THE $ONG ROYALTIES GUIDE

SONGWRITER

DISSECTING THE DIGITAL DOLLAR themmf.net/digitaldollar Introduction & Executive Summary The MMF has spent the last few generates nearly half of recorded years exploring how money flows music income overall and continues to from streaming services through to rise month on month. artists via our ‘Dissecting The Digital Dollar’ series of reports and guides This creates a conundrum. As produced with CMU Insights. This streaming becomes the biggest has included reviewing the debate recorded music revenue stream around how the ‘digital pie’ is sliced, – and with the song share on that ie the ongoing discussions over income being double that on a CD – how streaming income is shared out songwriters should be slowly starting between the different stakeholders, to see a benefit. But songwriters including artists, songwriters, and their managers insist that is not labels, publishers and the streaming happening. services themselves. There are a number of factors that in A key part of that debate is how part explain this conundrum, including money paid into the music industry by the increasing number of co-writers the streaming services is respectively on songs in some genres and the way allocated to the recording copyright monies are shared out between the – which is ultimately shared with different works on an album in the the artist – and the separate song streaming domain. However, perhaps copyright – which is ultimately shared the biggest factor is the inefficient with the songwriter. In the main process via which song royalties from considerably more is allocated to the streams are processed and paid. former. As streaming has become the fastest growing recorded music In most cases, sitting between a revenue stream there has been streaming service and the artists and much debate about the fairness of songwriters whose music they stream these splits. will be a number of music industry institutions. These are the entities That debate continues. However, with which the streaming services while there is still an argument that the negotiate licensing deals. digital pie should be further resliced to the benefit of the songwriter, it is also Once the deals are done, each month true that more money is already being the services pass data and money allocated to the song on streams over to each licensing partner. These compared to what was passed to the licensing partners then pass money publisher and the writer from the sale along to the artists and songwriters, of a CD. In fact in some cases, with the sometimes directly, sometimes via more recent streaming deals, the song other companies or organisations. This allocation on a stream is more than therefore creates a royalty chain – a THE SONG ROYALTES GUIDE THE SONG ROYALTES double that on a CD. number of entities through which data 2 and money must pass as it goes from Meanwhile, streaming income now streaming service to artist or writer. THE COMPLEXITIES OF THE ROYALTY CHAIN

SONGWRITER For various reasons outlined in this the gauntlet, MMF would suggest guide, these royalty chains are much the following areas as an immediate more complicated on the songs side priority… of the music rights industry. There are more royalty chains in play. Longer 1. Shine a light on global royalty chains are more common. royalty chains Significant delays can occur at each Given the complexities of the link in the chain. What monies are global digital licensing landscape, being deducted along the way often it has become too onerous and isn’t clear. And the songwriter – expensive for all but the most compared to the artist – is much more successful songwriters to track and reliant on the capabilities of the first trace their royalties. This needs to link in the chain – with which they will change. Collecting societies and often have no direct contact – to get music publishers must embrace paid at all. transparency and move towards making crucial data freely available Through this latest phase of the Digital as standard practice – and especially Dollar research with CMU, we’ve information relating to the ownership discovered that fixing all of these of rights, the royalty chains being inefficiencies is like solving a Chinese employed, and any deductions and Puzzle. Even if you can identify the delays that occur as money moves numerous and interlocking problems, along those chains. how to best tackle each issue so to ensure that royalties flow and creators are paid remains an almighty 2. Reveal the disputes challenge. Co-ownership of songs, Music publishers, collecting societies the way copyrights are split, territorial and their royalty processing hubs licensing and poor data all contribute currently control the flow of songs to an overly complex system, and data between the music industry cause the disputes, delays and and the streaming services, and are deductions that stop songwriters therefore the first to see the common getting properly paid when their music data clashes that can delay or stop is streamed. payments. It is unacceptable that they sit on these issues and we need Clearly, there are no silver bullets. A them to proactively alert songwriters plethora of reforms are needed, some whenever data clashes occur so they of which are already under way in know to resolve them and remove any some territories with some repertoire. blockages that are stopping royalties But to ensure every songwriter is getting through. treated fairly, there is an urgent need for a wide-ranging plan of action – led 3. Shorten the chains by by writers and their managers and embracing global licensing other professional advisors (lawyers If you were starting from scratch, no THE SONG ROYALTES GUIDE THE SONG ROYALTES and accountants), alongside music one would invent the current song publishers, collecting societies and licensing framework for streaming streaming services. Laying down 4 services. The current territorial THE SONG ROYALTIES GAME As each songwriter’s streaming income passes along the many different royalty chains in play, money can be delayed and deducted at each stage.

The big questions: How much is actually getting through? And how long does it take for the money to reach the writer?

What royalty chains are in play will depend on a writer’s publisher and society. Often writers are not aware of what chains are being employed, let alone what deductions and delays occur. So it’s hard for writers to know just how much money is getting lost along the way. 5 approach and the employment of does exist – and it is filled mostly with multiple royalty chains for single royalties owed to smaller writers and streams of single songs is the publishers towards the end of the byproduct of systems, institutions long tail. If, as is common in the songs and reciprocal partnerships that were business, this unallocated income is created for an analogue era. distributed to writers and publishers based on market share, you have a As well as efforts to better understand reverse Robin Hood system, whereby and disentangle current practices, those writers and publishers who there must also be a shift towards need the money most are least likely global licensing of the songs to get paid. repertoire. Any new services and new markets should not be licensed locally This also means that those perhaps – putting more links into the chain best positioned to address the – and when deals are renewed with issues outlined in this guide are the existing services, efforts should be least incentivised to do so. This is made to shift ever closer to a global clearly untenable. We need more licensing approach. transparency from all stakeholders as to how much income is currently 4. Speed up the flow of unallocated, what is happening to that payments income, and what publishers, societies and data processing hubs are doing While many artists are now receiving to bring the amount of money that payments within weeks of their cannot be accurately distributed to the music being streamed, it frequently absolute minimum. takes writers years to receive all their song royalties. This is completely If some revenues cannot be attributed, unacceptable. Even in the current then it is morally indefensible to environment, we should be setting redistribute them on the basis of goals that writers should never have to market share. We would like to wait more than nine months after a song see a rigorous consultation within is streamed to receive payment in full. the songwriting community – and for these monies to be used for 5. Reduce black box grassroots projects and initiatives. collections and distribute unattributed revenues fairly 6. Campaign for change In theory, in the streaming space there Finally, we need songwriters – and should be no unallocated royalties, ie their managers and other professional monies that we know need to be paid, advisors – to push each of the but where we don’t know which songs publishers and collecting societies or songwriters those revenues should they work with to actively and urgently be allocated to. There should be no address the issues outlined in this black box for streaming. guide. And to celebrate those who are THE SONG ROYALTES GUIDE THE SONG ROYALTES making positive changes to ensure However, due to the above mentioned that ongoing growth of the music 6 inefficiencies, a streaming black box industry is equitably shared by all. Section One: Digital Dollar basics

