The Three Licenses Holding Back The Music Industry

By Jeff Price

At first glance, one would not think it would be that complex to get the three licenses necessary to sell or stream music on-line, the reality is it’s not only one of the most confusing things to get a handle on but it is also the bottleneck stopping the music industry from reaching its full potential.

Before music went digital, people used to buy it by walking into a physical retail store.

The business model for a physical retail store like Tower Records was:

–       give us your stuff,
–       we’ll put it on our shelves,
–       we’ll pay for it when it sells or send it back for a refund if it doesn’t.

The complexities that existed for Tower Records and other physical stores stemmed from the infrastructure needed to:

–       Have shelves
–       Decide what things to place on them
–       Have a shipping department to receive new albums and return unsold albums
–       Have a finance/billing department to pay people and keep track of: what sold, what was returned, and  how  much money was owed
–       Hire people to place the stuff on the shelves and ring up sales at the cash register.

As simple as it may sound, this is a hard to scale, clunky system that limits what is available to buy based on needing tangible “things” like stores, trucks, CD manufacturing plants, inventory control, and so on. The model limited consumer choice and denied well over 99% of artists on the planet the ability to have their music sit on a shelf in a store where people go to buy music.

The new digital music “stores” and services like iTunes, Amazon, Spotify, etc bypass all of these problems. Everything can be in “stock” on their servers with unlimited inventory that replicates on demand as soon as it is bought or streamed.  There is no shipping department and no need to guesstimate how many copies of a CD to bring in.  Sales are one way and there are no returns. As music can only be found if searched for, the inventory causes no “clutter” stopping other music from selling. In addition, unlike the physical world, it is known exactly how many units sold as opposed to only knowing how many were shipped.  Despite these innovations, the industry is still bottlenecked, only this time it stems not from the inefficiencies and costs found in the physical world but from the clash of technology, the value of a song and copyright law.

In the old school physical model, record labels pre-cleared all licenses and made all the copyright royalty payments; Tower Records’ job was to simply pay distributors for each CD sold, not pay copyright owners. In the new digital music world, on-line stores need to negotiate multiple licenses and directly administer payments to copyright holders. With this need, stores traded hiring people to work in sales and shipping to hiring teams of lawyers, financial administrators, software engineers and database administrators.  Despite the, hundreds of millions, if not billions of dollars, being invested into this new model, one cannot circumvent the basic notion of the value of the copyright to a song and the recording of that song.

To get your head around the issues, some background is needed on copyright.

Here are the quick basics: There are two copyrights to every recorded song – a © and a ℗.  As an example, Dolly Parton wrote the song “I Will Always Love You”. Columbia Records hires Whitney Houston to sing Dolly’s song “I Will Always Love You.”  When they are done, there is a recording of Dolly’s song that Columbia Records hired Whitney to sing. The actual recording of Whitney singing Dolly’s song is controlled by Columbia Records – this is the ℗ – it stands for “Phonogram.” The song itself is owned by Dolly, this is the © – it stands for “Copyright.”

If you are both the songwriter and the performer, it’s important to imagine yourself split in two; one of you controls the © (the “you” that wrote the song) and the other “you” controls the ℗ (the “you” that owns the recording of the song).  As the owner of these copyrights there are a whole bunch of laws in place that allow you to make money.  These laws also set the rules that others must follow in order to distribute, stream and sell your song(s) or recordings of your song(s). These are the six legal copyrights that state that your song has monetary value and these rights drive the entire music industry. You can read more about these six rights here.

For a digital store to sell music, it must have the song files on its own hard drives/servers – this allows the store to control the customer experience, provide customer support and control the shopping cart and check out process.  When a song is bought or played on-line, it is the digital store that is fulfilling the download or stream; this is where the problem is. For a digital store to legally fulfill a stream or download it must get global licenses and make direct payments to copyright holders or the entities that represent them.

As an example, a “download music store” like AmazonMP3 or iTunes, sells a song file.  This song replicates itself onto your hard drive where it sits for you to access and play whenever you want.  It is a one-time sale. The digital store only needs a license to the recording of the song, the ℗, to sell it (this is not always the case outside of the US, but let’s table that for now).  For the digital store to get the right to this copyright, it must negotiate directly with the record label that controls it. There are no pre-existing laws or rules in place that dictate how much the digital store must pay the label for each sale, this is a one to one negotiation with each side jockeying for the best deal terms – the label wants as much money as possible, the store wants to pay out as little as possible.  This is what a contract between a record label and iTunes, Amazon etc is all about.

