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Tony Wilson’s Three-Way Proposition

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Lest we forget, Factory Records impresario Tony Wilson was a digital music pioneer. Marking 13 years ago today since his untimely death, The Guardian profiled Wilson’s ill-fated start-up, Music33. This venture was an online MP3 store, launched three years before the iTunes shop (but, to be fair, a couple of years after eMusic). 

Wilson approached the majors, but they wouldn’t get on board. If you remember, the prominent record labels were, at the time, adamantly opposed to download stores and even more resistant to unbundling songs from their albums, a built-in feature of Music33. “People want to buy songs,” Wilson insisted. He did enlist some cool indie labels like Skam (home to Boards of Canada), Mark Rae’s Grand Central, and Blood and Fire. The latter was a dub/reggae reissue label that I adored and had no idea until today that Simply Red’s Mick Hucknall was partly responsible. 

Music33 didn’t go well, ahead of its time like a lot of Tony Wilson’s endeavors. Download speeds circa 2000 didn’t cooperate, users had to redeem their purchases via passwords, and the management of micro-payments was impossible. Music33 was doomed to fail. 

In just a few years, technology solved all of those problems for Music33’s successors. But there was one idea Wilson had that didn’t carry over to our modern paradigm. From The Guardian piece: 

Wilson conceived Music33 as an online record store. The price of a song would be split three ways – 11p apiece for the website, for the artist and for their record label. Wilson felt, as he told me in 2000, that “these shits” – the labels – “saying to the artists: ‘You can have so much per cent’ can go screw themselves.”

The three-way split is an intriguing proposition. That arrangement strongly favors the artist as, after recouping, the artist also gets part of that label split — or all of it, if self-released. That’s in addition to a mandatory third of the total proceeds. Of course, the artist would need to be in direct contact with the store to get her 1/3 share which is problematic. But, as we’re dreaming here, imagine that neighboring rights organizations like SoundExchange handle the artist’s portion. That direct relationship for artist payments already exists with SoundExchange, and gathering performers’ royalties from downloads (or streaming) isn’t that far from what the organization already does.

What if Music33 had taken off and set the tone for the structure of download payments, evolving into the standard rates for streaming payouts? With artists guaranteed to receive at least 33% of streaming royalty, today’s landscape would look quite different. 

Update: As I tweeted, songwriters and publishers would still get the short end of the stick in Music33’s alternate timeline.

🔗→ ‘You’ve been smoking too much!’: the chaos of Tony Wilson’s digital music revolution

The Ongoing Collision of Music and Podcasts

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Recently, the co-host of the Geeks and Beats podcast posted the news that Spotify removed all 250 episodes of his show. This inexplicable act was the result of a takedown request from Universal Music, caused by an allegation of copyright infringement. The notice, sent by Spotify, did not specify what triggered the complaint, so the show’s host doesn’t know how to respond:

As you can see, we have no idea what’s being contested. All we know is that Geeks&Beats has been kicked off Spotify. And not just for the mysterious offense. All 250+ episodes are gone. Wow. Obviously, though, the sniffing algorithms found something and triggered the takedown. Try appealing to a robot.

It would be great if a copyright identification system for podcasts resembled Content ID on YouTube, where the use of songs is approved and, if desired, monetized. Perhaps that’s on the way. But, Spotify’s present one-strike-and-you’re-toast application of the tool is a problem.

If you recall, SoundExchange and PodcastMusic.com are preparing to launch a music licensing platform for podcasters.1However, I haven’t seen any updates on the launch since August, so I don’t know when this service will finally become available. Drawing upon SoundExchange’s extensive collection of pre-approved masters, the platforms expect labels and artists to set licensing prices for catalog easily, and podcasters to easily obtain those license for their shows. The service will include commercially known songs as the majors come on board.

But how will Spotify’s song-sniffer know that the podcaster acquired a legitimate license from SoundExchange? I don’t see the two platforms ‘talking’ to each other to verify music usage. What I expect to happen: Spotify automatically pulls the podcast down (every episode!). The podcaster disputes the claim with proof of the license, with no idea if she’s sending the correct documentation for the disputed song. And then she waits for the podcast to (hopefully) get reinstated. How long do you think that will take? And if it’s a podcast that regularly uses music from SoundExchange’s licensing platform, then fielding takedown notices could become the podcaster’s part-time job.

The intersection of music and podcasts is more like a collision. It’s a total mess. And the indispensable podcast The Future Of What covers the topic in detail in the latest episode. Listen and feel the frustration of everyone involved.

🔗→ This is how insane music copyright claims have become: Totally. F**cked.
🔗→ Episode #178 : Licensing Music For Podcasts

When Small Podcasts Want Big Music

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Vintage Microphone

Billboard:

For about a year, music-business sources say, rights holders have been monitoring podcasts more aggressively for unlicensed content. “We realized we were undervaluing the podcast market,” says one source, “and started proactively approaching people who had been using music without proper licenses.” […]

Podcasters who use music say their business is evolving from an anything-goes atmosphere reminiscent of early hip-hop sampling or online radio into an industry that depends on licensing — one, some say, in which only big companies will be able to afford the resulting fees.

