort for most. If implemented well, a small claims court like this could fill a need and make a difference for smaller and independent royalty payees.

The momentum for copyright reform is stronger and more likely than it has been in a long time. Goodlatte’s bill consolidation here is something that could likely pass, regardless of the objections from either side.

And now for this week’s other headlines:

Benom Plumb, Assistant Professor of Music Industry Studies at the University of Colorado Denver, reviews the biggest stories of the week affecting music royalties. He is a music industry professional, not an attorney. For more info about Benom, visit his website at www.professorplumbmusic.com.

February 16, 2018

Can This Company Increase Royalty Payments From Live Performances?

VNUE Inc. Acquires Soundstr to Streamline Live Performance Royalty Tracking (Billboard)

The Soundstr acquisition this week is certainly of interest to all who have a financial interest in public performance royalties.

Since the very nature of attempting to track live performances of songs across every bar, club, restaurant and concert venue throughout the country can be a major challenge, any progress to make this process more fair and transparent is always welcome.

I’ve been involved in this issue of live performance royalties since 2007. I can say firsthand that it can get pretty messy.

Most venues complain they are overcharged for blanket license fees. These licenses grant them access to millions of songs, but most will never actually be performed in their establishment. For example, a venue that features mostly independent Folk or Americana music really has no need to pay a high license fee for access to millions of non-folk songs.

The venues want to pay only for what they play. And the performers and songwriters want to know their songs are being tracked correctly to receive fair compensation for live performances of their music.

In my experience, unless the songwriter or the artist directly reports which songs were used, some live performances generally go unnoticed. Therefore, the live performance royalties go unpaid.

Each of the PRO’s have their own live concert performance reporting system. It usually requires the writer, artist, or their representatives to register each individual song, for each individual concert date, complete with venue name, address, capacity, headliner/supporting act data, ticketing info, artist name, tour name, etc.

Most writers and artist don’t actually complete these registrations, but their publisher or management team should. If their representative didn’t have the correct concert data, many times there were errors that resulted in inaccurate payments.

Enter Soundstr, a music technology startup that created a tracking technology allowing concert venues to identify the songwriters and their performing rights organization for every song performed in their establishment.

The very idea of this is revolutionary, but the fact someone actually figured out how to do it is pretty impressive. Essentially, a concert venue can plug in the Soundstr tablet device into the soundboard and their system can identify the songs performed that evening, and tell the venue which PRO(s) control the rights to that song.

With this kind of data, venues could just pay for what they use, and the songwriter more directly benefits. Theoretically, we should be able to follow the license fees paid from the folk venue and watch it go directly to the folk songwriters whose songs were performed there.

VNUE Inc., a publicly-traded live entertainment and technology company, clearly saw the Soundstr technology as a way to add value to its core business. VNUE’s company overview on Bloomberg shows that it is in the business of capturing and delivering professional quality audio and video recordings of live performances. It also manages the content and copyright clearances for those recordings and videos.

As the Billboard article mentions:

“VNUE hopes Soundstr will help streamline the process for rights clearances around its digital and physical live recordings...in addition to refining the in-venue tracking process itself."

Real-time performance royalty tracking is the future. Even though the music industry is still evolving from analog systems, reliable royalty and metadata tracking technologies will only improve the licensing and royalty payment process. If the technologies work, using these systems can make license fees more fair for music users, while also providing better transparency and more accurate payment for songwriters.

And now for this week’s other headlines:

Benom Plumb, Assistant Professor of Music Industry Studies at the University of Colorado Denver, reviews the biggest stories of the week affecting music royalties. He is a music industry professional, not an attorney. For more info about Benom, visit his website at www.professorplumbmusic.com.

 

January 2018

Round Hill’s $263M Tips Music Royalties as 2018s Hottest Investment