The ‘Dissecting The Digital Dollar’ 3. When the music industry allows book explains in detail the deals others to exploit the controls of that have been done between the its copyrights, it either does so music industry and the streaming through direct deals or through the services like Spotify, Apple collective licensing system. In the Music, Amazon Music Unlimited, latter scenario, the music community Deezer and Tidal. It also outlines pretty much licenses as one through the copyright law, contractual organisations called collecting conventions and licensing practices societies (or ‘collective management that all had an impact on the way organisations’ or ‘performing rights those deals were structured. organisations’, also known as CMOs and PROs). (Section 2.4) For a comprehensive overview of how it all works you should read the 4. Each country has its own collecting full book. Though here are ten key societies. Usually there is a society facts that will help you understand for recording rights and a society for the way streaming royalties are paid song rights. On the songs side, there and why there are different royalty might be one society for mechanical chains. References to relevant rights and one society for performing sections of the book are also given. rights. In some countries there are multiple societies for one set of rights 1. There are two sets of music rights which compete with each other. and two music rights industries: (Section 2.4) recording rights and song rights, respectively controlled and 5. Traditionally collecting societies

monetised by the record industry only issued licences within their THE SONG ROYALTES GUIDE and the music publishing sector. home country. They would then (Section 2.1) have reciprocal agreements with other societies around the world. 2. Copyright provides a number of This meant each society could specific ‘controls’ to the copyright offer a licence in its home territory owner. Music publishers often covering something nearing a global talk about ‘mechanical rights’, catalogue. Licensees would pay which include the reproduction their local societies, which would and distribution controls; and then pass the money on to foreign ‘performing rights’, which include societies when foreign catalogue was the performance, communication used. (Section 3.5) and making available controls. It is generally agreed that a stream 6. The law usually tells us who the exploits both the mechanical rights default owner of any one copyright and the performing rights at the same is. For songs it is the songwriter. time. (Section 2.2) Where there are multiple writers, 7 they co-own the copyright between 8 THE SONG ROYALTES GUIDE combination of directdealsand the publishingside, thereisa labels andmusic distributors.On the licensingpartnersarerecord direct dealsinthedigitalspace, so The recordindustrygenerally does sector (coveringsongrights). rights) andthemusicpublishing record industry(coveringrecording from ‘licensingpartners’ inboththe Streaming servicesneedlicences The musiclicensingjigsaw Section Two: share’ andwillusuallybepaiddirectly This isreferredtoasthe‘publisher’s songs thatarepartoftheagreement. collecting societyaroundanyofthe any moneygeneratedbythewriter’s usually grantthepublisherashareof publishing deal,thatdealwillalso 8. Whenasongwriterdoes collecting society. (Section3.3) and theperformingrightstotheir assigns boththemechanicalrights Europe, thesongwriterusually to amusicpublisher. InContinental the otherelementsoftheircopyright society andthenassignsorlicenses performing rightstotheircollecting songwriter usuallyassignstheir 7. InAnglo-Americanmarkets, the (Section 3.1) to managetheirrights(viaalicence). assignment) orappointanotherparty their rightstootherparties(through them. Defaultownerscantransfer previously paid.(Section3.3) the recoupmentofanyadvances payments willlikely besubjectto subject tocontract.Againthose the writerashareofthatmoney the publisher, whichwillthenpay monies willusuallyflowfirstthrough license onitsbehalf. Buteitherway, or allowacollectingsocietyto either directlylicensethoserights elements ofthecopyright,itwill 10. Whereapublishercontrols any newpayments.(Section3.3) income beforethepublishermakes can usuallyberecoupedoutofthis Any advancespaidtothewriter through thepublisher’s bankaccount. But thismoneywillstillusuallypass pay acutofitssharetothewriter. publisher mightthenbeobligedto 9. Underthepublishingdeal, (Section 3.3) to thepublisherbysociety. stream. the recordings and songsitneedsto licences, ensuring ithasaccesstoall service mustcompleteajigsaw of they entereachnewmarket each songs aspossible. To dothis,as license asmanyrecordingsand Most streamingserviceswant to societies getinvolved. both publishersandcollecting collective licensing,whichmeans THE DIFFERENT MUSIC the recordings it controls into the LICENSING JIGSAWS streaming service’s platform. If a deal has not been done with any one The service will need to complete label or distributor – so the jigsaw is separate jigsaws for recordings incomplete – the streaming service and songs. And depending on the won’t be able to offer that licensing country, on the songs side it may also partner’s recordings in that market. need to complete separate jigsaws This will make the service’s offer for the mechanical rights and the less attractive to consumers in that performing rights. country, but at least the streaming company isn’t going to infringe Each piece of the recording rights anyone’s copyrights, ie stream a jigsaw will be a label or a distributor. recording without the permission of Each piece on the song rights jigsaw the copyright owner. will be a publisher or a collecting society. How complicated each However, on the songs side the jigsaw is to complete varies from licensing partner simply provides a country to country. licence, not any content. The songs are contained in the recordings that As a general rule, the recording rights the labels and distributors have jigsaw will be pretty similar in each already uploaded. The streaming territory, so with each new country service knows what recordings are a service enters, it should become on its platform, but doesn’t actually easier to complete that jigsaw. know what songs are contained in But with song rights, the jigsaw or those recordings, let alone who wrote jigsaws could be quite different from those songs or who controls the market to market, depending on song rights in any one country. Plus local conventions and the decisions song copyrights are often co-owned, publishers and societies have made. which means multiple deals may be THE SONG ROYALTES GUIDE required to ensure 100% of any one THE IMPLICATIONS copyright is licensed. OF NOT COMPLETING THE JIGSAW This means it is actually quite easy for a streaming service to stream a And yet, it’s arguably more important song without the copyright owner’s to fully complete the song rights permission, ie to infringe copyright. jigsaw in each market than it is And when you infringe copyright, to complete the accompanying the law says the copyright owner – recording rights jigsaw, because of or ‘rights-holder’ – can sue you for the potential impact on the business damages. of any licensing jigsaw being incomplete. That said, in most countries, the owner of any songs being streamed Once each deal has been done without licence is unlikely to actually with a label or a distributor, that sue, because – providing the licensing partner then pumps all 9 10 THE SONG ROYALTES GUIDE RIGHTS JIGSAWS COMPLETING THESONG rights jigsawineachcountry. service tofullycompletethesong copyrights isforthestreaming ensure itwillnotinfringeanysong But eitherway, thesimplestwayto process inAmerica. simplify, toanextent,thelicensing Act seekstoendthispracticeand said, therecentMusicModernization litigation onthisissueintheUS.That and iswhywehaveseenplentyof will workonanowinfeebasis This isespeciallytruewherelawyers pay anyoutstandingroyalties. demanding itsecurealicenceand for damagesratherthansimply side tosuethestreamingservice an incentiveontherights-holder’s royalties actuallyowed.Thisprovides can besignificantlyhigherthanthe damages’ areoftenavailable, which in theUS,wheresocalled‘statutory