Once this license is in place, and a song is sold via download from the digital store, the digital store pays the record label for sale of the recording, the ℗.  The record label then handles paying and administering any other money owed to copyright holders.  This includes money owed to the person(s) that owns the song, the ©, or in the case above, Dolly Parton.   The laws around the world state that each time a song is “reproduced.” (a download is legally considered to be a “reproduction”) the person(s) who wrote the song must get paid something called a “mechanical royalty.”

In the US, the government pre-sets the “mechanical royalty” rate.  Right now, for songs under five minutes it’s a little less than a dime – $0.091.

However, the music industry is moving to a streaming model, where people pay a recurring fee to listen to music on demand – for example, stores like Rhapsody, MOG, Napster and Spotify provide this type of “on-demand” streaming service. A customer just needs to be connected to the Net or, when they are not connected to the Net, be pre-approved to listen to what music they want when they want. There are also “free” services like YouTube and Spotify that have ads in them in place of charging consumers a fee.

Streams for music services add a whole new complexity to the situation as every single time a song is streamed not only does the record label have to be paid but so must the person who wrote the song – i.e. Dolly Parton.

Therefore, for a music service to offer on demand streams, it needs not one but three separate licenses. These three licenses are:

–       One license for the Recording of the song (the ℗)

–       One license for the Reproduction of the song (part of the ©), a mechanical royalty (the legal definition of mechanical royalty was expanded and states a stream is also a “reproduction”).

–       And one license for something called the Public Performance of the song.

Let me take a moment to explain a public performance.

A public performance is when a song is played on the radio, in a bar, in a restaurant, live in a venue, on TV, in an elevator or anywhere else that falls under the legal definition of “public performance”.  It’s actually kind of cool. Songs are valued so much around the world that if any company or person wants to play your song in public (you can read the definition of “public performance” here) they actually have to get a license from you and pay you. Remember, this license is for the song, not for the recording of the song.

As technology creates more ways for songs to be publicly performed, the definition of public performance is updated and expanded.  It now states that a song streamed on the Internet is also a public performance of that song. Therefore, if someone wants to stream a song on the Net, there must be a license in place with the person who wrote it. As an example, for each every stream of a song on YouTube, the person who wrote the song must be paid.

Returning to our example, Columbia Records controls the right to the recording of the song (the ℗), but Dolly Parton controls the copyright to the song itself (the ©).

Under the laws around the world, Dolly is granted the exclusive right to publicly perform her song. This means that no one else can “publicly” play (either her recording of it or someone else’s recording of it) without negotiating a license with Dolly to do so. Therefore, if Dolly’s song is streamed on the Net via Apple, YouTube, Napster, Rhapsody, Spotify, MySpace, Google etc, a license must be negotiated with Dolly for the public performance of her song.  If a license is not negotiated with Dolly, or with someone representing Dolly for her public performance, like BMI, then Dolly can sue for copyright infringement.

To make things even more confusing, if Dolly chooses to become a member of ASCAP or BMI, the two largest U.S. based Performing Rights Organization that negotiate public performance licenses (called PROs) on behalf of their members, the digital store must negotiate “one to one” with the PRO for this license. However, the US government has determined that ASCAP and BMI basically have a monopoly on the songwriter public performance market in the US and have too much power.  Therefore, ASCAP and BMI  have to operate under “consent decree” – this basically means that if the digital music store, radio station, restaurant etc, do not like the royalty rate that BMI and/or ASCAP are demanding to publicly perform Dolly’s song, they can turn to the US government to argue their case and the US government can rule on the rate.

Yeah, my head hurts too, and so do the heads of the digital music stores.

Unfortunately for the digital stores, the three licenses are split between three separate entities.  Using the Dolly Parton example above, the record label for the recording of the song is Columbia Records (the ℗), the publisher, for the reproduction (mechanical royalty) of the song is Velvet Apple Music (a part of the ©) and the organization representing Dolly Parton as songwriter for the public performance of her song is BMI (also part of the ©). In order for a digital store to stream Dolly’s song, it needs to negotiate and get licenses for all three. The tension and disagreements between the three entities representing these rights usually stall or stop negotiations.

