8Sided Blog

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Spotify is “Effectively Suing Songwriters”

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Music Business Worldwide:

Yesterday (March 7), it emerged that four major owners of digital music services – Spotify, Amazon, Google and Pandora – had lodged legal appeals against the US Copyright Royalty Board’s recent decision to raise streaming royalties for songwriters (and music publishers) by 44%. That royalty rise, which previously looked locked in, is now in serious jeopardy.

Apple Music, in contrast, has accepted the new rates, and declined to challenge what’s viewed as an important pay hike for songwriters.

Remember when Kendrick Lamar and (reportedly) other artists threatened to pull music from Spotify over the arbitrary ‘hate conduct’ ban policy? Spotify quickly backtracked. This might be another opportunity for artists to show Spotify and the streaming industry who really needs who more.

And, as with privacy, Apple continues to brand themselves as the company that does the right thing. I’ll contain my cynicism (which I have for any corporate organization) and say ‘good on them.’

🔗→ Wait… Spotify is ‘suing songwriters’? What the heck is going on?

Ahoy, The Captain

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I’ve done some work with Toni Tennille, helping with the promotion and management of her memoir as well as some general consultancy and publishing guidance. I did have a previous connection: Toni is Caroline’s aunt, which makes Daryl Dragon (‘The Captain’) her uncle. And, technically, my uncle (or uncle-in-law).

I never met Daryl but had an email exchange with him several years ago. He was curious about the status of some C&T compositions and wanted help investigating publishing and master rights, with the hope of exploiting selections from the catalog. Daryl sent me this detailed email — one of the most meticulous I have ever received. He listed all of the songs in question — dozens — separated by genre, style, and era, with codes designating where each was released, if it was a demo, if the song appeared in a film, and so on. Interspersed throughout the list was his commentary on the tunes, often with wry humor and not-too-subtle hints of frustration with the industry. Unfortunately, we never made it past this initial stage, but this personal glimpse into a music industry veteran’s catalog remains illuminating.

Also, The Captain started one of his emails to me with “Ahoy, Michael!” That was pretty cool.

One thing that I always found fascinating about Captain & Tennille is that they owned their publishing from the beginning. It is rare for songwriters signing with major labels to keep their publishing rights, and even rarer to do this in the early ‘70s. Another bold move was Daryl’s decision to open a recording studio, Rumbo Recorders, in 1979. Whatever preconceptions you might have about Captain & Tennille know that Daryl and Toni had the foresight and an independent spirit that eludes many ‘superstar’ artists.

Daryl Dragon passed away yesterday at the age of 76. Toni was with him and, though their relationship was troubled and they divorced, the two remained close. It was sweet how encouraging and at ease Daryl was with Toni’s memoir, which some found explosive in how it addressed their personal history. Right before the book came out, I was in a car with Toni and ‘The Captain’ called. Toni put him on speakerphone, and it was fun to hear their interaction, two close friends catching up.

Toni once told me that Daryl had a massive love for music technology and synthesizers. She said that if he could just play around with synthesizers all day, then he’d be happy. So, in tribute, I’m posting this video from the 1978 TV special Captain & Tennille in Hawaii. I think it shows Daryl Dragon truly in his element.

P.S. I bet you didn’t know that Daryl (and his brothers) have a rad psych album out on Ninjatune.

Why Streaming is the Future of DJ’ing

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Download sales are in a free-fall as acceptance of music streaming continues to grow. If you’re in the dance music industry, you might feel some immunity (at least for now) as DJs are your primary customers. And DJs have to download, right? They still need the digital files on a USB, or a CD if they’re (ahem) old school. Well …

Complete Music Update:

Dance music download platform Beatport has acquired Pulselocker, the DJ-centric streaming service that ceased operations late last year.

Pulselocker allowed DJs to access music to include in their sets. It integrated with various DJ software and hardware systems, worked offline, and reported usage back to rights owners. As a result of the deal, Beatport plans to utilise Pulselocker’s patented technology within its own planned streaming service later this year.