However, thishasn’t beenthecase the costsoflegalaction. owed todate, ratherthanincurring deal andpaytheroyaltiesthatare streaming serviceagreealicensing rights-holder’s interesttodemandthe that areowing.Thereforeitisinthe are likely tobesimilaranyroyalties faith –theavailabledamagesincourt streaming servicehasn’t actedinbad What thismeans willdependonthe launching. societies ineachcountywhere itis start withthesongrightcollecting the streamingservicewillusually To completethe songrightsjigsaw, complications. licensing deal.However, thereare with onelicensingpartnerand one service cancoverallsongrights country. Thismeansthestreaming entire songrightsjigsawforthat a singlelicencethatcompletesthe that oneorganisationcanprovide other societyintheworld,theory has reciprocalagreementswithevery rights andperformingrights,which society representingbothmechanical In countrieswherethereisasingle has arelevantreciprocalagreement. society aroundtheworldwithwhichit the songscontrolledbyanyother it willalsoprovidealicencecovering and/or musicpublishers.Inaddition, own localmembershipofsongwriters all thesongsdirectlycontrolledbyits a licenceforitslocalmarket covering society willfirstandforemostprovide Under eachofthesedealsthe society. rights societyandaperforming publishers. represent differentwritersand/or collecting societiesthateach collecting society. It couldmeananyofthefollowing: has beentraditionallymanagedthere. country andhowcollectivelicensing n n n First, thelocalsociety maynotbe reciprocal agreements remove digitalrightsfrom Collecting societiesthat Separatedealswithamechanical Separatedealswithmultiple Asingledealwitha able to provide a licence covering the are often referred to as ‘copyright repertoire of every other collecting hubs’ and include the likes of ICE and society in the world. Armonia in Europe and the Digital One Stop Shop venture in Latin Either because it doesn’t have America. reciprocal agreements in place with every other society yet. Or because Publishers that remove Anglo- some of those other societies have American digital rights from chosen to not include digital rights the collecting societies within their reciprocal agreements in Secondly, an increasing number of that territory, forcing the streaming music publishers are licensing at least services to instead license those some copyright controls associated rights directly from the foreign with their Anglo-American repertoires society. in some (though not all) countries through direct deals rather than the A collecting society licensing users collective licensing system. of music in countries other than its own is a relative innovation, but is In these countries, the publisher becoming increasingly common in will pull the mechanical rights of its the digital space. It means that a Anglo-American repertoire – which, society will negotiate a licence with a remember, the publisher directly streaming service that covers multiple controls – out of the collective markets. licensing system when it comes to digital services. It means the In countries where that multi-territory mechanical rights in these songs licence applies, the local society will no longer be included in any will not be involved in licensing collecting society licence and the the foreign society’s repertoire. In streaming service must instead countries where the multi-territory THE SONG ROYALTES GUIDE negotiate a deal with the publisher. licence does not apply the traditional approach will usually be used, ie the Publishers usually set up a joint local society will provide a licence venture with a collecting society or through a reciprocal agreement. copyright hub in order to manage these direct deals. These JVs are Some societies have come together often referred to as ‘special purpose to provide these multi-territory vehicles’ or SPVs. They include licences through joint ventures, so entities like SOLAR (for Sony/ATV), that a service can get a single deal DEAL (for Universal), PEDL (for covering the respective repertoires Warner), ARESA (for BMG) and IMPEL of multiple societies in multiple (for a consortium of indies). Kobalt territories. The aim is to reduce the works in partnership with its own number of deals the service needs collecting society AMRA. to do. Where a publisher has pulled the These joint venture licensing entities mechanical rights in its Anglo- 11 12 THE SONG ROYALTES GUIDE society (CMO) mechanical rightscollecting Countries withouta through thepublisher’s bankaccount. rights incomeneveractuallypasses that thewriter’s shareofperforming with apartnersociety. Thisensures the reasonsforsettingupSPVs control thoserights.Whichisoneof to flowthroughthesocietiesthat subsequently generateswillcontinue performing rightsincomesaiddeals and thewriter’s shareofany participating collectingsociety be subjecttotheapprovalofany However, thosedirectdealswill direct deals. allowed tobundlethoserightsintoits countries. Insteadthepublisheris has withthelocalsocietiesinthose nor inanyreciprocalagreementsit provides astreamingservicedirectly, publisher’s songsinanylicencesit include theperformingrightsofthat American societywillnolonger the directdealsapply, theAnglo- This meansthat,inmarkets where performing rights. rather thanthepublisherowns direct deals.Remember, thesociety accompanying performingrightsinits collecting societiestoincludethe the relevantAnglo-American also oftenseekpermissionfrom collective licensingsystem,itwill American repertoireoutofthe rights inanyone songneedsa anyone exploiting themechanical mechanical rights insongs.Instead collecting societythatrepresents the notably theUStodate, thereisn’t a In asmallnumberofcountries, most have struggled toidentifytheowners In theUSsome oftheseagencies their services. publishers andanylicenseethat hires licenses betweenindividualmusic they administratenumerousdirect offer alicencetolicensee. Instead not inthemselvesempoweredto a collectingsociety, buttheyare agencies performasimilarroleto process. Insomewaysthese administration ofthedirectlicensing which songsandthenmanagethe identify whichpublisherscontrol rights agenciesthathelplicensees an option.However, thereareusually mechanical rightssociety, thisisn’t But incountrieswherethereisno licensing throughdirectdeals. controlled bypublishersnotyet covers themechanicalrightsofsongs provide a‘mop-uplicence’ that that market. Thesocietycanthen publishers arelicensingdirectlyin should beabletotellthemwhich relevant localcollectingsocietywhich services canusuallystartwiththe deals. However, thestreaming streaming servicesthroughdirect Anglo-American repertoiresto publishers arestilllicensingtheir mechanical rightssociety, some in manymarkets wherethereisa Of course, asdescribedabove, with everypublisher. require adirectlicensingrelationship that licence, butalicenseewillstill agreement thatdictatesthetermsof compulsory licenceorindustry-wide control thatwork.Theremaybea publisher –orpublishersthat licence directlyfromthemusic of every single song copyright society in the US for the first time contained within the vast catalogues which will in itself be empowered of the average streaming service, to provide streaming services with meaning some mechanical rights a licence. Any publishers without a have gone unlicensed and some direct deal with a service will claim mechanical royalties have gone the mechanical royalties they are due unpaid. for the streaming of their songs via this new society. This means the streaming service is liable for copyright infringement. WHAT THE SONG And because of the statutory RIGHTS JIGSAW MIGHT damages explained above – which means unpaid rights-holders could LOOK LIKE make significantly more from an So, as you can see, there are various infringement lawsuit that simply complications that mean the song demanding they be paid any royalties rights licensing jigsaw can be very that are owed – this has resulting in different from country to country. plenty of litigation. Completing the jigsaw could be very easy or it could be very complex In a bid to avoid this situation, the indeed, as illustrated in the diagrams Music Modernization Act 2018 will on the following page. create a mechanical rights collecting

