Hello Songwriters, Are You Listening? - (part 1 of 3)
[ No. 52 - February 2001 ]
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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 (MusicReports.com). 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.
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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.
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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").
ASCAP
(The American Society of Composers, Authors and Publishers)
<www.ascap.com>
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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:
<www.ASCAP.com/artcommerce/money-intro.html>.
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.
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.
<www.fezguys.com>
