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.