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How Amazon’s Twitch.tv Cheats Music Creators

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Categories: Articles, Copyright, Infringement, Legal Issues, Music, Music Industry, Music Publishing, Performance, Record Labels, Royalties, Streaming, Videos, Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

By:  Erin M. Jacobson, Esq.

This article was originally posted on Forbes.com.

Music creators (songwriters and performing artists) and rights’ owners (music publishers and record labels) are not collecting a new and substantial source of income – and most of them are not aware they are not collecting it. Enter Twitch, the website exploiting creators and owners without paying for a single cent of music usage.

What is Twitch

Twitch, a subsidiary of Amazon, is a live-streaming video platform that has “over two million broadcasters and 15 million daily active users.” Anyone can become a Twitch “broadcaster,” meaning users set up their own channels and live-stream various content, which includes, but is not limited to, video-game play, card games, pranks, craft tutorials and more.

The broadcasts start out as live streams and are saved on the channel for re-broadcasts and on-demand watching. Watching videos and channels on Twitch is free and publicly accessible to anyone with an Internet connection. Anyone can become a Twitch broadcaster for free and earn money directly from viewers. Broadcasters that contract with Twitch to become a partner or affiliate will earn money from Twitch directly, as well as from viewers. All revenue streams are described in the next two sections.

Income Earned by Twitch and Twitch Partners/Affiliates

  1. Ad Revenue: Twitch serves ads on all video content, which includes video-on-demand and pre-rolls, and collects ad revenue from showing these ads.
  2. Subscriptions: Viewers can subscribe to a particular broadcaster’s channel at pricing tiers of $4.99, $9.99, and $24.99, with these charges recurring monthly.These subscriptions allow viewers to support broadcasters and use special emotes (chat icons like emojis) that are accessible only to subscribers of a particular broadcaster’s channel.
  3. Bits: Viewers can contribute “bits” to a broadcaster during a stream. Bits are a digital currency within Twitch bought by users for real money, and contributing these bits to a broadcaster is basically like adding money to that broadcaster’s tip jar.
  4. Amazon Prime: Because Twitch is owned by Amazon, Prime members can use “tokens” from their Prime membership to subscribe to broadcaster channels on Twitch. Tokens renew every month, so a Prime member can re-subscribe to a broadcaster’s channel on a monthly basis using Prime tokens.

Twitch and the broadcaster split all income from subscriptions, bits, and Prime tokens, usually on at least a 50/50 basis.

Income Earned Directly by Broadcasters

  1. Donations:Viewers can contribute money directly to a broadcaster through third party services like StreamLabs, Muxy or StreamElements without buying bits.
  2. Media Share: Viewers can make “media share requests” through StreamLabsand StreamElements, meaning viewers can request a broadcaster to play a certain song, YouTube video, or other media within a live stream (hereinafter “Media Share(s)”). Prices for Media Shares are set by the broadcaster, and some broadcasters will start their pricing at $5 per request.

A Twitch Broadcaster’s Earnings

Twitch’s most popular broadcaster is 26-year old Tyler Blevins, known on Twitch as “Ninja.” Ninja reportedly earns over $500,000 per month on Twitch revenue alone, not counting his recent sponsorship deals by Red Bull and Uber. A recent Forbes article reported Ninja’s earnings calculation: “160,000 subscribers at a higher $3.50 rate per sub means he’s pulling in $560,000 a month from that revenue stream alone. Not counting Twitch bits. Not counting donations. Not counting 4 million YouTube subscribers.”

Ninja and most other broadcasters also use music in their streams. None of this music is licensed and none of this money is going to the music creators or rights’ owners.

Music Licenses Required

Platforms with user-generated audiovisual content require performance licenses for the compositions from performance rights organizations ASCAP, BMI, SESAC and GMR. Music users must obtain synchronization and master use licenses from the music publishers and record labels, respectively, along with paying negotiated fees to “synchronize” the audio with the visual elements. Also, rights’ owners may share in ad revenue in addition to or in lieu of those fees.

It should also be considered whether a broadcaster who repeatedly uses a particular song as a theme song or channel staple (like when Ninja does a victory dance at every game win to the song, “Pon Pon Pon”, performed by Kyary Pamyu Pamyu) is implying an association with or (false) endorsement by an artist, similar to when political candidates use certain songs in their campaigns.

How Music Rights are Being Violated

First, there is no evidence that Twitch has valid performance licenses in place from ASCAP, BMI, SESAC, or GMR (although they may be working on it). Therefore, Twitch is not paying for the repeated performances of music to audiences of millions.

Second, it is not known that any broadcaster using music on Twitch obtains synchronization or master use licenses, or pays any fees for the use of music. Also, neither Twitch nor the broadcasters are sharing ad revenue with rights’ owners.