The Traditional Music Industry

But here’s the upside, the shift in the music industry allows artists/songwriters to have access to marketing, promotion and distribution without having to give up or assign ownership of their copyrights to other entities.  This means that in the new music industry these three licenses can be done with just one person, or an entity that represents all three of these licenses, as opposed to three separate competing entities.

The New Music Industry

This will make life a lot simpler for digital stores while generating even more money for the artist/songwriter.  It will also bring more efficiency to the market.  For example, the artist, or entity representing them, can send information to the digital store and the digital store uses this information to send back money and accounting statements (this is basically what EMI Publishing just announced – you can read more on that here).  This differs from the current system where the digital store sends information to a third party – like a PRO – and then the PRO has to figure out how to match things up and where things go. With this efficiency in place, it would reduce the percentage a PRO has to take off the top to cover its costs of hiring people and systems to track down whom to give the money to. All we need now is an infrastructure to be put in place and laws to be updated to allow the potential growth.  I’ve heard people say that the music industry is a $100 billion dollar industry trapped in a $35 billion body. I think I finally believe it.

  • Al Snyder

    I buy only from Amazon.com because their music is free from DRM. I hardly ever share the .mp3 with anyone, unless I want to turn somebody on to a great artist. Then they usually buy the album. This closely follows the way we shared vinyl in the mid 60’s and early 70’s. More often than not, they bought their own. I will never buy another song from iTunes. They make it extremely difficult to “own” a song without jumping through legal hoops.

    • http://www.facebook.com/corterjay Corey Jay Lenhart

      iTunes now has DRM free music, of higher quality than any other digital download too :)

    • Matt

      Unfortunately Amazon takes 60% from the Artist, where iTunes only takes 30%. And to top it off Amazon takes another $35 or so a year for stocking one physical CD. So potentially an artist who sells 40 (400 songs) copies on Amazon would or could make nothing.

  • http://twitter.com/tonetheman tonetheman

    Streaming a song to a single consumer who has purchased the song is not a public performance. The industry is sooooo wrong on this it is not funny.

    • Anonymous

      I am not saying it’s right or wrong. You should know that it is not the music industry that states this, it is governments around the world that state this.

      • bomber music

        No, it’s not. It’s the collection societies, the governments generally hamper our efforts to protect copyright – especially in the US.

        • Anonymous

          @bomber

          the collection societies only have power due to copyright law stating that an entity needs a license from a songwriter

          this law exists due to governments

          • bomber music

            @tunecore:disqus : stop digging. You’re wrong yet again. The government was pressured to introduce copyright laws by creators. Creators and their publishers then created collection societies. The US government has repeatedly eroded the copyright laws for music.

          • Anonymous

            @bomber

            I am not sure why you are so angry about things. i did not write copyright law, the government did.

            Using your argument, one could state that about any law. Yes, society determined that there is value to a song, and that the creator of that song should be compensated. And yes, they lobbied the government to create laws to allow that belief to codified in the law

            Organizations were then set up to help songwriters get that money

            i am not sure I understand the problem with that…

          • http://twitter.com/RaiderATO Tim Eubanks

            Article 1, Section 8, Clause 8 of the US Constitution states one of the responsibilities of the federal govt. is to protect copyrights. It is not because of pressure from the creators, unless you meant creators of this nation.

            And the US govt. has likely overstepped their bounds when it comes to protection of copyright. Lifetime plus 70 years is not a very “limited” time and the possibility of 125+ years of restriction limits timely progress in a field. If you haven’t capitalized on your creation in a reasonable amount of time (“lifetime + 70 years” is not reasonable), others should be able to expand on your creation.

          • Anonymous

            @tim

            Creators pressure/lobby the government to represent their wants/needs. This influences legislation and laws.

            In regards to what is reasonable, that is entirely a subjective opinion – and what they argument tends to be about. This is where the lobbying comes in.

    • bomber music

      no, you’re wrong, you just don’t understand why

  • bomber music

    What a load of rubbish.Get your facts straight.

