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Radio Seeks to Pay Songwriters Lower Rates — Again (Forbes.com)

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Categories: Articles, Business, Legal Disputes, Legal Issues, Music, Music Industry, Music Industry Interviews, Performance, Royalties, Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

Radio Seeks to Pay Songwriters Lower Rates — Again

By:  Erin M. Jacobson, Esq.

This article was originally published on Forbes.com.

A committee representing roughly 10,000 commercial radio stations has sued performance rights organization Global Music Rights (“GMR”) in an effort to further reduce the amount radio stations pay to music composition creators and rights owners for performances of their works. This committee is the Radio Music Licensing Committee (“RMLC”) and it claims that GMR has created an artificial monopoly over works in its repertoire.

Performance rights organizations (“PRO’s”) are organizations that track and collect performance royalties on behalf of songwriters and music publishers. In the United States, there are four PRO’s: ASCAP, BMI, SESAC, and GMR. ASCAP and BMI are the two largest U.S. PRO’s and are also non-profit organizations. Since 1941, ASCAP and BMI have been subject to consent decrees issued by the Department of Justice. These consent decrees are agreements that allow the government to regulate ASCAP and BMI’s license fees and how they operate in order to prevent monopolization and encourage competition. SESAC and GMR are both independent, privately owned companies that operate on a for-profit basis and are not subject to consent decrees.

Music industry mogul Irving Azoff founded GMR in 2013 in order to provide a more boutique experience for managing performance rights licensing and potentially command higher rates for the performances of works in its repertoire, which includes compositions written and/or performed by artists such as Adele, The Beatles, Pharrell Williams, Katy Perry, Madonna, and many more.

Because GMR is not subject to a consent decree, it can deny a license to perform the works in its repertoire and can also negotiate license rates as it sees fit. The RMLC argues that the license fees required by GMR are exorbitant and seeks to lower them by forcing GMR to submit to judicial rate-setting proceedings, which would require a judge to mandate the rates GMR can charge its licensees. This is similar to procedures mandated for ASCAP and BMI, but without subjecting GMR to a full consent decree. The RMLC previously filed a similar suit against SESAC and reached a settlement in the RMLC’s favor.

Terrestrial radio makes its money on advertising revenue, and while radio is far from dead, it no longer holds the status of its heyday. Terrestrial radio and other broadcasters regularly fight to reduce license fees, as terrestrial radio lobbyists were also part of the group in favor of the Department of Justice’s crackdown on ASCAP and BMI’s licensing platforms, the outcome of which is still pending.

Most observers of this situation usually fail to mention that the public perception of radio’s purpose is music promotion. Without music driving the listenership of certain stations, those particular stations would not earn the ad revenue from advertisers who want to reach those stations’ listeners. However, the stations repeatedly seek to reduce compensation to the songwriters and music rights owners that create the very music that establishes their listenership and drives their revenues.

Terrestrial radio isn’t the only industry trying to reduce payments to music creators and rights’ owners. Those of us who regularly handle music licenses know that attempts to undervalue music also come from Internet and digital companies, as well as small bars and restaurants. Visual productions seeking synchronization and master use licenses also regularly try to lowball license fees or request gratis uses.

It is up to music creators and rights’ owners to value music (#valuemusic) and require proper payment for uses of their music, and to those that use music to recognize the value that music brings to their project or business.

*This article does not constitute legal advice.

Erin M. Jacobson is a music attorney whose clients include Grammy and Emmy Award winners, legacy clients and catalogues, songwriters, music publishers, record labels, and independent artists and companies. She is based in Los Angeles where she handles a wide variety of music agreements and negotiations, in addition to owning and overseeing all operations for Indie Artist Resource, the independent musician’s resource for legal and business protection.

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New Video: How Much Do Artists Earn from Spotify?

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Categories: Royalties, Streaming, Videos, Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , ,

I talk about the numbers.

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Do Artists Need Spotify?

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Categories: Articles, Legal Issues, Music, Music Industry, Royalties, Tags: , , , , , , , , , , , , , ,

By: Erin M. Jacobson, Esq.

spotify independent artist music attorney music lawyer los angeles erin m jacobson esq

I often am asked for my thoughts on Spotify and whether artists need it.

Adele and Taylor Swift are not on Spotify and sell millions of albums. These artists are already big enough that they will sell albums regardless of whether they are on Spotify. Spotify streams actually compete with these artists’ sales because there are many people who will stream the album instead of buying it and the royalty rates for streaming are much smaller than what an artist of this caliber will earn from a record sale. An artist would have to have the album streamed many more times than purchased to earn the same amount of money in royalties.

For independent artists, Spotify can be a promotional tool — another distribution channel for new fans to discover your music. Again, it’s not about the money earned from streams, as for most indie artists that is even less than what established artists earn. The hope is that once these new fans discover the indie artists, they will sign up on their email lists, go to their shows, buy merchandise, etc. and money can be earned that way.

While indies probably won’t earn money from Spotify, if it helps them gain new fans then it may be worth it. If you can be found without Spotify and streams will actually compete with your album sales, then it might not be worth it.

Have questions on how Spotify relates to your career? Contact Erin to book a consultation now.

 

Disclaimer: This article is for educational and informational purposes only and not for the purpose of providing legal advice. The content contained in this article is not legal advice or a legal opinion on any specific matter or matters. This article does not constitute or create an attorney-client relationship between Erin M. Jacobson, Esq. and you or any other user. The law may vary based on the facts or particular circumstances or the law in your state. You should not rely on, act, or fail to act, upon this information without seeking the professional counsel of an attorney licensed in your state.

If this article is considered an advertisement, it is general in nature and not directed towards any particular person or entity.

 

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January Music Business and Legal Round-Up

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Categories: Articles, Business, Copyright, Digital Distribution, Legal Disputes, Legal Issues, Music Industry, Royalties, Tags: , , , , , , ,

cowgirl, lasso, roundup

Image via freeimages.com

I’m trying something new where I do round up at the end of the month of some interesting stories or issues that have occurred during that month in the music industry. Please let me know if you like this new feature believe in the comments below.

First, you’ll want to check out my articles for January:

In other news:

The reports are in from 2015, and the industry numbers are actually up thanks to streaming, although digital sales have dropped. Some artists, like Adele, have proven they don’t need streaming to sell records.

Although streaming has upped some numbers, the artists aren’t getting paid. Spotify was hit with two class-action lawsuits for failure to properly pay royalties. They have now just instituted a new system for tracking and paying royalties. Some accusations claim that Spotify has not properly licensed much of the music that it plays and further that Spotify apparently doesn’t know who to pay. While there are issues that sometimes arise in the industry where finding the proper rights owner can be difficult to find, the majority of rights owners are easily able to be located and paid by those who take a few minutes to look for them.

Spotify has enough money to fight these lawsuits and they’ll probably be some sort of settlement along the way, however Spotify should’ve put a system in place in the very beginning to ensure streamlined and proper payment. This seems like the beginning of a lot of legal hassle for Spotify, but if truly not paying legitimate royalty recipients, it’s a legal hassle that they deserve.

And here are some predictions for 2016.  Let’s see if they come true…