Third, Twitch does not have its own content ID system like YouTube to track and claim uses of music. Twitch leverages Audible Magic to track audio uses after a live stream is over and will mute infringing content in the on-demand re-broadcasts, but not all content is recognized and removed. Also, there is no system to flag these infringing uses or mute them during a live stream.

All of the money earned by Twitch and its partner/affiliate broadcasters for subscriptions, bits, and Prime membership is retained entirely by Twitch and its partners/affiliates, and money earned from donations and Media Share song requests is kept entirely by the broadcasters. None of these funds are allocated to music creators and rights’ owners whose music is being used in these broadcasts.

Current State of Affairs

On June 22, 2018, the Twitch community received a shock when a group of its most popular broadcasters were banned from Twitch for playing a leaked version of a new song by rapper Juice Wrld that was initiated via Media Share song requests. Interscope Records issued DMCA takedown notices, and per Twitch policy, each infringer was banned for 24-hours.

This incident has shed a light on the use of uncleared music by Twitch broadcasters, but many have either continued with playing uncleared content or will not include certain music in the broadcasts. Ninja has turned off music content so he can then repost videos to YouTube in order to avoid YouTube claims by rights’ owners and keep his YouTube ad revenue. Ninja has publicly stated, “I’ve already reached out about getting rights to music … you can still get screwed over for playing music that doesn’t belong to you. … It’s such a nightmare, that it’s just not worth it.”

Interscope later supposedly stated the DMCA takedowns were an accident and Juice Wrld apologized to the Twitch broadcasters, saying “I will do what I can to prevent it from happening again.”

The National Music Publisher’s Association (NMPA) is rumored to be in negotiations with Twitch for licensing, but has not confirmed or commented as to the details.

Furthermore, Twitch isn’t the only site on the market. There are other, similar sites such as Mixer (owned by Microsoft), Facebook Gaming, YouTube Gaming, and Caffeine. There are also other music-centric sites, like Smule, using music in audiovisual content purportedly without permission or payment. More of these websites, as well as phone apps, with user-generated content, continue to emerge and the rate at which more new platforms are introduced is unlikely to slow due to the prevalence of streaming.

The Real Problems

First, rights’ owners are not enforcing their rights and making sure they receive payment for uses of their content. As stated at the beginning of this article, many creators and rights’ owners do not even know about these infringements. Those rights owners’ that are aware, like Interscope, have allowed the rumors of “accidental” takedowns to be the last word on the subject instead of taking a stand to protect their rights.

Second, Juice Wrld is an example of at least one artist condoning the Twitch broadcasters’ unauthorized use of his work instead of getting paid. Artists and songwriters can and should benefit from these uses, and condoning the infringing behavior allows for more of it, as well as a further loss of income to the creators and rights’ owners.

Third, streamers are often ignorant of how to obtain permission. Noah Downs, a video game lawyer at McDonald, Sutton & DuVal in Richmond, VA observes, “Some broadcasters reach out to artists directly, thinking that if the artist tweets ‘Sure, use my music!’ then it must be okay to use. It does not matter if a broadcaster has that kind of permission from the artist – generally the decision is up to the label.”

Fourth, many streamers feel entitled to play music without permission under the belief they are actually helping artists by giving them exposure. Famous artists and songs do not need free promotion from Twitch broadcasters – they are already famous. While exposure might be helpful for new artists to gain fans, it still doesn’t need to be for free.  For example, music service Pretzel Rocks and music company Monstercat have agreements with artists allowing music to be played legally on Twitch broadcasts with compensation being paid to the artists and songwriters.

In an ironic twist, Twitch viewers and broadcasters frequently use and repurpose clips of other Twitch broadcasters’ content without permission. The broadcasters complain about this practice and will submit content claims when their content is used without permission, but they fail to realize that they are doing the same thing to music creators and rights’ owners. Downs agrees, stating, “In many ways, broadcasters and musical artists are the same, and both deserve to be paid fairly.”

The bottom line is that allcreators and rights’ owners need to be properly compensated for uses of their work. Rather than ignoring or condoning infringing behavior, creators and rights’ owners need to keep up with new uses of music and take a stand to protect the value of their music and their livelihoods.

It’s time creators stopped feeling entitled to steal from and deprive each other of the fruits of their labor. It’s time people realized that using music without permission or payment not only cheats the creator or performer, but also impacts everyone that works for them or with them. It’s time the culture of all creators shifts to one of respecting one’s own work enough to get paid for it and respecting the work of others enough to get the proper permissions and pay the proper compensation. It’s time that everyone gets serious about valuing music.

 

*This article does not constitute legal advice.

Click here to contact Erin M. Jacobson, Esq. if she can assist you in your career with this issue or other music industry issues. (Ms. Jacobson does not shop, litigate, or accept unsolicited material.)