Coverage of this acquisition has noted that Beatport previously attempted a streaming service and failed. But it’s easy to see that the plan here is much different. While Beatport’s earlier streaming ambition was to be like a dance music Spotify, the Pulselocker acquisition promises something new: a subscription streaming service for DJs.

I remember once terrifying a DJ friend of mine with the prediction of a ‘Wi-Fi CDJ’ that would access the DJ’s library from the cloud. The result is not that much different than inserting a USB, really — the DJ would be found scrolling through song titles on the CDJ’s screen and queuing selected tracks for play. It made sense for this prediction to be subscription-based, and for the DJ to be able to organize the catalog with folders and tags beforehand using an app. There would also be an offline element in case the network connection got spotty. My friend was worried as this alternate future killed dance music’s market for downloads.

But the last market flying the flag of paid downloads isn’t as healthy as we’d like to believe. DJs are a tribal group, bonding tightly over music and club life. The thought of piracy may not ever enter their minds but sending MP3 copies of a dozen hot tracks to a DJ buddy is an acceptable notion. The dance music world is also rooted in an often desperate promo culture, with labels sending links to free downloads of the latest release to hundreds (sometimes thousands) of tastemakers in one go. Don’t get me wrong — many DJs are still buying downloads, but many others are incentivized not to.


The streaming DJ set-up is disruptive and offers an alternative. The convenience of instantly adding to one’s library transforms copying and sharing amongst DJs into recommending. And I can also see promo services doing deals with Beatport or other streaming-for-DJ services, allowing private ‘lockers’ of pre-release music accessible only through invitation.

There is an issue of bandwidth and audio quality. Discerning DJs prefer the uncompromised quality of a WAV or AIFF audio format, which means large file sizes. But bandwidth and speed are always getting better, and I can imagine these futuristic CDJs utilizing a cellular network in addition to Wi-Fi internet, or can be reliably wired in by ethernet or other systems. There’s also the offline option, and I guess that libraries would be downloaded ahead of time into temporary onboard memory – or transferred to a USB for backup – in case of network failure. If this all works as planned then why even play MP3s? The DJ has the preferable WAV or AIFF option at her fingertips (or, likely, a future lossless format devised for streaming DJs) so why settle for inferior sonics? The overall sound of clubland improves.

For labels and self-releasing artists, the available data will be mind-blowing. Theoretically one could check stats on a Monday morning to see how many times a track got played over the weekend, in what cities, and maybe even — if these future CDJs are geo-located — what clubs. There’s also a payment to labels per play which might mirror Spotify’s subscription model (though I hope Beatport considers adopting a subscriber share model). At first, this may seem a severe downgrade from download income, but when one considers the decline in shared MP3s and the potential monetization of promos (not to mention the improved potential for discovery), then things get a little rosier.

Another factor making a difference is the conceivable ease of reporting venue play for performance royalty collection. Ideally, I’d like to see the streaming service or even the CDJ itself automatically report the set list to performance rights organizations. If that doesn’t happen, then the DJ or venue can easily output a list of the songs played during a set for online submission. This innovation, coupled with the advent of audio fingerprint technology in play identification (already being tested in a handful of countries such as Germany and the UK), helps solve the longstanding problem of inaccurate distribution of venue-related performance royalty. Historically, a nightclub’s yearly license payment to a performing rights organization (such as BMI and ASCAP) goes to an assumed pool of top-tier artists, no matter the music policy of the club. These technological solutions would radically change the landscape, and non-mainstream clubs could finally see their mandatory licensing fees going to underground artists. So, in the near future, a dance music producer could find direct income from DJ play via streaming subscriptions and venue performance royalty.