I like the comparison with the early days of sampling and online radio. Podcasts have legally existed under-the-radar for over a decade, inviting the ‘wild west’ cliche when it comes to music licensing. The media attention given to Spotify’s acquisitions and start-ups like Luminary is a cause for monied interests to sit up and notice. Though most podcasts continue to live in the underground, the industry is no longer an underground industry.

Those ‘underground’ podcasts — 94% of podcasts supposedly have less than 5000 downloads an episode1A statistic that I heard repeatedly at Podcast Movement 2019 but I can’t find an online source to back it up. — have little separation from the Mark Marons and the Conan O’Briens. We judge and hype-up the industry according to its successes and highest valuation. So there’s not much wiggle room for a podcast in the 94-percentile to license a well-known piece of music at an appropriately adjusted fee. And to be fair, the rights-holders for, say, “Bohemian Rhapsody” can’t maintain the infrastructure to field thousands of small-paying requests.

Another problem is the archival nature of podcasts. Licenses are more expensive the longer they are active, so licenses with set terms — such as a one-year license — are a way to cut costs. Perpetuity is ideal, and is standard in film and television licensing, but can be out-of-range for podcast budgets. The Billboard article notes that “an annual track license generally costs between $500 and $2,000 for the master recording, plus the same amount for publishing … and must be renewed for a podcast to remain online.” A podcaster in this arrangement would pay this fee annually or have no choice but to delete the archive.

Here’s Music Ally’s take:

Now imagine the admin (let alone the mounting costs) for a podcast that puts out shows on a weekly or even daily basis. […] That’s not an argument for rightsholders not to be compensated for use of music in shows that can reach wide audiences, but the annual-renewal model seems fraught with challenges: we’ve seen some catalogue games ‘deleted’ by their developers because their music licences elapsed, and the games weren’t generating enough revenues any more to make renewals pay off. Could the same thing be happening for older podcasts?

An in-the-works solution is the forthcoming SoundExchange/SourceAudio collaboration that I wrote about previously. I’m sure annual renewals from podcasts will be required through this system as well but at a much lower cost2Supposedly this service will adjust the licensing fee based on the podcast’s estimated listener numbers. and the assistance of the platform in keeping track of it all.

A more immediate solution for the indie podcaster is to eschew “Bohemian Rhapsody” for independent music, focusing on labels and artists that are receptive and probably maintain all of their rights. Most small labels I know would be happy to have music featured in a podcast, or anywhere for that matter. Of course, that’s no help if you’re doing an episode about Queen. But maybe there’s already too much out there about Queen and not enough about emerging bands. Consider giving the airtime to an independent artist that would enjoy some podcast love.

Moving Toward a Music Solution for Podcasts

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I often talk to podcasters about music rights, but we never get anywhere. They want to know how to use recorded songs in their episodes. You think it would be easy — plenty of podcasts are using music and getting away with it. I suspect they’re just flying under the radar. Could fair use come into play? My friends’ podcasts could be considered informational, talking about the music and the artists behind the songs. But claiming fair use is a throw of the dice, and you need to be prepared to go to court if a cease-and-desist letter appears in your inbox. ‘Fair use’ is something that’s decided in a courtroom.

The problem is that there are no set guidelines for using music in podcasts. It’s a gray area, that ‘wild west’ that people bring up when discussing content rights on the internet. Podcasts are a combination of a download and an interactive stream — one or the other or both can happen. So the rights may fall closer to those of a song released to iTunes and Apple Music than licensed to a video or for radio play. On top of that, the usage is a derivative one. You’re incorporating — thus technically altering — someone else’s work in your podcast.

Right now, the solution is to locate and directly contact all of a song’s rights-holders. Easier said than done! Many songs, especially the popular ones, have multiple rights-holders to find. In my experience, Google won’t be much help. It’s the same process that a music supervisor goes through to license for a major motion picture. But, as we learned at the Podcast Movement conference in Orlando last week, 94% of podcasts have less than 5000 downloads per episode. These aren’t operations with the resources of a movie studio. Or the clout and money for that matter — imagine negotiating with a music publisher over a song for your fledgling comedy podcast.

So, yes, the Podcast Movement conference happened last week. And, with premeditated timing, an announcement was made right before the conference doors opened. The news offers a music solution for podcasters. Here’s an excerpt of the press release from SoundExchange:

SoundExchange today announced plans to collaborate with SourceAudio to provide a new solution for the rapidly growing podcast industry to secure music with fully integrated, global licenses. The collaboration would provide Podcastmusic.com, a digital music marketplace for podcasters, with access to SoundExchange’s vast membership of music creators and offer licensing for label and publisher-owned music. […] The service will launch in 2020. Participation in this service by publishers, labels, and other rights owners is on a voluntary basis.