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Interview with Michael Eames of PEN Music Group

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Categories: Business, Music, Music Industry, Music Industry Interviews, Music Publishing, Tags: , , , , , , , , , , , , , , , , , , , , , , , , , ,

I’m happy that the first post of 2014 is an interview with Michael Eames, President of PEN Music Group.

Michael Eames, President of PEN Music Group

Michael Eames, President of PEN Music Group

Founded in 1994, PEN is a full-service independent music publishing company with a worldwide presence who is celebrating its 20th Anniversary in 2014.  PEN offers efficiency and personal attention as a boutique company.  With PEN’s A-list music contacts in film, TV and advertising, and a success rate that continues to grow (with 100+ placements each year), it is an effective alternative to the large multinational publishing companies.  PEN has formed strategic partnerships with several record labels to leverage collective strengths and has joint ventures with other respected companies.  PEN’s songs have also been recorded by artists including The Black Eyed Peas, Celine Dion, the cast of GLEE, Selena Gomez, Miley Cyrus, kd lang, Santana, Christina Aguilera, Corinne Bailey Rae, Faith Hill, Paulina Rubio, Macy Gray, Kenny Rogers and Luther Vandross, among countless others.

 

1.  Describe a typical day at the office.

I am not sure there is a truly “typical” day which is why I like being a publisher.  But generally for me the office day starts at 8:00 am after I drop my son off at middle school.  Then the day for me will typically involve all of the following in no particular order:
– responding to emails from Europe or overseas that came in overnight
– seeking approvals from clients for requests for use of their music that we receive
– tackling some sort of software programming with our state-of-the-art copyright and royalty system called CORE so that I can continue to try to make our administrative processes as efficient as possible
– pitching our music to any needs or searches that we get (and we can sometimes get as many as 5 a day)
– seeking out new clients and business opportunities via either online research or reaching out to lawyers and business managers about their clients that may be looking for deals
– responding to inquiries from existing clients who have questions or needs
– meeting either individually or as a group with our staff so that we can keep focused on all the items that need to be done, both on the administrative side and the creative side.

 

2.  What is your favorite part of your job?

 

Even though we have been placing music in film/TV/ads for our entire 20 year existence (since 1994), nothing beats the email that we receive when someone says they want to license something and need a quote, etc.  You then feel all the effort is worthwhile and you can’t wait to let the client know that a use may happen.  And since things sometimes fall out in the mix, the ultimate satisfaction is tuning into TV and hearing our music and or in a film in a theater, etc.  There’s a sense of pride in knowing that that use would not have happened without our efforts and it’s a great feeling.

 

3.  What are some projects that you are currently working on that you can discuss?  

 

Since 2014 is PEN Music Group’s 20th anniversary, a lot of the projects these days are internal projects that we are doing to acknowledge and capitalize on the anniversary.  For example, in late January 2014 we are going to launch Phase 1 of our new website that we have been working on for a year.  There will be a few phases after this initial rollout, but we’re looking forward to getting this out there.  We are also always planning and refining our CORE software that handles all our copyright and royalties so that we can handle as much volume as possible with as little human interaction as possible.  This Spring we are also launching our web-based pitching system which completely integrates with CORE.  This will enable us to only have to enter certain data on a song once and then all that data gets pushed out to our pitching system so that as long as we have access to a browser on a laptop or mobile device, we will be able to search our catalogue of music and create pitches that we can send to music users who are in need of music for their projects and then we can track who streams what, who downloaded what, and generally see how the outside world is interacting with the music that we assemble and pitch.

 

4.  What do you think are the most important issues facing songwriters and publishers at this time?
I think the overall topic that we must address is the constant fight to devalue music.  And that fight is both with external forces as well as internal ones.  Let me explain.  First, it is clear we are moving towards a streaming-based world.  And fast.  Right now the streaming rates are crap, especially given that there seems to be more and more evidence that streaming is displacing sales that have historically given us our mechanical royalties.  We must work together as content owners as well as with the digital services to structure rates that are fair and that allow digital services to flourish.  I fear it is going to get a bit worse before it gets better, but I think ultimately this is going to be a lucrative world but it’s one in which music must be properly compensated for.  On the internal side, especially in the world of synchronization, there is a constant erosion of fees.  And this is partly due to some artists and publishers continuing to allow their music to be used for lesser and lesser fees for the increased broad media rights that producers need these days.  This is a tough one – because if you say no, there are probably 10 other companies right behind you who will allow their music to be used and you want the use to happen as opposed to not happen.  But sometimes you just have to take a stand and explain how your music is worth more than what is being offered and you can’t allow it to be used except for a fair price.  Every time you allow your music to be used for free or practically free, another content producer goes off thinking for their next project that they don’t need a big music budget because they can always get music for free or next to free.  This is a losing battle and if we are to maintain (or maybe even increase!) the value of music, we must think carefully now about what our individual and collective actions are doing to the perception of music’s value.