It’s inevitable that DJs will use streaming or cloud-based services as their ‘record crates’ (well, save for the vinyl hold-outs — like me). DJs are not strangers to disruption, having transitioned from 12”s to CDs to USB sticks to laptops in just over thirty years. But this is the big one, changing how we select, promo, discover, collect, play, and monetize. The art of DJ’ing responds to the technology so it will be interesting to see how this next step affects the DJs, their ingenuity, and the sounds they play.

The Digital Dispute Over Mechanical Royalty

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Lots of confused, angry, and wide-eyed rumblings due to Spotify’s latest legal pronouncement. The Hollywood Reporter explains:

What {Frankie Valli and the Four Seasons member Bob} Gaudio’s lawsuit alleges — as did the prior class action — is Spotify is violating the reproduction rights of publishers and songwriters. Those making a mechanical reproduction of a musical composition can obtain a compulsory license and bypass having to negotiate terms with publishers. However, those doing so have to follow certain protocol like sending out notices and making payments. The lawsuit claims that Spotify hasn’t done an adequate job of doing this.

In the past, Spotify has pointed to the difficulty of locating the co-authors of each of the tens of millions of copyrighted musical works it streams. It fought the class action mainly on jurisdictional grounds as well as challenging whether the lawsuits were ripe for class treatment. But Spotify seems prepared to go another step and set off a legal firestorm by now challenging what rights are truly implicated by streaming.

“Plaintiffs allege that Spotify ‘reproduce[s]’ and ‘distribute[s]’ Plaintiffs’ works, thereby facilely checking the boxes to plead an infringement of the reproduction and distribution rights,” states a Spotify motion for a more definitive statement from the plaintiffs. “But Plaintiffs leave Spotify guessing as to what activity Plaintiffs actually believe entails ‘reproduction’ or ‘distribution.’ The only activity of Spotify’s that Plaintiffs identify as infringing is its ‘streaming’ of sound recordings embodying Plaintiffs’ copyrighted musical compositions.”


Spotify is implying that digital streaming doesn’t entail reproduction; thus the service never owed mechanical royalties in the first place. If you’re confused (and that’s understandable), Complete Music Update gives a solid explainer:

In music, and especially music publishing, a distinction is commonly made between the reproduction and distribution controls – often referred to as the ‘mechanical rights’ – and the performance, communication and making available controls – commonly referred to as the ‘performing rights’.

When you press a CD you exploit the mechanical rights but not the performing rights. When you play a song on the radio you exploit the performing rights but not the mechanical rights. But what about digital?

Copyright law doesn’t usually state which controls the digital transfer of a song or recording exploits, though generally the music industry has treated a digital delivery as both a reproduction and a communication (or a reproduction and a making available) at the same time. A download only exploited the mechanical rights, while a personalised radio service like Pandora or iHeartRadio only exploited the performing rights. However, with on-demand streaming of the Spotify variety, it has generally been accepted that both the mechanical and performing rights are being exploited.


(The full CMU explainer is worth a read.)

I admit, applying mechanical royalty to digital streaming seems a stretch at first. But what’s important to remember is mechanical royalty is not meant to be tied to purchase or the consumer acquiring the duplicated composition. For example, if a label manufactures 1000 CDs then mechanical royalty must be paid for all 1000 copies, even if only 50 sell.

Technically, streaming does require a download, though that download is immediately deleted from the device’s RAM. So, even though the listener isn’t purchasing or acquiring the song, there is a duplication taking place.

This does get tricky when one examines the separation of radio-style services (such as Pandora’s traditional streaming ‘stations’ and iHeartRadio) and on-demand streamers (Spotify, Apple Music). I don’t know the technical specifics, but doesn’t a Pandora ‘station’ download the file to a device’s RAM as well? Almost every other country in the world seems to think so, as the US is an outlier in excluding digital radio-style services from mechanical royalty payment.

If the issue of mechanical royalty and streaming goes to court, it will be watched very carefully as the precedent set either way would be monumental.