Section Three: Calculating royalties THE SONG ROYALTES GUIDE Once a streaming service has done So while people still frequently talk all of its deals in any one market, about ‘per-stream’ rates in relation it then has to go about calculating to streaming income, there isn’t what each licensing partner is due really any such thing. What any in any one month and ensuring that one label, distributor, publisher or those payments are made. Again, society receives is based on what how this works is different for percentage of overall consumption recordings versus songs. their catalogues account for, and then their respective revenue share THE STREAMING arrangements with each individual SERVICE DEAL streaming service. The deals done between the Basically it works like this. Each streaming services and the music month the service works out what industry are, at their core, revenue percentage of all music streamed in share deals based on consumption any one market was accounted for by 13 share. any one label, distributor, publisher or COMPLETING THE SONG LICENSING JIGSAW

Completing LOCAL SOCIETY a licensing LOCAL SOCIETY jigsaw could LOCAL be as simple SOCIETY as this…

LOCAL SOCIETY

LOCAL LOCAL SOCIETY SOCIETY

LOCAL LOCAL LOCAL SOCIETY SOCIETY SOCIETY

BMG SONY/ATV Or as KOBALT complicated as this… UNIVERSAL Though the MUSIC simpler the PUBLISHING CHAPPEL WARNER/ IMPEL jigsaw in any one market, the more convuleted the royalty chains LOCAL OTHER COPYRIGHT for non-domestic SOCIETY SOCIETIES HUBS songwriters. society’s catalogue. It then allocates But calculating what song the same percentage of its overall royalties are due to whom is more income in that market in that month complicated, because the service to that rights-holder. doesn’t know what songs are contained within the recordings its The streaming service then shares users have been streaming. that allocation with the rights- holder according to the terms of its Although some services now licensing deal. Labels and distributors ask labels to provide songwriter will usually see 50-60% of their information alongside the recordings allocation. Publishers and societies they upload, that doesn’t mean they 10-15%. This process will probably know what specific song copyright be done separately for each of the has been exploited, nor who controls service’s subscription types, eg free, that copyright in any one market. It premium, mobile bundle, family plan, does know the unique ISRC attached student discount, etc. to the recording, but it doesn’t know the unique ISWC of the song Section 6.4 of the ‘Digital Dollar’ contained in that recording. And book explains in much more detail there is no central publicly accessible how these deals work, and also talks database that links ISRCs and ISWCs. through the other key elements of the streaming deals like minimum Because of these limitations, the guarantees, advances, equity and services usually outsource the fees. For the purposes of this guide, calculation of song royalties each we are less concerned with how month to their licensing partners, ie royalties are calculated, and more the societies, copyright hubs and interested in who is doing those music publishers. calculations, who the service actually

pays, and then what happens to that Each licensing partner is provided THE SONG ROYALTES GUIDE money as it flows through to the artist with a report of all the tracks and writer. streamed in each country. The licensing partner must then process CALCULATING ROYALTIES this report and identify which tracks EACH MONTH contain songs it controls in that market. Because of co-ownership of Once the deals are in place, the song rights, the licensing partner may streaming service generally assumes only control a slice of any one song that whichever label or distributor copyright, and therefore also needs uploaded a recording onto its to declare what percentage of each server must represent the rights in song it controls in that country. that sound recording. Therefore, whenever that recording is streamed, With billions of streams being that label or distributor should be serviced each month, this is a paid, according to the monthly significant piece of work. Some consumption share metric and the societies have invested in building 15 terms of their specific deal. 16 THE SONG ROYALTES GUIDE each royaltyprocessingproviderhas controls ineachmarket. Meanwhile what percentageofsongs)it has arecordofwhatsongs(and this process.Eachlicensingpartner However, problemsroutinelyoccurin OF DATA CLASH THE PROBLEM above. due basedonthemetricdescribed then calculatewhateachpartneris licensing partner’s repertoire, and consumption waslinked toeach calculate whatpercentageofoverall its controls.Theservicecanthen service whattrackscontainsongs partner reportsbacktothestreaming has beendone, eachlicensing Once thisroyaltyprocessingwork report. service’s entiremonthlyconsumption having toprocesseverystreaming than everysinglelicensingpartner societies poolingthiswork,rather There isalogictopublishersand as royaltyprocessingproviders. businesses thathavesetthemselves the copyrighthubs,ortostandalone work, eithertoothersocieties,or direct –choosetooutsourcethis publishers whichlicensesongrights process. Others–andthose technology thatautomatesthis among songwritersandpublishers. how thatmoneyneedstobeshared licensing partnercanthenworkout processing providercreated,the Using thereportstheyortheirroyalty and publisherwhattheyaredue. pays eachsociety, copyrighthub Where theisnodispute, theservice significant. total numberworldwidecouldbe are onholdasaresult–butthe markets –norhowmanyroyalties currently indisputehowmany It’s notknownhowmanyworksare until thedisputehasbeenresolved. paying outanyroyaltiesonthatwork rule thestreamingservicestops to be‘indispute’ andasageneral Songs thatareover-claimedsaid only 80%. another claimshavebeenmadefor one songhasbeenclaimed,whilefor claims, theymightfindthat120%of licensing partnershaveputintheir is tosaythatonceallofaservice’s over orunderclaimedfor. Which which meanssomesongswillbe processing providersmaynotagree, licensing partnersandroyalty However, thedatabasesofdifferent linked toineachISRC). in eachrecording(iewhatISWC is a recordofwhatsongiscontained HOW BAD DATA STOPS WRITERS GETTING PAID

What does the What does the service do when service do when a song is over- a song is claimed? under-claimed? It might just stop Where does the paying. money go?

100% CLAIMANT CLAIMANT THREE THREE

CLAIMANT CLAIMANT CLAIMANT TWO TWO TWO

CLAIMANT CLAIMANT CLAIMANT ONE ONE ONE Section Four: Royalty chains

Once a service has worked out who is owed what, it pays the licensing partner with which it has a direct relationship, which on the recordings side will be a label or a distributor, and on the songs side will be a publisher, collecting society, copyright hub or rights agency.

This entity might have a direct relationship with the artist or songwriter. In which case it would pass on what is owed to said artist or songwriter under the terms of any label, distribution or publishing contract or – in the case of a collecting society – according to its own rules and regulations. In this scenario we have a single-link royalty chain, ie there is only one entity between the streaming service and the artist or writer.

However, for various reasons, there are often additional links in the chain, which is to say other entities through which money must pass before it reaches the artist or writer. Each of these extra links in the chain will likely result in additional deductions and delays.

SINGLE-LINK ROYALTY CHAINS When it comes to song royalties, there are two main circumstances where there would be a single link in the chain between the streaming service and the writer.

First, where the writer’s collecting society licenses the service directly. This will often be the case when music is streamed in the writer’s home country. And, as mentioned above, some societies now license their repertoires directly to streaming services in multiple countries, ie not just their home markets. Where this applies, some royalties would flow down a single link chain.

Secondly, where a publisher has a direct relationship with the streaming service, again some royalties may flow down a single link chain. Though, as we will see below, most direct deals are not quite this simple.