    First: Tower records would have needed 2 different licenses to play music instore.
    Secondly: How the hell can the licenses be said to be holding back the music industry? The licenses are crucial for artists, publshers and labels earnings. You are in retail, you are NOT the music business, you create nothing, you just make a living from what others do. You facilitate (and well), but you are just a distributor, you could as easily be shirtcore or shoescore.

    Really the lack of knowledge is shameful

    • Anonymous

      @bomber music

      First, Tower would not need licenses to play music in its stores – in the US, the law states if you are a record store and sell CDs, you do not need to pay for public performances.

      Second, my job is to serve artists. Anything I can do to accomplish that goal I will do. If I can help them maintain control and earn more money I will do that. One of the ways we could do this is be representing them for these three licenses thereby not only allowing them to make more money but also provide a way for them to collect it.

      • bomber music

        You’re wrong again. Tower , like any commercial premises would need, in the UK for example, A PRS and a PPL license.

        So, you’re saying that you could do a better job than PPL, PRS, SESAC, BMI, ASCAP etc etc etc? I really don’t think so, you simply dont have the means, nor apparently the relevant knowledge. The artists are free to join any of these collection and licensing societies any time they choose.

        • Anonymous

          @bomber

          actually, i am not wrong. In the US, record stores do NOT need to pay public performance royalties to play music in their shops. Either do movie theaters.

          laws vary from country to country.

          And yes, TuneCore could absolutely do a better job than a PRO for collection of just Digital Public Performance with the third parties it distributes to

          For example, TuneCore already licenses one of the three rights to the digital stores. Why not all three on your behalf? The data matches and as we are more efficient you would be accounted to more quickly and with more transparency. More money back in your pocket more quickly with more transparency

          There are hundreds of thousands of songwriters that use TuneCore that have sold over 300 million units of music. There is a lot of weight in that.

          For other public performances that are NOT digital public performances, I agree, join a PRO.

          • bomber music

            @tunecore:disqus
            – indeed, you have just shown how poor the copyright laws in the US are. In the UK, all commercial premises require two licneses, PRS and PPL. Your post has never stipluated that you are in all cases referring only to the US. Perhaps you should make that clear rather than risk misleading people

          • Anonymous

            @ bomber

            You are right, the info I am discussing tends to be more US oriented, Outside of the US things work differently which creates even more problems in the US as artists cannot get some of the money that has been collected for them by societies abroad.

            Thus the reason I launched the publishing administration part of TuneCore. There are two functions to a publishing administration company

            1) Create a “net” so when the earth is shaken and the money falls out it can be collected and given back to the songwriters

            2) market and promote songs for:
            – license to TV shows, films, commercials etc
            – other artists to cover

          • i2productions

            Wow, why the anger here at tunecore? Actually in nearly every post here, US is used. It can’t be much clearer. I’m not completely sure, but I’m going to assume most of the artists using tunecore are based in the US. There are too many countries to list, or advise on all possible laws. They can only preach to the broadest audience. Just apreciate the knowledge being put forth, or go bitch somewhere else!

          • http://twitter.com/suebasko Sue Basko

            The complex licensing and payments system, and the fact that they are different nation to nation makes it very difficult to sell music from Canada and the UK (let alone other places) in the U.S. – and vice versa.  On top of this is the visas situation — music performers cannot just come to the U.S. and play shows or festivals, they have to have a performer visa.  These are expensive (a few thousand dollars) and take about 6 months to acquire.  I wish there would be a uniform and reciprocal system between the U.S., Canada, the UK, and Australia.   The existence of the internet, and its predominance now as the place to hear and buy music seem to make this a likely outcome in the coming years. Copyright laws and royalty collection and distribution systems were designed for a much different world.   It is time for them to catch up.

          • Anonymous

            @Sue

            I could not agree more!

            jeff

          • Fox

            This question might sound silly but with all that I’ve read soundexchange or other PRO should be paying or collecting I should say for artist for youtube and myspace stream or anytime stream for that matter right?

          • Anonymous

            @fox

            yes

          • Fox

            But they don’t they only handle internet & satiellite radio. Is there any one who pays for myspace stream or any streams youtube streaming?

  • bomber music

    What a load of rubbish.Get your facts straight.