Spotify has already paid out tens of millions in settlements over unpaid mechanicals which is likely to be seen as an admission of guilt, hurting the chances of the ‘we should be exempt’ argument. So the money is on the status quo. Regardless, songwriters have a right to be concerned. The line taken by Spotify’s lawyers reveals that the company believes writers should be paid even less than they presently are.

Songwriters Getting Paid as the Robots Listen

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There are a few options for businesses to legally play music on premises, whether that business is, say, a nightclub, restaurant, or hair salon. An in-store music service like Mood Media (formerly Muzak) can supply channels of pre-cleared tunes for a subscription fee. These services are like radio in most cases, as the business won’t be able to choose any particular song that’s played. The business could also just play music by friends and enter into a direct licensing agreement with each songwriter. That would be a huge hassle and dramatically limit the available catalog.

The most popular option is to pay for the compulsory licenses offered by the performance rights organizations – PROs like ASCAP, BMI, and SESAC. These licenses allow the business to play songs represented by each PRO. A few factors determine the fee, such as venue capacity, and the business usually obtains a license from all the PROs. For one thing, it’s a lot of work to determine which PRO represents a song the venue wants to play, and the music customers would like to hear are distributed amongst all the rights organizations. Paying fees to all creates full coverage and the freedom to play whatever you’d like.

A venue’s requirement to get a compulsory license is one of the most misunderstood aspects of music publishing. The venues themselves especially misunderstand this requirement. I’ve spoken to many business owners who don’t understand why they have to pay for such a license. The phrase “it’s nothing but a shakedown” is used on more than one occasion. But the simple fact is this: if your business is profiting off of someone else’s music – and playing music to enhance your business qualifies – then the songwriters should get a cut of some sort.

There is another argument made by business owners that I find harder to dispute. Nightclub owners often argue that the fees they pay to the PROs aren’t going to the songwriters whose songs they are playing. This statement is often true. Presently, the PROs have no way to track the songs played in their licensed venues. The businesses could submit a list of all the songs played in a day, but no one is going to do that. Instead, the PROs pool the collected fees and distribute the royalty to songwriters they assume are the ones getting played the most. In other words, popular songwriters, for the most popular songs.

I can empathize, as I DJ’ed hundreds of times exclusively at underground clubs and very few of the songwriters I played (if any) ever saw a penny. I’ve heard tales of clubs in some territories tackling the problem by having the DJs write down all the songs from their sets. I guess it’s the thought that counts, but this is obviously an unreliable and haphazard solution.

There’s a change coming, though. Advances in audio recognition are making song tracking in venues possible. Using technology popularized by the likes of Shazam, songs get identified and, in turn, the appropriate songwriters paid. From a story in Complete Music Update:

Collecting societies PPL and PRS For Music have confirmed that they are expanding a pilot project to test the use of music recognition technology in clubs, pubs, bars and hotels to monitor what music is being played in those spaces.

Peter Marks {CEO of UK clubbing chain The Deltic Group} has welcomed the pilot, saying: “Music is the very heartbeat of our business and it’s in our interest to see that talented artists are rewarded for their creations. With online streaming and other digital technology, it’s increasingly difficult for songwriters and musicians to make a living from their creations, so anything we can do to help and attract and support the latest local talent has to be a good thing”.

I believe GEMA in Germany has also been testing this out.

The ramifications are enormous and welcome; accurate tracking in venues (and eventually across other outlets such as radio and sporting events) will create a great benefit for non-mainstream songwriters.

It remains to be seen if US PROs might look to adopt this technology. The fact that there are multiple PROs in this country may prove to be a stumbling block. A device that listens, identifies songs, and sends data to the PROs would have to be installed in every participating venue. It would be a hassle if each PRO had its own device for every business to install. Could they agree on one shared device? Part of me thinks it unlikely as the US PROs are fiercely competitive. That said, the recent news of ASCAP and BMI collaborating on a musical works database gives us a glimmer of hope.