THE SONG ROYALTES GUIDE THE SONG ROYALTES 18 MULTI-LINK ROYALTY CHAINS Multi-link royalty chains are more common. First, where collecting societies are involved, there may be a copyright hub or another collecting society in the chain.

So, where the writer’s home society is licensing services directly, it might actually be providing that licence via a copyright hub, which creates an extra link as follows.

Plus the writer’s home society won’t be directly licensing services in all markets and in those other territories the local society will get involved. Which means the local society will license the service via its reciprocal agreement with the writer’s home society. That local society will then claim and collect any royalties due, and pass the money on.

We should also remember that, even where collective licensing is involved, some of the money might still pass through the publisher before being paid to the writer.

With Anglo-American repertoire this would apply to all society-collected THE SONG ROYALTES GUIDE mechanical royalties. But as noted above, depending on the writer’s publishing contract, the writer might also be due a cut of the publisher’s share of any other income collected by a society.

Where this occurs, the society still usually pays the publisher its share, but said publisher must then pay some of that money to the writer, subject to contract. In both these scenarios the following chain would apply…

Meanwhile, where a publisher is licensing directly rather than via the collective licensing system, there is still likely to be an extra link in the chain. This may be because there is a rights agency sitting between the service and the publisher 19 20 THE SONG ROYALTES GUIDE of thefollowingroyaltychains mightapply… pass themoneyontohome division,whichwillinturnpaythe writer. Soone directly orviaasociety, huborotheragency–andthatlocaldivision willthen country, royaltiesmightbepaidtothatpublisher’s localsubsidiary –either So wherethewriterhasaglobal dealwithaglobalmusicpublisher, ineach publishers involvedintheprocess. be localsubsidiariesofthewriter’s ownpublisherorotherlocally-basedsub- publishers. Whichistosay, assongroyaltiespassalongthechaintheremay As anaddedcomplication,wehavetofactorinlocalsubsidiaries and sub- And theremayalsobecopyrighthubsinvolvedinthisprocess. For example… Royalties paidunderthesekindsoflicences mayvariouslyflowas follows… least one, andpossiblytwo, extra linksintothechain. the directlicensingandoneormoreofcollectingsocieties.This addsat via entitiescalledSPVs, whicharejointventuresbetweenthepublisherdoing Meanwhile inEurope, asexplainedabove, directlicensingisusuallymanaged US. Inthatcasethemoneywouldflowasfollows… doing alltheadministration,asmighthappenwithmechanicalroyalties inthe

Where the writer has a global deal with an independent publisher, that publisher might rely on another publisher – usually called a ‘sub-publisher’ – in some markets. Where this applies, monies will pass through the sub-publisher first before being paid to the home publisher and onto the writer. So one of the following royalty chains might apply…

It is also worth noting that different combinations of these various royalty chains are also possible, which could add additional links into any one chain.

DEDUCTIONS AND DELAYS The reason it’s important for writers and managers to understand that their streaming income may be passing down different royalty chains is because different deductions and delays will occur on each different chain. And it’s THE SONG ROYALTES GUIDE crucial that writers and their managers appreciate the impact this might have on how much they ultimately receive and when.

When it comes to any deductions made as money passes through the local divisions of a publisher or any sub-publishers involved in the process, there needs to be clarity in the publishing contract as to what this means for the final sum the writer receives.

Are the local divisions or sub-publishers deducting money as royalties pass through their bank account? And, assuming they are, will the percentage of monies due to the writer under contract be calculated based on the ‘at-source’ income, ie the sum of money the streaming service handed over to the first link in the chain? Or will it be applied to the sum received by the home publisher (or home division of the publisher)?

Depending on the wording of the publishing contract, these deductions might 21 22 THE SONG ROYALTES GUIDE differently bythe deductionsanddelaysthat occur. different chains. Whichinturnwouldmean each co-writerwouldbe affected societies, whichwouldmeaneach writer’s shareofthemoneywouldflowdown co-writers maybesignedtodifferent publishersandbemembers ofdifferent For starters,songsareroutinely co-writtenandthereforeco-owned. Different some moneydownathirdchain, andsoon. to anyonesongwillflowdownchain,somemoney godown another, at theendofmultipleroyaltychains.Whichistosaysome themoney due The otherimportantthingtounderstandisthateachsongwriter will likely be VARYING ROYALTY CHAINS reciprocal agreement. joining theforeignsocietyasawritermembersothattheyno longer rely onthe Again itcanbehardforthewritertoavoidthesedelays,other than directly monies tomovethroughthesystem. and royaltiesareprocessed,itcouldtake eighteenmonthstotwoyearsfor Add inextradelaysatthelocalsocietyandwriter’s ownsocietyasdata infrequent asonceayear. and whenmonieswillbeexchanged, butthisexchange ofmoneycanbeas societies. Thereciprocalagreementbetweenanytwosocietieswill setouthow Considerable delayscanalsooccurwhenmoniespassthroughforeign community needstobetterunderstandandthendiscuss. cut theinefficientsocietyoutofchain.Thisisanissuethat songwriter know wheretheinefficienciesoccurand–eveniftheyknewit can behardto have beenmadewhere. Whichmeansitcanbehardforanindividualwriterto not alwayscleartothewriteratendofroyaltychainwhat deductions However, thefeeschargedbydifferentsocietiesvaryconsiderably andit’s those costs. due –orhireathirdpartytodothisworkforthemallofwhichincreases a streamingservicehastoprocesslotofdatacalculatewhat everyone is administrative costs.Andremember, anysocietywithadirectrelationship members andwouldarguethatanydeductionstheymake simplycovertheir Of course, mostsocietiesarenot-for-profitorganisationsownedby their move alongthechaincan’t usuallybeavoided. Deductions madebyanycollectingsocietiesthatroyaltiespassthrough asthey ultimately paid not affectthewriter, ortheymightsignificantlyreducewhatmoniesthe writeris THE SONG ROYALTES GUIDE 23 In Continental Europe, generally both mechanical rights and performing rights generally In Continental Europe, directly to income flows through a society which will pay some of that money and the society splits the money between publisher Though how the writer. writer may differ. Anything allocated to performing rights of Anglo-American repertoire will flow of Anglo-American repertoire Anything allocated to performing rights to the writer. 50% of the money directly through a society which will pay at least This isn’t mere semantics. With Anglo-American repertoire, anything allocated anything allocated mere semantics. With Anglo-American repertoire, This isn’t by the the publisher (either directly to mechanical rights will be paid in full to share that The publisher will then streaming service or via a collecting society). to recoup and will usually be allowed income with the writer subject to contract, any advances from that money. For example, in France it is 75% mechanical rights, 25% performing rights (albeit is 75% mechanical rights, 25% performing in France it For example, rights, in Germany it is 33% mechanical depending on the nature of the stream); 66% performing rights; in the UK it is 50/50. However, whenever that happens, the licensing partner (or possibly another another whenever that happens, the licensing partner (or possibly However, allocating some that payment into two, entity in the royalty chain) will then split rights. of the money to performing of the money to mechanical rights and some country to country. The exact nature of that split varies from In other countries the streaming service has licences (whether from a society, a a society, from streaming service has licences (whether In other countries the so rights, cover both mechanical rights and performing publisher or a hub) that elements of to its licensing partner that covers both a single payment will make the copyright. The impact of this split varies from country to country. In some markets the In some markets varies from country to country. The impact of this split rights license mechanical rights and performing streaming service will will therefore The terms of these different deals through separate deals. and are allocated to each element of the copyright dictate what monies apply. what royalty chains Mechanical rights v performing rights rights v performing Mechanical mechanical rights and the a stream exploits both the As mentioned above, of two sides – the the copyright. And – for legacy reasons performing rights of differently. and be licensed and managed separately the song copyright may This happens for two main reasons. for two main reasons. This happens Meanwhile multiple royalty chains may also apply for a single songwriter single songwriter for a also apply chains may royalty multiple Meanwhile single a by a single country in being streamed single song to a in relation service. streaming 24 THE SONG ROYALTES GUIDE and flowthrough tothewriterviaeachofthese chains… So asingleroyalty forasinglestreamof songmightbesplit intothree flow downathirdchain. And thewriter’s cut ofthepublisher’s shareofperformingrightsincomewill share ofmoneyallocatedtothe performingrightswillflowdown another chain. money allocatedtothemechanical rightswillflowdownonechain. Thewriter’s For anAnglo-Americanwriter, therewilllikely bethreechains perstream.The flow downmultiplechains. royalty dueonthatstream(whichwillbefractionsofapenny) will be splitand by asinglestreamingservice. Whichistosay, whenasong isstreamed,the single songwriterinrelationtoasongbeingstreamed ina single country It’s becauseofthesevariationsthatmultipleroyaltychainsmayapply fora The impactofthesevariations commission. once ayear, andboththelocalsocietywriter’s societywillcharge a significant, becausemoneyisoftenexchanged underreciprocalagreements will besubjecttodifferentdelaysanddeductions.Andthesedifferences canbe Because thewriterandpublisherarerelyingondifferentroyalty chains,they society viathetwoorganisations’ reciprocalagreement. represent theirrightsglobally. Sothelocal societywouldpaythewriter’s home Meanwhile, thewriterwillprobablyhaveappointedtheirlocalsociety to the societyandthenpassmoney–minusitscutontomain publisher. they mayhaveasub-publisherinthatcountry, whowouldbepaiddirectlyby member ofsaidsocietyandthereforewillreceivetheirsharedirectly fromit.Or So, forexample, wherethe servicepaysalocalsociety, thepublishermaybea agreements. and allowittorepresenttheirrightsglobally, often relyingonreciprocal either directlyorviasub-publishers–whereaswritersusuallyjoin one society This isbecausepublisherstendtojoinmultiplesocietiesaroundthe world– the samesongonserviceincountry. royalty chainforthepublisher, eventhoughtheyarebeingpaidforstreamsof collect, itiscommonfortheroyaltychainwritertobedifferent thanthe Where societiespaybothwritersandpublishersashareoftheincome they Publisher’s SharevWriter’s Share is 50%. directly tothewriter, whereaswithmechanicalrightsincomethewriter’s share So forexample, inFrance, withperformingrightsincome66%isusuallypaid