    First: Tower records would have needed 2 different licenses to play music instore.
    Secondly: How the hell can the licenses be said to be holding back the music industry? The licenses are crucial for artists, publshers and labels earnings. You are in retail, you are NOT the music business, you create nothing, you just make a living from what others do. You facilitate (and well), but you are just a distributor, you could as easily be shirtcore or shoescore.

    Really the lack of knowledge is shameful

  • Chad Garber

    huh

  • phsyco

    Euh…….

  • http://profiles.google.com/huntergaille Gaille Hunter

    I, Gail “Gypsy Heart” Hunter, am a smooth blues singer-songwriter with a publishing company, Velvet Thumb Music, registered with BMI. I have a Tunecore widget with 3 songs on it. Why can’t I see or have you tell me how many streams my songs receive? Do you not want to pay me for each one?

  • CrunchySteve

    @Al Snyder iTunes makes it easy to own a music file. (as distinct from owning the music in that file) Once you buy the album, simply convert it to an MP3 or other non-DRM format. How is that hard? Pretty sure that all iTunes music is now DRM free, too

    • Al Snyder

      Have to get out my heart attack paddles and check out iTunes. I might need them if they’ve gone DRM free. That’s great news if they have. Thanks for the tip.

    • Jerome

      Tuncore and DMG (Diversity Music Group) ALL THE WAY!!!!!

  • http://profiles.google.com/huntergaille Gaille Hunter

    So if I make a slide show with public domain photos and add a song to it and send it to my friends am I infringing on the songwriter and singer?

  • http://www.facebook.com/LeeFoxRox Lee Fox

    “”
    the music industry is moving to a streaming model, where people pay a recurring fee to listen to music on demand
    “”

    Why is that assumption being made?

    Why would artists accept streaming as the new model when they are realizing that streaming is paying nowhere near the revenue they deserve for their art?

  • Eric B.

    So I have a question. If I for example want to make a cover for Viva La Vida by Coldplay on my violin, I would need to get a licnense from Coldplay to post it on iTunes even if I wrote the sheet music?

    • Anonymous

      @ eric

      yes, you would need to get a mechanical license

      A great and easy place to do this is LimeLight – you can find it here: http://www.songclearance.com/

      jeff

    • bomber music

      Not from Coldplay, from a mechanical collection society. But it wouldnt cost you a penny. You just ave to fill out the forms to ensure that the songwriter gets his royalty from your use of his work.

      • Anonymous

        @bomber

        unless its in the US. In the US you would need to get the mechanical license and administer directly to Coldplay’s publishing entity

        Sadly, the US works differently than most other countries – part of the confusion in the industry

        Outside of the US Bomber is correct. In the US, you need to get the mechanical license and then pay the publisher yourself.

        • bomber music

          @tunecore. once more, i believe that’s not entirely accurate. In both countries a collection society would issue the mechnical license, not the publisher. Publisher’s employ mechanical collection societies to act as agents to collect and license. You do not have to pay the mechanical royalty as it is deducted at source by iTunes (whereas the copyright in the sound recording is not, i think)

          • Anonymous

            @ bomber

            I am not trying to be argumentative. The US is a weird place compared to the rest of the world

            In the US, there are no collection societies for mechanicals. In the US the publisher issues the mechanical royalty. As a publisher you can hire an entity to do this for you – like HFA – but HFA is not a collection society

            Further, in the US, you only need to make a good will effort to get the mechanical license and it cannot be denied to you.

            Finally, you can actually follow the law in the US and account to the government as opposed to the publisher.

            As an example, in the US, if you sell a song on iTunes for $0.99, iTunes will pay out $0.70 to the LABEL. In the $0.70 there are two royalties, the mechanical royalty AND the label royalty.

            The label then has to administer back the mechanicals to the publisher, it is not paid off the top to a collection society.

            The amount of the mechanical in the US is $0.091 per song under five minutes. Over five minutes it is a formula.