The US is often the country left behind when it comes to advances in rights management. Let’s hope our industry is proactive in embracing this technology solution to a longstanding problem.

Spotify Settles With Songwriters

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Spotify has reached a settlement with a group of songwriters who had sued for copyright infringement, eliminating an potential complication to the public offering that the streaming service is planning later this year.

Under the agreement which will need to be approved by the court, the streaming company will set up a fund worth $43.4 million to compensate songwriters and publishers whose compositions the service used without paying mechanical royalties.

Spotify has to pay record labels to use their recordings and publishers to use the underlying compositions; it pays mechanical royalties directly to publishers and public performance royalties to performing-rights groups like ASCAP, which distribute the money to their member publishers and songwriters. Streaming services don’t need to negotiate with publishers, since they can take advantage of a “statutory license” offered by the federal government.

But they need to find the right publishers to pay — a challenge in cases where recordings have entered Spotify’s system without proper metadata. Spotify has always made a point of holding money aside for publishers it couldn’t identify, but doing so doesn’t make it compliant with copyright law.

Beyond past and future compensation, the settlement agreement outlines a process by which Spotify and the class counsel “will work collaboratively to improve the gathering and collecting of information about composition owners to help ensure those owners are paid their royalties in the future,” according to the plaintiffs’ motion.


Previously, Previously, and Previously.



Update: Complete Music Update does a great job explaining this mess:

In some countries, the music publishing sector has traditionally licensed the performing and mechanical rights separately through different entities, meaning streaming firms need to ensure that – not only do they have deals in place for both recordings and songs – those deals cover both the performing and mechanical rights of any works streamed.

In the US this has proven challenging, because while there are collecting societies that licence performing rights, there is no one-stop society that represents mechanical rights. In other countries where the two elements of the copyright are licensed separately, there is a mechanical rights society that can provide a licence to cover any songs that are not subject to direct deals between the streaming firms and the big music publishers.

On one level this shouldn’t matter because there is a compulsory licence covering mechanicals in the US, which includes a set statutory rate to be paid, so streaming services don’t need to negotiate terms and they know from the outset what the mechanical costs will be. However, the compulsory licence obliges the streaming service to alert each and every rights owner that it intends to exploit their work or – where they can’t identify the owner – it should file paperwork with the US Copyright Office instead.

Few services did this, mainly because of the big music rights data problem, whereby there is no one stop publicly accessible database to tell you who controls which song copyrights, nor which song is contained in which recording. However, by failing to adhere to the formalities of the compulsory licence, whenever a streaming service streams a song in the US which is not covered by one of its direct publisher licences, it is technically committing copyright infringement.


Update 2:

Compare Spotify to Facebook. Facebook has no licenses. None. Zero. Zilch. They know they have no licenses and they don’t seem to be in much of a hurry to solve this problem. For all of Spotify’s problems, Facebook is not Spotify. Facebook is a royalty deadbeat.

What the Spotify cases should tell Facebook is that Facebook should not expect to get a pass for their bad behavior. Facebook should expect to write a very large check for the past and a very large check for the future.

YouTube, Unpaid Royalty, and Missing Metadata

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The New York Times:

In a persistent problem for the online music business, large numbers of songs have missing or incorrect data about their songwriters and which music publishers represent them, leaving what is widely estimated to be millions of dollars unpaid. The publishers’ association has made a series of deals to address the problem, most recently with Spotify.



On Thursday, YouTube, which is by most estimates the most popular destination for music online, announced that it had reached a settlement with the National Music Publishers’ Association, a trade group, over the complex issue of unpaid songwriting royalties.



The agreement with YouTube {estimated to be worth more than $40 million} will give participating publishers — the companies that traditionally manage songwriting rights, which are separate from those of recordings — access to a list of songs for which YouTube has missing or incomplete rights data. YouTube will then pay any accrued royalties from a fund it has set aside for this purpose.



Again, the services get the all the blame but messy data collection and management within the industry itself is a major part of the problem.