And remember, the delays that occur in each of chain will likely be different. If we factor delays into the mix, the chains might be more like this…

Publishers may also sit on the money for longer, especially if there are local divisions or sub-publishers in the mix, so it can sometimes be hard to predict which chains incur the most delays, and when each payment will come in. THE SONG ROYALTES GUIDE And, of course, royalty chains also vary from country to country. So not only is a writer likely sitting at the end of three chains for each song, those chains could be different for each market.

25 Section Five: Recommendations

As explained at the outset of this whenever their client’s songs are guide, the various complexities and being streamed in each market, inefficiencies in the way streaming remembering that multiple royalty royalties flow through the system chains will likely apply to a single is likely impacting on when and stream of a single song. how much artists and writers earn whenever their music is streamed. As a starting point, managers need to request this information from any There are a number of things that societies or publishers that their individual songwriters, managers writers currently work with. There and/or accountants can be doing may initially be push-back from some right now to reduce the negative of a writer’s business partners, but impact of the royalty chains on any songwriters have a right to know one writer’s income. and understand what chains their royalties are flowing down, and Beyond those practical steps, there providing this information should be are then a number of things that a basic transparency commitment for could be done at an industry level to any society or publisher. reduce negative impact across the board, and writers and managers Once the royalty chains have been should be demanding that the identified, the manager then needs societies and publishers prioritise to work out what deductions and these tasks. Some societies and delays are occurring at each link publishers are already doing some in the chain. This may prove to be of these things, and should be a more tricky task. Some of the celebrated for it. information – such as fees deducted by European societies – will be In this section we outline the practical public domain, albeit not necessarily steps writers and their managers can in a particularly user-friendly format. take, and set out an agenda for what Other information may be stated in the wider music publishing industry contracts or royalty reports. Other should be doing next. information still may require more detective work. PRACTICAL STEPS FOR SONGWRITERS AND Where money is passing through publishers – and especially multiple THEIR MANAGERS sub-publishers or multiple divisions of a global publisher – the manager 1. Map your royalty chains should be clear on whether that impacts on the songwriter’s THE SONG ROYALTES GUIDE THE SONG ROYALTES A songwriter’s manager and/or accountant should identify what ultimate share of income. Which is 26 royalty chains are being employed to say, whether the writer’s share is calculated based on ‘at source’ income or not. If it is, they should ask and each society has its own rules for clarity as to what the publisher as to who has access to its system. actually means by ‘at source’. Some societies are now connecting and/or pooling their databases – with Where money is passing through mixed success – but there are still societies it will be harder for a writer well over 100 databases that really to avoid the deductions and delays need to be checked in some way. that occur, although choice of society and choice of publisher might have The global collecting society body an impact. Certainly managers should CISAC has long had a system that be aware of what those deductions attempts to make it easier for people and delays might be, both under to access multiple society databases their clients’ current deals and called CISnet. Traditionally this was memberships, and especially when only available to other societies, considering new publishing deals or however there have recently been moving to a new society. moves to extend access to publishers and writers, and managers should 2. Check the databases to seek access to this system to help avoid data clash with the data checking process. Managers and accountants should That said, given the large number also seek to ensure that there are of databases, that is a lot work. And no current data clashes in relation because databases are constantly to their client’s work which could be changing, checking for data clash delaying or stopping the payment in this way is not a one-time-only of streaming royalties. These data project. Really this should be a task clashes could be occurring in single undertaken by the music publisher or multiple territories. – and, indeed, the good publishers