            Outside the US the money that you get from iTunes does NOT include the mechanical, the mechanical is paid to a collection society. The amount of the mechanical is based on a % of the sale price, it is not a fixed cost.

            i think the system outside the US i better than the one in the US

  • Songer

    It’s amazing how you think that individual songwriters, on their own, will be able to negotiate direct performance licenses with music users that pay anywhere near than those negotiated by the professionals at ASCAP and BMI using the leverage of hundreds of thousands of songwriters. Songwriters almost ALWAYS get creamed with these deals, and end up sacrificing years if not decades of royalties when they “sell out” for exploitative one-shot direct license deals that eliminate any ASCAP or BMI royalties from those usages. Plus, more and more companies are demanding FREE direct performance licenses as a condition of “using” music, which means no royalties at all! You really need to dig a little deeper here if you’re going to truly represent the interests of songwriters. ASCAP and BMI certainly aren’t perfect by any means, but the fees they negotiate are unlikely to be matched by individuals negotiating one-on-one, especially with music users who offer “take it or leave it” deals with no room at all for negotiation.

    • Anonymous

      @ songer

      I dont think individual songwriters should be negotiating this on their own. I do think entities like TuneCore should be. More leverage, more transparency, more efficiency and more money back to the artist/songwriter(s)

      • Songer

        Very interesting. If you’re now going into the business of mass-negotiating public performance licenses as a competitor/alternative to ASCAP and BMI who have been doing this for over 50 years and have armies of experienced licensing lawyers at the ready, what can you tell us about your policies in this area? ASCAP and BMI are pretty transparent about their distribution systems down to specific weightings, rules, etc. Since you’re touting “more transparency”, what are your specific policies in terms of pricing these direct performance licenses, and what % of the license will you be taking for administration, etc? These are fair questions if you’re asking songwriters to give up their ASCAP/BMI royalties and choose your company to negotiate these licenses instead of the established performing rights organizations. If you’re ready to offer a better deal, great!

      • Dulcet Jones

        This raises a question that I had for Tunecore last year:  Why is there no field for “songwriter”, or “composer” when we upload songs to Tunecore for distribution?  I didn’t get a satisfactory answer at the time and now this article points out the importance of this info and the possibility that there are royalties owed to artists that have had sales and streams.   I record under the name “Dulcet Jones” but all of my songs are registered at SOCAN and SoundExchange as “Jim Graham”, my real name.  I haven’t had much activity to make it really matter so far but I would like to know what gives.

        • Anonymous

          @dulcet jones

          There is no field for songwriter or composer as the stores do not ask for it nor want it from a distributor. In addition, what you are describing has to do with the copyright to the song (the (c) ) – you hire TuneCore to represent the recording of your song (the (p) )

          There are two sets of very separate copyrights – one is for the recording of the song, the other is for the song itself (please read the Six Legal Rights That Drive The Music Industry to explain this further – you can find it here http://www.tunecore.com/guides/six rights)

          Just as Warner Brothers does not collect, report etc on the songwriter side, either does TuneCore distribution.

          TuneCore has no right to:

          – register your songs withe collection agencies around the world
          – collect the money owed to you from these collection agencies
          – market and promote your songs for licensing to TV shows, films, commercials, video games etc
          – market and promote your songs to other artists and labels to get them covered to make you more money
          – to license the rights to your songs
          – to police your songs to assure that no one else is using it illegally

          These things are called Music Publishing.

          The burden of all of these things are with the Publisher – in this case it sounds like you are the publisher. These are your copyrights and one else can go and do any of these things without you hiring them to be your administrator or without you assigning ownership of your songs them.

          This is exactly why TuneCore is launching TuneCore Music Publishing. This is a whole separate set of copyrights that you would need to hire TuneCore to represent and assign us the right to do so.

          jeff

          • Dulcet Jones

            In the past 15 years I didn’t have to pay anybody to have SOCAN collect and distribute royalties to me from radio airplay and satellite subscription services, and I thought SoundExchange was involved in the internet side of things on that level. (I’m inquiring about that, waiting for a reply from them).  What you are saying is composers have to pay an agency like yours to track, collect and distribute royalties for streams online.  Pardon me for sounding negative but I feel that the internet has really had a bad impact on music creators.  First it was lost revenue due to P2P sites, now we will have to pay for a service we didn’t have to pay for before, and as far as I can see, the royalties for online activity is severely less than airplay.  I did spend 10 years in the music business full time, it’s currently a part-time hobby but I think I need a new hobby, this one’s getting too expensive.    