Previously and Previously.

Video: Saving “Happy Birthday”

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Here’s a short video documentary on the sinuous story of that song everybody knows and sings and how overnight it went from being a Warner/Chappell cash cow to the public domain. The affair offers some insight into the often complicated worlds of music publishing and rights management.

For years, global music publisher Warner/Chappell claimed copyright of the “Happy Birthday” song, demanding payment for any public performance of it. Jenn Nelson tells the story of her four-year campaign to prove that the company did not in fact own the rights to the world-famous song, whose tune was composed by two sisters in Kentucky in 1893.



Previously: HERE and HERE and HERE,

Encouraging Steps Towards Closing The Publisher Data Gap

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Music Industry Blog:

Artist concerns about transparency in streaming services are well founded but it is an eminently fixable problem because virtually all of the necessary data is in place. When a record label or distributor licenses music to a service it literally provides a data file of its music which is then ingested (uploaded) by the service. But when service licenses from a music publisher or PRO there is no such data file, because the recorded works are owned by the labels. Publishers do not even provide a comprehensive list of what works their license covers. So music services instead do a ‘best efforts’ licensing effort, licensing all the key publishers and PROs.

The problem is that until there is a market level solution that sort of action won’t go away. This means any music service operating in the US, where there is a statutory damages system, cannot operate with certainty that it will not face another legal suit with potentially vast damages awarded. The nightmare scenario is that streaming services start pulling out of the US, or restricting their catalogue to identified works (which largely means major publishers only) rather than face potentially fatal legal challenges.

The music industry needs a solution and now just like busses that never come, two arrive at once: Google’s Open Source Validation Tool for DDEX Standard and Canadian PRO (Performing Rights Organization) SOCAN has acquired Medianet essentially as a digital rights reporting play.

Previously.

I sort of feel like the old guy grumbling “we can land a man on the moon but we can’t even (insert impossible thing here)”, but in this data-obsessed age we really should have a centralized publishers database that can be updated and utilized throughout the industry. Hopefully multiple companies getting involved (there are also rumors of Music Reports entering the fray) will finally bear some fruit, and we can begin slowly stumbling our way out of this wild west phase of the streaming economy.

A Boost for DJ Mixes and the New Streaming ‘Sub-Economy’

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Billboard:

The National Music Publishers’ Association (NMPA) and Dubset have reached a deal that will allow the NMPA’s independent members, both publishing companies and songwriters, to take part in a new streaming “sub-economy” that only recently became technologically feasible. This new revenue source is through derivative works, or pieces of music that are wholly or partially based on others’ creations, like DJ mixes and remixes. Through its MixBANK, Dubset cross-sections these creations and identifies their constituent parts (a vocal line here, one-half of an entire song there), determines the appropriate royalty splits, then services them to its clients, like Apple Music.

Dubset isn’t the only company making advances in this highly technical space. SoundCloud’s new subscription service, Go, uses an undisclosed process to identify derivative works, which its platform has plenty of. (This, despite a recent report to the contrary.)

Hypebot:

Through the Rights Agreement, NMPA members who opt-in will have access to Dubset’s MixBANK platform where they can set terms and rules around how and where their catalog may be used in mix content. Each time a new mix or remix is delivered to MixBANK the clearance rules set by rights holders to determine whether the content is cleared for distribution are applied. Cleared mix and remix content is then made available to legal music services under an approved royalty structure.

Pay no mind to Digital Music News’s shadowy anonymous sources … DJ mixes and remix culture are on the rise in the social sphere.

(Previously)

Update (May 25, 2016); via Hypebot:

Dubset Media announced today that it has reached an agreement with Spotify to use its MixBANK distribution platform. The deal makes it possible for DJs to upload and legally stream their mixes and single track remixes. In addition, the new agreement is expected to enable Spotify listeners to stream radio shows and other user generated mixes that have not been previously legally available to music fans.