are actively working in this space. THE SONG ROYALTES GUIDE As a starting point, managers should However, bigger publishers have such check the databases of as many large catalogues, they may struggle to collecting societies as possible, stay on top of each data conflict as it confirming that any songs the writer occurs. Meanwhile smaller publishers wrote or co-wrote are correctly may be relying on a sub-publisher or attributed. This will be easy to do with sub-publishers to stay on top of data the writer’s own society, but other clashes in other markets. societies may be the first link in any one royalty chain, or could be making But it is nevertheless reasonable a claim against the song on behalf of to expect a publisher to be doing another co-writer somewhere else in these checks. So, while a manager or the world. So the more extensive this accountant might want to undertake database check can be the better. this data checking themselves, to be absolutely certain everything Because every collecting society is in order, managers should be traditionally had its own database, also asking their writer’s publisher there are a lot of databases to check 27 what work they are doing and what along one royalty chain can be much systems they have in place to ensure longer than another. So, for example, bad data isn’t stopping payment. mechanical rights income might show within six months, while performing 3. Compare income from rights money on the same streams different royalty chains to might take eighteen months. identify disparities Adding to this challenge, it is not As noted above, different royalty always easy to identify what time chains will often apply to the same period any one set of royalties song. So mechanical and performing relates to. Some publishers and some royalties, and/or a writer’s share and societies are good at identifying what a publisher’s share, may go down time periods specific royalties came different chains. Also, money owed from some of the time. But managers to co-writers on the same song will and accountants should put pressure often go down different chains too on both publishers and societies depending on who their publisher or to provide this information with all collecting society is. streaming royalties being reported, and then regularly check that there In many ways single payments going aren’t any disparities between down different chains in this way is connected chains. inefficient, but it also provides some checks and balances for those at the end of the chain. So that managers 4. Undertake a complete data and accountants can compare the and royalty chain audit monies their clients are receiving Where writers and managers suspect at the end of each chain for the that they might be losing significant same work and see if there are any sums to the system – maybe as disparities. a result of comparing the income coming through the different chains For example, if a writer is receiving – they might wish to do a complete mechanical rights income from royalty chain audit, identifying every their publisher and performing possible royalty chain, and then rights income from their society, scrutinising each link in that chain and they are in a market where the regarding deductions, delays and any mechanical rights/performing rights possible data clash. split is 50/50, they can see if they are receiving more or less the same This process might also identify amount of royalties for the two sides incomplete or missing royalty chains of the copyright. And, if not, they can in some countries, which might be investigate why not. the result of bad data, or a streaming service having yet to complete its Though it’s important to note that licensing jigsaw. THE SONG ROYALTES GUIDE THE SONG ROYALTES comparisons of this kind will require some nuance, because the length Successfully completing such a task 28 of time it takes for money to pass arguably requires legal, accountancy and database expertise, which will be economies of scale that could likely require forming a specialist bring the costs of such activity down. audit team. Alternatively, the songwriter That team may also have to assess community might want to fund a test what audit rights the songwriter has audit with a middle-level songwriter under any publishing contracts. And on the condition that any issues also what demands for transparency uncovered would be shared with and information they can make the wider community. Even then of any collecting societies, either confidentiality clauses in publishing under each society’s own rules, or contracts might prevent some key according to other regulations that issues from being made public. govern relevant societies. Those other regulations maybe in national CHANGES TO copyright law, or European law, or the INDUSTRY PRACTICE code of conduct of CISAC. 1. More transparency This, of course, is likely to be an expensive endeavour, and so is most Everyone agrees that there needs to viable for songwriters with more be more transparency in the digital lucrative catalogues who are likely music market, but who needs to losing significant sums to the system. be more transparent about what? The previously published MMF This is a common problem in the Transparency Index sets out the 20 music industry, in that a majority of pieces of information artists and songwriters probably can’t afford to songwriters need from their business do a full audit, even though those are partners to fully understand their the songwriters for whom monies lost own streaming businesses. Much of this Index applies to publishers and to the system can be the difference THE SONG ROYALTES GUIDE between making a viable living from societies as much as it does to labels their music or not. and distributors.

Meanwhile, where superstar However, on the songs side more songwriters do audit and find information is required. We have systemic problems, they are advised above that managers ask any often prevented from sharing publishers and societies their writers that information with the wider work with to identify what royalty music community because of chains are being employed. Really non-disclosure agreements and this information should be available confidentially clauses. by default.

Though if a template audit system To that end, the songwriter and specifically to tackle this challenge management communities should was created, which could then be urge societies and publishers to start used by many songwriters, there may sharing royalty chain information as 29 a matter of course. This need not be as onerous a task as it might sound, royalty payment process more especially for societies, because the accurate and more efficient over all, same set of chains will apply to big but those initiatives shouldn’t result in groups of writers, usually based on less transparency for writers. who their publishers are. So it’s not a case of the societies having to create 2. Easier access to a personal set of royalty chains for the databases every single member. Given just how big an impact a database on the other side of the As well as outlining what royalty world can have on a songwriter’s chains are in play, societies and income, the music publishing sector publishers should also be telling needs to make it easier for writers writers what deductions and delays and their managers and accountants are occurring at each link in each to check all the databases that list chain. Writers shouldn’t have to their works. undertake extensive detective work to find out what their own business To that end, extending access to partners are doing with their own CISnet to all stakeholders should be money. a priority, and efforts should be made to ensure it is as easy as possible for Publishers and societies may writers, managers and accountants cite confidentially clauses in to check and update data relating other contracts as a reason for to works they created, own and/or not providing this information, or represent. argue that doing so is too labour intensive, especially for works that 3. Introduce data clash alerts generate nominal income. However, transparency of this kind should be In addition to making it easier standard practice for anyone in the to access song right databases, business of rights administration, societies and publishers should be and again – especially with societies urged to be more proactive in alerting – the same sets of royalty chains, writers and their managers to any and therefore the same deductions current data clashes that are delaying and delays, will likely apply to large or stopping payment. groups of writers. Regularly checking every database Managers should also ask societies for clashes is a big task – whether to ensure that any transparency undertaken by publisher, manager commitments they have made – or and/or accountant – but really the are obliged to comply with under system should be routinely spotting law – apply to hubs and royalty and alerting all stakeholders to processing providers that they take all clashes. After all, the more stakeholders alerted to a data THE SONG ROYALTES GUIDE THE SONG ROYALTES part in or employ. Both hubs and the central pooling of royalty processing clash, the quicker any dispute over 30 can make the digital licensing and ownership can be addressed, which should be to everyone’s benefit. The quality of collecting society data other local revenue and it is hard to and databases varies hugely around separate digital income from other the world. Though many societies income. In a small number of cases are regularly evolving their platforms. a country’s copyright law actually Managers should urge societies to grants the local society a monopoly. make data clash alerts a top priority And there may be other commercial and champion those societies that or political reasons as to why a deliver. country hasn’t been included in a multi-territory deal. 4. More global licensing Beyond trying to reduce the negative But as a basic rule, the more global impact of each individual royalty licensing that can be achieved the chain, another aim for the music better. So writers and managers community at large should be to should call on their societies reduce the total number of chains and publishers to seek such being employed and the number of arrangements, and to better explain links in each chain. where and why local partners are still involved in some countries. The simplest way to achieve this is to increase the number of global 5. Faster payments licensing deals in the streaming While on the recordings side of the domain. As explained above, both business improvements could still be societies and publishers do now made by some labels and distributors license streaming services on a multi- with regard to the speed with which territory basis. Where that happens, royalties are processed and paid to monies flow from the service to the artists, as a general rule money flows licensing partner (possibly via an through the system much faster with SPV and/or hub) to the writer, without recordings compared to songs. additional publishers and societies THE SONG ROYALTES GUIDE getting involved. This makes the As mentioned above, the time it takes process simpler and should mean for money to move down different fewer deductions and delays as the royalty chains can vary hugely, money flows through the system. meaning money for a single stream could arrive in multiple payments Although multi-territory licensing is over a period of years. This is clearly now more common, in most cases not acceptable. deals of this kind will still only apply in some countries with some It is true that – because societies and services, ie not on a global basis with publishers must process reports from all services. Which is to say, many the streaming services and then claim countries will still sit outside those the royalties they are due – they are arrangements. never going to be able to process the money as fast as labels and That might be because a local society distributors. But the process should or publisher is required to access be taking months, not years. 31 Where the significant delays still For some revenue streams, black box occur, it is partly because of overly is inevitable, because many licensees complex royalty chains which more of music – such as pubs, clubs and global licensing can address. But it cafes – will never realistically submit is also partly down to the fact that, accurate lists of music usage, so the in music publishing, long delays societies do not know who is actually are too readily accepted as the due the money paid into the system norm, especially where reciprocal by those users. Different societies agreements between societies are have different policies as to how that involved. It is worth remembering, of money should be distributed, though course, that these delays frequently splitting black box up based on affect writers more than publishers. market share is quite common.