SoundExchange is the rights organization designated by the US Congress to collect royalties on non-interactive digital streaming (such as from SiriusXM or Pandora in old school ‘station’ mode). As it’s the only US organization to handle this type of royalty stream, the catalog of recordings registered with SoundExchange is vast.

In 2017, SoundExchange acquired the Canadian mechanical rights society CMRRA which plays a part in this podcasting arrangement. SoundExchange’s inherent authority over non-interactive streaming doesn’t apply to podcast licensing. But the necessary clearance and royalty collection on the sound recording (mechanical or reproduction rights) is handled through CMRRA. The composition side, overseen by organizations like BMI and ASCAP, is cleared by direct license. The rights-holder opts-in through SoundExchange and grants direct licensing for podcasts.

The catalog will appear on SourceAudio‘s existing site PodcastMusic.com. Presently there is a database of ‘700,000 production and music bed tracks’ that will presumably sit next to recordings pre-cleared through SoundExchange. As SourceAudio is a private company, there have been grumblings about its collaboration with a congressionally mandated organization. I feel this warrants a discussion — undeniably this arrangement gives SourceAudio an upper hand on its competitors. Perhaps SoundExchange can expand this service to other companies that fit professional guidelines, giving the rights-holder an option of libraries to use.

Regardless, this is an exciting development and a massive improvement for podcasters navigating music rights. Recording artists and labels should be pleased, too — this opens a new revenue stream and licensing outlet.

I attended Podcast Movement and sat in on two panels that delved into the mechanics of this emerging podcast music service. A lot of the details are still being worked out. But I can start to see the full picture thanks to remarks by representatives of SourceAudio and SoundExchange and a pair of spirited audience Q&A sessions. Here’s some of what I learned:

  • The service is voluntary for SoundExchange members. All rights-holders — labels, publishers, artists — must opt-in. Prices can be set by rights-holders, which would allow those with high profile content to charge more. However, a $20 per license range is suggested to encourage more licensing frequency. A SourceAudio rep described the ideal model as “Walmart, not Neiman Marcus.”
  • A license will be for one usage in one podcast episode. The licensee will be limited to up to 90 seconds of the song. I assume a shorter usage will reduce the fee.1The fee will also be adjusted according to how many downloads you predict for the episode. There will be two license categories: bumper music, for going in and out of segments; and music used in an informational context, such as historical podcasts about the song or artist played.
  • If the podcaster wishes to license the full song or use the song repeatedly in a series (such as the podcast’s theme song), then the rights-holder(s) must be contacted directly. But fear not — the platform will provide a method of contact for all songs in the catalog. Also, songs in the SoundExchange library not opted-in for pre-cleared podcast licensing are listed as ‘unavailable.’ But a means of contact will be provided for direct negotiation and licensing. Handy. 2I asked if a rights-holder could create exclusions, such as ‘my music can’t be used in conspiracy theory-promoting podcasts.’ It seems there might be something like this in place, but the answer I received was vague.
  • After completing a license, the podcaster downloads the song. This song file will contain a special watermark. Upon the podcast’s completion, I believe the creator is required to upload the show to SourceAudio for verification.3If this is the case, it would be beneficial to integrate this delivery into major podcast distribution platforms. The music’s use in the podcast is tracked via watermark through arrangements with various podcast distribution networks. I imagine Google’s podcast platform plays a large part here as it’s inevitable that some form of Content ID is utilized.4Similarly, any license through the service will also apply to YouTube for ‘video’ streams of podcasts.
  • Though the licenses will be global,5How can one effectively territory-restrict a podcast, anyway? only songwriters registered with US-based PROs can participate at the service’s launch. This issue is probably because not all international PROs recognize direct licensing. The SourceAudio rep assured me the program would be expanded to non-US artists eventually, but there will be some confusion until then. US labels and publishers will be frustrated when they can’t submit songs registered by non-US writers to foreign PROs. Hopefully, this worldwide expansion starts rolling out soon after launch.
  • It appears spring 2020 is the launch target. But there will be a beta version going live any day now. In a smart move, SourceAudio will push well-known Christmas songs for the beta period. The seasonal content will accelerate the testing period as these Xmas licenses will appear in podcast episodes before the end of the year.
  • “Back In Black” was mentioned in passing a total of three times over the two panels. I’m wondering if there’s something in the works with AC/DC to publicize the song as a part of the launch.6This song doesn’t have a US-based writer or publisher so, if it does appear on the service, I wonder if the song’s relationship with ASCAP suffices?

I expect technical hiccups and continued grumbling about SoundExchange’s involvement in private industry. But I’m thrilled to see some clarity arriving in how music gets licensed in the rising rocket of the podcast market. The organizations promise monthly announcements and updates, so there’s more to reveal. Watch this space.

Visit www.podcastmusic.com/rights-holders to get involved as a podcaster or rights-holder.