The FezGuys
Hello Songwriters, Are You Listening? - (part 1 of 3)
[ No. 52 - February 2001 ]

Think of the current state of music publishing as an enormous and gaudy cruise ship. The captain and chief officers represent the collection societies (ASCAP, BMI, etc.). How they got their positions of power is unclear, but they've managed to consistently give the impression of smooth sailing while actually being drunk with complacency and passed out in their cabins. The crew are their lawyers and they're all grabbing at the wheel, claiming to be in command. How they treat the passengers (the songwriters) depends. 90% of the passengers wait in the dark and airless decks below, in steerage, for the crew to toss them crusts of bread. The crew does this when it suits them, or when forced by an outside influence (a pirate ship shows up and the captain trots out passengers in a show of solidarity and defense). The other 10% are treated like gods. What makes them deserving is a combination of timing, aggression, sheer chance and simple beauty (and occasionally a good song). The lucky 10% are rewarded with roomy cabins and prompt and attentive service.

But the crew has become panicked, knowing the passengers (even some of the well-treated ones) could become a rowdy mob at any moment and throw them overboard in favor of a new system for the service and distribution of bread. The threat alone has the crew spooked, and they're each working on their own plans for mutiny. And as the ship nears the New World, the sea is thickening with privateers. These notorious swashbucklers include John Castle (Cantametrix), Francois Xavier Nuttal (Audiosoft), John Simson (RIAA's SoundExchange), and Ron Gertz ( Any of these could bring a previously unseen efficiency to the tracking of online music royalty payments, making the traditional collection societies unnecessary in the online world.

So the love boat of online publishing careens its ignorantly inertial way through uncharted shoals. The steerage passengers, successfully conned by adverts promising a lovely sea cruise, accept that life is hard and, as emotional necessity, even derive some small sense of moral superiority from it. Poor fools. Their misery places them in an elite class: the shared private language of the broke musician, scrambling to make rent and eat.

Some Terms

Musical work: The actual song (notes and lyrics).

Sound recording: The specific recorded version of that musical work.

Copyright: Whoever owns the copyright has the legal right to do whatever they want with the musical work.

Publishing royalties: Whoever owns the publishing gets the money (receives royalties). Some examples of publishing are: performance (live, radio), mechanical (CD sales, etc.), print (sheet music), synchronization (movie, game, ad, etc.).

Writing royalties: Whoever is credited with authorship of the musical work is supposed to get money (receive royalties) too.

Collection societies: Middlemen/clearing houses for permission to, and payment for, the use of musical works in all media. The big three for performance rights are BMI, ASCAP and SESAC while the Harry Fox Agency (HFA) is the biggest fish for other areas of publishing.

With that listing analogy taking on water faster than tech stock portfolio devaluation, we figure it's time to revisit the storm-tossed foredeck of online music rights. It may not pay the rent to know these things but a little information doesn't hurt. A lot's changed since column #7 ("Farm Animals and the Law," including the analogy) and, as we quickly find out, every answer raises new questions. Let's blast around the harbor in a Zodiac borrowed from Greenpeace to peek below the waterline of the collection societies' biggest boats to see what kind of changes they'd like to inflict on the Internet.

Collection societies have rigged themselves into a system that's basically incomprehensible to anyone without a law degree and countless hours of time on their hands to wade through massive amounts of paperwork. Most of that paperwork appears to merely guarantee the societies the legal right to do what they do in the way that best serves their own interests. Even a helpful "follow the money" tutorial on the ASCAP web site (described below) says: "Recording-artist royalties represent an extremely complex area." From a historical perspective, it's useful to remember these societies came into being when sheet music was the only way to be paid for a popular song. The societies helped songwriters by busting people that printed thousands of copies of a song and sold those copies out of the trunk of their Model T, pocketing all the proceeds and furthering the downward spiral of many musicians to alcoholic insanity.

Each new distribution technology found the collection societies right there, wrapping up their piece of the pie and touting how they always operate in the songwriters best interests, for at least 50% of the take. Nowadays these bloated bureaucracies are desperately trying to control the online music realm. They have financial muscle, industry connections and an eager lobbying faction in Washington, DC (a city described by our FezFathers as: "forty square miles surrounded by reality").

(The American Society of Composers, Authors and Publishers)

Let's take a look at how the performance collection societies are attempting to deal with online distribution. We'll start with the biggest of the "big three." Digging around on ASCAP's web site we find "ASCAP Licensing" and from there the "Internet License Agreement." Downloading an Acrobat .pdf file finds us with a dense document written in fluent legalese with the word "Experimental" prominently displayed in the title. Cool. ASCAP is tossing out an online licensing payment scheme to see if anyone will take it seriously. Online music licensing is a convoluted and complicated issue to be sure, but it's somehow reassuring to realize collection societies are only fishing, like the rest of us, to see how much they can get away with. We wish they had thought to open up a forum where their customers (the musicians) and experts who understand the technology could contribute towards deciding what was fair. There's no info in the document about how, exactly, monies will be distributed in the online realm and a site search under "Royalty Information" yields no results.

The site is generally clearly written and offers a very readable overview column on how the whole system operates at: <>. The authors of "Music and Money", Todd and Jeff Brabec (the former a one-time Director of Membership at ASCAP), offer this caveat: "Ranges of fees, as well as comments, vary based upon individual negotiations and situations." Noted. Your experience may not be identical. The article goes on: "...each source of income (CD or cassette sales, radio or TV play, live performance, broadcast outside the U.S., sheet music sales or use in a commercial or movie) has its own distinct payment structure and figuring out exactly how a songwriter, artist or music publisher makes money and where that money comes from can be a major challenge." That's putting it lightly. But, the authors remind us, "a fortune can be made from a single composition." So Puff Daddy's mansion wasn't a gift from Rudolph Giuliani for his good work with teens at risk? Over $3-billion dollars are collected worldwide each year, we learn. Dammit, we want our piece!