 

5.  Everyone is now on the “placement” train, where they think the only viable way to make money is to get placements in TV and film.  Do you agree with this?  

 

Generally speaking I do agree with this.  But I think it depends on what kind of artist and songwriter you are.  Albums aren’t selling what they used to so everyone is looking at synch to make up the difference (see previous answer directly above).  And the synch world can still be a lucrative area, especially in ads and trailers where the fees are still higher generally than uses in TV and film projects.  TV uses are also in many ways the only “radio” that many artists receive these days given the corporate dominance in mainstream radio programming.  A successful TV show using your music can mean 10 million+ people hearing your song in one night.  That kind of exposure can’t be beat, especially if it’s a placement where you can actually hear the song as opposed to it just being background in a bar for example under dialogue where no one will hear it.  But successful touring artists can still make a lot of money off their music and never get a placement.  I talk to the indie artists about the concept of the “superfan” – strive to find, develop and maintain a direct artist-fan relationship with 1,000 people who love what you do so much that through the year they will spend $100 on you (whether that be in CD sales or digital downloads, tickets to a show, merchandise, etc.).  If you can do that, that’s $100,000 a year and you are successful at music and you’ve been able to do that with just 1,000 people and no placements.  It can be done.  And then there are some artists that are just synch-focused and they work hard and make a good living.  It can be done a number of different ways, but either way it takes commitment and a dedicated work ethic.

 

6.  What other avenues are still profitable for publishers and writers?

 

Other than the placement world, I think everyone is looking to YouTube to be a new frontier of sorts in generating income.  And you can generate a lot of income on YouTube but it takes a LOT of views to have a decent financial impact.  We are in a visual world now – any artist who wants a fighting chance should plan on making videos of their songs – whether they are gimmicky videos that go viral or not.  It’s all about getting the exposure.  But once you can get it (however you do it and it can be done outside of the major label paradigm), it’s how you use it and manage it that will determine your financial success.  As mentioned before, successful touring artists sell records still and that generates mechanical income.  It all feeds upon itself – the trick is figuring out where an artist or songwriter will first connect and then you take that and run with it.

 

7.  What types of deals are mostly being offered now among the independent publishers?

 

I think generally speaking the deals fall into 1 of 3 types: 1) the placement/licensing deal; 2) the admin deal; and 3) the co-publishing deal.  Regarding the placement/licensing deal, as the name implies this deal’s main focus is synch.  The publisher generally doesn’t get involved in any aspect of the writer/artist other than synch.  This can be a way for a publisher and artist to develop an initial working relationship to scope each other out.  But one word of caution to the artist is non-exclusive deals that get offered that involve re-titling the songs.  This is increasingly being frowned upon for a variety of reasons, so consider deals of this nature that are offered very carefully.  Then there’s the admin deal.  In this scenario, the writer/artist owns everything 100% still and the publisher takes on the administrative and hopefully creative responsibility to make things happen for the artist.  The more things that happen, the more income is earned for both parties.  Then lastly there’s the co-pub deal.  In these deals the publisher and the writer/artist split the publishing 50/50 and this deal generally involves some sort of upfront financial payment or investment in the writer/artist.  This is the highest level of commitment and as long as you feel you have the right partner who believes in what you are doing, this deal structure can work out well.  It all depends on what you as the writer/artist feels comfortable with.  Meet lots of publishers and go with who you feel “gets you” and who is offering what you feel is a fair deal.

 

8.  What is an independent publishing company looking for when considering signing a new artist?

 

Speaking for us as PEN Music Group, we are looking for great music in genres that we don’t have much of.  We don’t like to take on too many artists of the same genre where they will be cannibalizing each other in the opportunities we bring to them.  But it has to be music that we all connect and react to.  This is sometimes hard to put into words – it’s just a gut feeling.  But you know it’s good when you hear it.  Then we want to spend the time getting others to hear the music since we feel they will like it.  We are also looking for writer/artists who know how much hard work is involved in this career and don’t expect that if we take them on we will do all the work for them.  No one will ever work as hard for what they do as they should.  And if we see someone who is smart and organized and business savvy on top of being creatively unique, then we know we have something.

 

9.  Is there any criteria an artist/writer needs to have to even be considered for a deal?

 

Existing income and activity is always nice, but in the end it comes down to the music.  It has to be great music.  If we don’t react to it, then we won’t fight for it.  It’s all about commitment.  If they have committed to doing the best music possible and that shows, then we will want to get involved whether there is any existing income or not.  Because at that point we believe we can generate the income.

 

Thanks to Michael for this very informative interview.   Learn more about PEN Music Group here.