Sunday, April 08, 2012
This is a bigger and more complicated problem that we originally thought. Sure, artists have been complaining about insultingly small payouts from the likes of Spotify - that is, if they're getting paid at all by their labels. But what about songwriters? Turns out that this is a totally different animal fraught with separate complications, headaches, and lots of middlemen. And for a publisher-signed songwriter, it looks something like this on streaming services, according to a diagram etched by Tunecore CEO Jeff Price in a recent blog post.
This describes two intertwined revenue sources on the song itself: mechanical and performance royalties. At a top level, a service like Spotify pays 10.5 percent of its gross revenue to songwriters and publishers, with exceedingly-complicated formulas determining the mix between mechanical and performance payouts. And after all is said and done, this process can take six months or longer to complete. Which not only means lots of percentage payouts to go-betweens, but also the inability to reinvest, pay down, or otherwise collect in a timely manner.
But wait: middlemen are only bad if they're not adding value, and songwriters often have highly-beneficial partnerships with their publishers and performance rights organizations (or, PROs, referring to ASCAP, BMI, or SESAC). But in a lengthy blog post, Price takes an unsympathethic view towards these in-betweeners, particularly the PROs. "My question to ASCAP, BMI and SESAC is this: if you truly exist for the benefit of the songwriter, why haven’t you created an option that allows the songwriter/publisher that controls all of their rights to get all their money directly from the streaming interactive digital service?" Price asks. "By sticking yourself in the middle it causes the songwriter/publisher to have to wait longer to get less money."
Price - a pioneer of direct-to-service distribution on the recording side - is now hoping to disrupt this complicated deck of players on the publishing side. "As the debate goes on about if streaming services are paying out enough royalties to artists, there is one thing that is not debatable: in the United States, artists and songwriters/publishers are not getting the entire amount, or any, of the additional 10.5 percent royalty owed to them from 'interactive' streaming services like Spotify, Rhapsody, Slacker, MOG, Rdio, etc. (and the music services aren’t really to blame)," Price continued.
But anyone familiar with the publishing world knows that getting to this could be a complicated affair. But it sure looks nice on paper.