The authors take a moment for realism amidst the happy hype by reminding us that "although most writers never achieve this level of success, it's helpful to know what's possible at the top end." Very helpful. Taken as a group, musicians every moment revere that top end possibility as the holy grail of musical fulfillment. Right this second your frolicking FezGuys are dreaming of living large; banging Crystal and huffing Cubans while gazing out over the lights of Los Angeles and screening some manager's phone call pleading with us to produce the next musical incarnation. Ah yes. What classic pop track can we destroy for the sake of a dancing teen's career?

But we digress. We finally get to parse some real world dollars and cents in the "tutorial." This is where it gets interesting. Let's look at some mechanical royalty info first. Here's how record companies really excel at cheating the songwriter.

"Under the U.S. mechanical rate of 7.55c per song for the years 2000 and 2001 (this will go up to 8.0c in 2002-2003), a million-selling single would be worth about $75,500 in combined royalties to the publisher and writer. (For) album sales, the above royalties would be multiplied by the number of songs on the album (to a maximum of 10). (Thus) if 10 songs were included on a CD and each received a 7.55c royalty, a total of 75.5c in mechanical royalties would be generated from the sale of each album. If the album sells between one-million and ten-million copies, the (total) writer and publisher royalties for the album would range from $755,000 to $7,550,000." So far, so good. But wait! The authors go on to mention that: "the per-song mechanical royalty can be reduced under certain circumstances (for example: if the writer is the recording artist). These reductions are, apparently, "voluntary and occur only if the publisher agrees or if the songwriter is a recording artist and has to accept lower royalties in the record company contract." That's great. If you write and record the song you'll be penalized. How in the hell did that happen? Record companies; they put the "con" in conglomerate. To take it one step further, it appears that if a songwriter has anything to do with the actual recording of the song on an album the mechanical rate to the writer and publisher is reduced for that album and a cap is placed on royalties. God knows what strange standard of business practice this grew out of.

But back to ASCAP's brave new online world and performance royalties. The document talks about the "many new words and concepts that creators and publishers must learn," like "service provider, search engine, broadband, encryption and compression." The authors acknowledge that "many of the established concepts of royalties and copyright also apply to this (online) area." Tellingly, Messrs. Brabec and ASCAP clarify the current state of online music publishing by highlighting its unknowns. "Copyright law, statutory licenses, compulsory arbitration, voluntary negotiations, etc. between parties continue to be in effect for the determination of what type of license is needed as well as how much that license will be." Well put. Translation: "We don't know what we're doing with regards to the Internet but we're working really hard at it." This includes figuring out who will own the web site content and the domain name and some "new-technology rate reductions." Can't wait. Always looking for another excuse to shrink the cut. To drive the point home: "...the increasing utilization of online distribution is creating new types of business models and considerations which are changing the way artists and record companies negotiate their deals." Will it be an equitable change?

Music publishing is defined by the authors as: "one of the centerpieces of entertainment programming." Are you, hopeful musician, looking forward to taking your place in the brave new world of online entertainment programming? Are you eager to join an organization that pays all members on a standard defined: "monies collected goes into a "general" licensing fund is paid out to members on the basis of feature performances on radio and all surveyed performances on television." Because everybody is on TV and radio somewhere? On what planet is that equitable? Oh, right! The same planet where payments are received 9 to 10 months after a transaction has taken place and the societies have had plenty of time to invest your money and fluff their nest without sharing any of the interest with you. Your FezGuys don't think our landlord would go for that kind of financial dawdling.

The article, brimming with lots of helpful information about how this odd music use fee collection system works (or doesn't, depending on how you read it), justifies its placement on the ASCAP web site. "ASCAP collects and distributes more money in performance royalty income than any other organization and our payment system is by far the fairest and most objective in the U.S." If that's fair and objective it's hard to imagine how they define "userous" and also makes us wonder why the U.S. government is currently dissecting and comparing both ASCAP's and BMI's services.

Other Resources
A very practical Q&A series. Recommended.

For all things government-related to the subject.

Online distribution presents an intensely diverse array of possible methodologies. Everyone involved is making it up as they go along. In a perfect world the final results will accurately reflect the efficiencies that new technologies bring, like trading in fuzzy royalty payments made from big radio station "estimates" for accurate per-song tracking. The FezGuys, prodigal as we may be, don't have all the answers, or even some of them. Well ok, a couple, which we'll get into next month as we continue our uncompromising observations of the current state of online music distribution rights. We'll look at BMI, SESAC, RIAA, DMCA, NMPA, HFA and all the big acronyms as well as deconstructing SoundExchange, the next generation of online music policing (if the RIAA gets their way).

Special Thanks to Bill Colitre for his valuable assitance in assembling this column.

The FezGuys welcome your suggestions on how to improve anything. <>



About the authors:

Jon Luini is a working technophile, a musician (bass player/singer) with full-blown facility and extensive experience on the Web and no free time. He is a co-founder of IUMA and MediaCast, co-creator of Addicted To Noise, and runs an Internet and music consulting and technology company, Chime Interactive (formerly Evolve Internet Solutions). <>

Allen Whitman is a working musician (bass player/singer/producer) with a keen, real-world interest in the practical use of the Web. Music credits include: The Mermen, "Brine-The Antisurf Soundtrack, biL, Deep Field South, Doormouse, Delectric and Drizzoletto. He has written for the San Francisco Examiner, Wired, EQ, Revolution, Yahoo Internet Life, Prosound News, Surround Professional, Replication News and others. <>

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