          • Anonymous

            @dulcet

            The copyright stuff can be really confusing. What you state is not accurate. Please take a moment to read the Six Legal Rights PDF, it should help clarify things.

            http://www.tunecore.com/guides/sixrights

            Socan collects money and pays it to you for Public Performances. It does not collect nor administer mechanical royalties outside of Canada. This is the way it has always been.

            CMRAA in Canada collects and administers Canadian mechanical royalties. A “mechanical royalty” is an amount of money owed to the writer of the song for the “reproduction” of the song. The rate is set by the government.

            Please take a moment to read more about mechanical royalties here – http://www.tunecore.com/guides/sixrights#2

            Therefore, if you sell a song outside of Canada, the mechanical royalty from the sale of that song sits with an agency waiting to get collected by you (unless the sale is in the US. In the US, the money you get via TuneCore includes the mechanical royalty). A publishing administrator would go and get this pre-existing money for you. If you do not get your money, it is given to someone else. You lose it. A publisher working for you would make sure you do not lose your pre-existing “found” money.

            The same holds true when a song streams. When a song streams outside of Canada, the mechanical royalty from the stream of that song sits with an agency waiting to get collected by you (unless the sale is in the US. In the US, the money you get via TuneCore includes the mechanical royalty). A publishing administrator would go and get this pre-existing money for you.

            This has nothing to do with the Net, this is the way music publishing works. The Net creates more sales and streams thereby making you more money if you wrote the song. The problem is the system that exists is based on the old school model. These third party agencies around the world have your money for mechanicals, they just have no way to get it to you. A music publishing entity gets it for you as you cannot get it yourself.

            SoundExchange has nothing to do with the songwriter, it has to do with paying the record label and the performer of the song for a Digital Transmission. You can read more about that here – http://www.tunecore.com/guides/sixrights#7

            A music publisher does not collect the money from a digital transmission.

            A music publishing administrator has the following jobs:

            – Register your songs and their copyrights with Performing Rights Organizations, and other entities, around the world – this allows money paid to them to be identified as yours. A copyright to a song consists of both the lyrics and melody. You can do this one your own if you like. However, if things are not registered properly at the start, you will not get all your money.

            – Collect your identified money for the use, stream, download, license, reproduction and distribution of your songs

            – Market, promote and shop your songs for license to TV shows, movies, commercials, videos games and other possibilities

            – Negotiate the licenses with an in-house legal department in an attempt to get you the best possible deal terms and payments as well as collect this money and get it back to you

            – Market, promote and shop your songs to other artists and labels in an attempt to get them to cover, record and release them.

            – In the countries where it is required, issue the licenses, and collect the money owed, for any entity or person that would like to “reproduce” your song (a reproduction is a download, stream or a CD, vinyl or something else physical that has your song on it)

            – Police, to the best of our ability, the world to assure no one is using your song or copyrights without getting permission or paying you for this use

            In return for this, the company you hire to do it usually gets paid by taking a % of the money it collects and helps to generate.

            The Net has actually improved things, not hurt them, by making things more efficient. For example, in the old days you had no actually way to know exactly what the radio was playing. Now there is a system that actually tracks each and every play on the Internet assuring the money is associated with the right song and songwriter.

            Also, the Net has created a new way for people to view videos. If a video has music in it on the Net, a license needs to be negotiated, money needs to be paid and the songwriter gets paid more money

          • Dulcet Jones

            Thanks, you have cleared up some of the issues, however, SOCAN does collect and distribute airplay royalties from all over the world via agreements with foriegn PRO’s.  They also update each artists statements with info on what songs were played and whether they were played on commercial radio, TV, or subscription service.  Mechanicals haven’t been an issue for most indie artists for a long time now,  and I don’t understand what a mechanical royalty would have to do with a stream or download, I will read up on it more but I’m losing interest pretty fast, I no longer perform live and have seen first hand what a difference this makes to sales, exposure and overall presence in general.     

          • Anonymous

            @Dulcet

            When I read things like what you wrote it upsets me, not because you find it frustrating and confusing, it is, but because the system is built to create this sort of confusion. Don’t let it defeat you! This is about the least sexy part of the music industry but the most important in regards to how you make money and protect your rights.

            When you create a song you get six legal copyrights. It is these six legal copyrights that drive the entire music industry. These six rights exist in most countries around the world.

