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Tag Archives: performance rights organization

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Will Computers Soon Control the Music Industry?

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

By: Erin M. Jacobson, Esq.


This article was originally published on Forbes.com.

Today’s hot topics in the music industry are more about data and payments than sex, drugs, and rock ‘n’ roll. As previously discussed, payments to musicians, songwriters, and the companies that represent them are unfairly low. Aside from the rates, the other problem with getting paid fairly relies on the accuracy of the data relating to music.

Digital uses of music require various types of data embedded in and tied to digital music files – called metadata. Metadata includes data like the copyright owners of the compositions and master recordings, ISRC codes (unique identifying codes for master recordings), ISWC codes (unique identifying codes for compositions), performance rights organization affiliations, and other information. One large problem with current metadata within the industry is a problem of matching. Music publishers and record labels often need to match data so certain sound recordings are matched to the composition embodied within them, or that certain uses can be matched to the exact sound recording and composition used. However, there is not yet a good system in place for totally accurate matching, which means a lot of extra work for rights’ holders to identify uses of their works in order to collect the payments associated with those uses.

The other problem is the lack of correct metadata. Oftentimes, identifying correct metadata is like identifying the correct message in a game of telephone. Between the publishers, labels, distributors, and other involved entities, metadata that may have been correct at the beginning of the chain is often incorrect by the time it reaches a stage of usage, resulting in incorrectly identified (or unidentified) owners who don’t receive payments because it is unclear who to pay.

Metadata is often incorrect for several reasons: (1) human error of employees incorrectly inputting data, and (2) lack of communication stemming from either rights’ owners not being clear on their shares of ownership or co-owners not sharing ownership information, (3) companies that have been sold or gone out of business with no clear successor, and (4) people who claim ownership of shares to which they do not actually have rights. In addition, many rights owners (often songwriters) do not want their ownership shares made public because they feel the ease of third parties figuring out what they earn will decrease their bargaining power.

There has been a longstanding argument within the music industry for the need for a centralized database containing all relevant ownership information for all songs. There was an initiative to create the Global Repertoire Database (GRD) to solve this problem, however, the initiative failed reportedly due to companies not providing their data, side initiatives focused on mini-GRD projects, and lack of funding. Although the GRD failed, there are other possible alternatives. CISAC, which is a worldwide collective society of author organizations, supports CIS-NET, a global network of ownership information powered by Fastrack. CIS-NET will be available to CISAC member societies, but not the general public or digital service providers.

Significant attention has been focused on using Blockchain technology to create an open database that is not governed by any one body and can be contributed to by multiple sources. This is a similar principle to the Wikipedia model. The advantages of using Blockchain technology for a centralized music rights database include: the data on the platform is encrypted and run across multiple computers making it difficult to hack; its Bitcoin protocol supports micropayment amounts, making it easier for rights owners to receive that $0.0007 payment and receive it directly; and its decentralized nature allow for rights’ owners to correct information on the rights they own.

However, in my opinion, there needs to be a centralized body to oversee the database to protect against bogus claims and try to discern correct data when inconsistencies are present. Further, while it is great that Blockchain technology can pay artists and writers directly, the technology needs to be implemented in such a way that representatives of rights’ owners like performance rights organizations, music publishers, record labels, attorneys, etc. are not circumvented, as those representatives are essential to handling important business functions for artists and rights’ owners who need to spend their time creating instead of drowning in the minutiae of administration.

The music industry needs a central database with correct information, splits, metadata, etc., both for cohesiveness within the industry and for information transparency to increase the efficiency and reliability of receiving payments. While Blockchain puts forth some real advantages, there is one element that Blockchain or any other database will never have – the human element. The music business is a business of relationships, a business run by people who manage and guard the rights of the music. Therefore, we can only achieve a winning proposition if the business can implement the technology in a way that supports the structure of and the people within the music business.

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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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How Songwriters Just Got Screwed

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Categories: Articles, Legal Issues, Music, Music Industry, Music Publishing, Streaming, Videos, Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

The Department of Justice has recently come to a decision regarding the review of the 1941 consent decrees that regulate the license fees and operations of ASCAP and BMI. Because ASCAP and BMI are non-profit organizations, they are subject to government-regulated consent decrees, meaning the government regulates ASCAP and BMI’s license fees and regulates how they operate in order to prevent monopolization and encourage competition. When ASCAP and BMI cannot settle on a equivalent fees, the dispute is taken to a rate court where the fee is settled. There have been massive lobbying efforts on the part of the music industry to reform these consent decrees and update them to the needs of writers and publishers in the Internet age.

A review of these decrees opened in 2014 in order to modernize the decrees so that they were more applicable to the ever-changing and evolving music industry – an industry where music is vastly consumed through Internet and streaming services. The goal of the modernization was to bring royalty rates up to fair market value and for the ability of music publishers to remove digital licensing from blanket licensing in order to earn more money from online music and digital streams. Much to the music community’s dismay, no changes were made to the consent decrees and the DOJ has also declared the implementation of full work licensing, also known as 100% licensing, which will end the current practice of fractional licensing that has occurred in the industry for decades.

Under the practice of 100% licensing, any person with a percentage of ownership of the work has the right to license 100% of the work, not just the percent owned. Even a 1% owner of a composition can now license 100% of the work without consent from the other co-owners, and is responsible to account to the other co-owners for their share of the payment. This creates problems because it enables music users to shop for the lowest price between owners and will make it harder for music owners to get paid due to frequent lack of communication between co-owners.  It also disrupts the effective system of fractional licensing, a system that has helped insure that owners receive equal income shares and rights.

The other aspect of the DOJ’s decision removes the option for music publishers and composition owners to do direct deals with digital and other service providers, while still allowing PROs to collect other aspects of performance income. Now, music publishers have to choose to be “all-in” or “all-out” with the PROs, allowing PROs to collect all performance royalties on their behalf or none. This will wreak havoc by further complicating the licenses needed by music users, complicated the tracking of performances from these users, and disrupting the income flow that would otherwise be collected by the PRO’s.

The DOJ’s decision will cause drastic decreases in the income streams for music creators. It not only affects the PRO’s themselves but also the thousands of music publishers, writers, companies, and foreign performance societies that hold business with these societies and rely on these rates.  Not only does the ruling further cripple the already narrowing income streams for music creators, but it also inhibits the industry from growing and progressing within the digital age, and prevents streaming from becoming a financially viable method of music consumption.

So what can you do?  As a music consumer, you can #valuemusic and pay for any music you listen to. If you own an establishment that uses music, make sure you are paying what licenses you can so the music owners and creators are fairly compensated. Everyone can go to standwithsongwriters.org and write to your congressional representative as well as sign up to get updates on this issue and how to stay involved in supporting this much needed reform in valuing music.

I became a music attorney because I am passionate about protecting and advocating for the rights of my clients — the creators and owners of musical works.  Contact me to protect your rights.

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.
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