To that end, writers and managers In theory for streaming there should be demanding that their shouldn’t be a black box, because publishers and societies make the the streaming services can provide speeding up of royalty payments, very accurate reporting of what music especially of streaming income, a top was used, albeit recordings rather priority, so that nine months is the than songs data. But even if the absolute maximum time anyone has distribution of streaming income is to wait to be paid. never going to be 100% accurate – because of the various complexities Where more timely payments have discussed above – writers and already been achieved, these managers should make a number of policies and practices should be demands in this domain. extended across the sector. And if any publishers or societies claim that First, that publishers and societies the nine month cap is unachievable, are entirely transparent about what writers and managers should streaming monies have not been question whether those organisations claimed or allocated, where that should even be in the business of money sits, and what is happening to rights administration. it. Secondly, that everything is done to ensure that unallocated monies 6. No black box and are kept to the absolute minimum. market share distribution Thirdly, that unallocated monies For various reasons, each year a are not distributed on a market portion of streaming income due share basis. Because it is almost to publishers and songwriters is certainly the case that unallocated unclaimed or unallocated. This is monies relate to streams of songs common with all revenue streams on created and controlled by more the songs side of the business, and grass roots writers and publishers, that unallocated money has often

THE SONG ROYALTES GUIDE THE SONG ROYALTES who never benefit when market colloquially been referred to as ‘black share distributions are employed. box’. 32 And market share distribution can also mean that it is in the interest of the project collapsed for political and the bigger rights owners – who are funding reasons. best positioned to fix the problems outlined in this guide – to actually not There was then a lot of debate a address these issues. few years ago about how such a database might be built – possibly The songwriting community should by employing the blockchain – and be rigorously consulted regarding since then various societies and start- what should happen to this income. ups have been working on music rights data solutions. It remains to One solution would be to allow be seen if any succeed and whether these monies to be distributed to multiple solutions are able to co-exist grass roots music makers through and communicate with each other. the talent support initiatives many societies already operate. Some of Although not a panacea, such a the money could also be used to central, publicly accessible, global fund enhancements to databases database of music rights ownership and royalty processing systems information would nevertheless that would allow the other changes directly address some of the issues proposed in this guide to be raised in this guide, and also facilitate implemented. and empower innovators in the market seeking to tackle some of the 7. Fewer databases other challenges. Finally, addressing the wider music rights data problem would go a long It is possibly unrealistic to hope way to helping reduce inefficiencies that one day there will be a single in the system, and especially the database, but drastically reducing impact of data clash. the total number of databases should

be a top priority for the wider music THE SONG ROYALTES GUIDE The music rights industry, and community. especially the publishing sector, has long discussed the need for a To that end songwriters and their central, publicly accessible, global managers should continue to database of music rights ownership encourage their business partners information, which would state which – labels, distributors, publishers song (by its ISWC) is contained in and collecting societies – to do which recording (by its ISRC), who everything they can to support viable wrote the song, who performed on data initiatives. the track, and who controls all the rights in each country. And everyone in the wider music community should make it their The music publishers, of course, business to ensure that, as new attempted to build something that songs are written, as good a data could have evolved into that – the as possible is put into the system as Global Repertoire Database – but soon as is possible. 33 The effective use of data standards a frank conversation among the like ISWC varies across the industry, songwriting community on many of and writers should be putting the issues raised in this guide and pressure on all publishers and about what can be done to tackle societies to up their game in this these things on an industry wide regard, while also doing their bit basis, through greater transparency by ensuring that they – or their and the identifying and championing representatives – agree ownership of best practice. splits on new works and register them with the system as soon as One easy thing we call can do is possible. ask the questions on the following page of all our business partners and FUTURE DEBATE use the responses to drive positive Finally, there probably needs to be change. THE SONG ROYALTES GUIDE THE SONG ROYALTES 34 DEALS n What royalty chains are your publisher and society currently employing? n Would another publisher or society have more efficient royalty chains? n How could your publisher or society change their licensing approach to ensure more efficient royalty chains?

DATA n Are all of your songs correctly recorded in every society database? n How can you easily check? n Are any data clashes currently stopping you from getting paid? n Why aren’t you alerted to these data clashes?

DELAYS n How long does it take for money to flow down your royalty chains? n Why are there delays along the way? n How can we cut the delays?

DEDUCTIONS n How much money is deducted at each link in the royalty chain? n What fees are the societies charging? n What cuts are your publisher and their sub-publishers taking? n How can we reduce the deductions?

DEBATE n How can we reduce the number of databases? n How can we reduce the number of royalty chains? n How can we reduce the number of links in each chain? n What is the most efficient approach to licensing streaming services? The $ong Royalties Guide explains the complexities and issues with the way streaming services pay songwriters. It has been produced by music consultancy CMU Insights for the Music Managers Forum.

ABOUT THE MUSIC MANAGERS FORUM | themmf.net MMF is the world’s largest professional community of music managers in the world. Since our inception in 1992 we have worked hard to educate, inform and represent our managers as well as offering a network through which managers can share experiences, opportunities and information. We are a community of over 600 managers based in the UK with global businesses and a wider network of over 3000 managers globally. We engage, advise and lobby industry associates and provide a professional voice for wider industry issues relevant to managers. The MMF runs training programmes, courses and events designed to educate and inform artist managers as well as regular seminars, open meetings, roundtables, discounts, workshops and the Artist & Manager Awards.

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