            Your song has value the moment it is created! And these six legal copyrights say they have monetary and legal value.

            I implore you not to throw in the towel, but take a moment to learn them and understand them. Yes it’s a pain, but once you have the basics down, you can make decisions armed with knowledge. Please don’t let the confusing and byzantine laws around the world stop you from getting your money!

            That being said – let me respond to you.

            SOCAN does issues licenses and collect Public Performance royalties in Canada. Here is some background on that

            When you write a song you are both the Publisher and the Songwriter. Under the laws around the world, the songwriter is granted the exclusive right to publicly perform his/her song. A public performance is when a song is played on the radio, in a bar, in a restaurant, live in a venue, on TV, in an elevator, streamed on the Net or anywhere else that falls under the legal definition of “public performance”. (NOTE – under the law, a STREAM on the internet is a PUBLIC PERFORMANCE. Therefore you need to get paid for this. In Canada, SOCAN has collected $20 million Canadian dollars for streaming public performances. They have not paid any of it out yet as there are still fights occurring in your government over what the rates should be. As an example, when YouTube streams a video, and the video has your song in it, you are required, by law to be paid. The amount YouTube is to pay is still being fought over between SOCAN, your government and YouTube. This is not the same as in the US. In the US, when your song is streamed there is governmental set royalty that MUST be paid to the songwriter for the Public Performance. This money is paid to ASCAP/BMI and SESAC. They in turn pay your money (as you are Canadian and affiliated with SOCAN) to SOCAN. SOCAN is then to pay it to you but at the moment they do not as the laws and rates are still being argued about in Canada.)

            When a song is streamed on the Internet, it generates three royalties as per this article (I made a few diagrams in the article to hopefully make this easier to understand the diagrams in it):

            One royalty goes to the “record label” for the actually recording of the songs – this is the money you collect through TuneCore distribution.

            The second royalty goes to the Publisher for the “reproduction” of the song (in this case this is you). The government sets the amount of money the Publisher is paid for the reproduction of the song via stream.

            The third payment goes to the songwriter for the Public Performance of the song. This is negotiated directly with the company streaming the song – in your case SOCAN is doing this for you with companies based in Canada.

            In other countries, there are other organizations like SOCAN – for example, in Japan the organization is called JASRAC. In the US we have three of them called: SESAC, BMI and ASCAP. There are over 70 of these organizations around the world.

            These organizations got together and agreed to collect Public Performance royalties for each other. They signed something called the Berne Convention that allows JASRAC to collect your public performance royalties that happen in Japan and pass them over to SOCAN. SOCAN then gets them to you.

            YOU STATE:

            “Mechanicals haven’t been an issue for most indie artists for a long time now, and I don’t understand what a mechanical royalty would have to do with a stream or download”

            MY RESPONSE:

            This is not true. If you are Canadian and a member of SOCAN, and you sell your music in any country around the world, except the Unites States, you are NOT getting your mechanical royalties. For example, one of your songs sells in iTunes Japan. When this happens, iTunes pays JASRAC your mechanical royalty and pays TuneCore for the sale of the recording of the song. You get the money from the sale of your song from TuneCore. However, you do NOT get your mechanical royalty as it was paid to JASRAC.

            JASRAC does not give SOCAN or any other entity your mechanical royalties. Your money stays with JASRAC unless you are able to get it. If you cannot get it, which to this point in time you have not, your money is given to other entities – like Sony, Warner Bros., Universal and EMI. That’s right, when you sell music in ANY country around the world outside of Canada and the United States you are making money for others as you did not collect your money.

            So the next question you may have is: “why dont I just contact JASRAC and get it.” The answer is because JASRAC will not allow you to become a member of JASRAC as you are a member of another Performing Rights Organization, SOCAN. Therefore, under Japanese law you cannot join JASRAC and get your money.

            This is what a music publishing company will do. It will find a way to get your money from JASRAC and get it t you.

            This same model applies in all other countries except the United States. When your music is SOLD or STREAMED in any country in the world, the mechanical royalties that are owed to you are paid to an organization like JASRAC. And there they sit until a period of time goes by, at which point they give them to someone else.

            As the future of the music industry is in streams – and a stream generates THREE income streams – one of the things a music publisher will do is help you get the money due that you are not able to collect

          • Dirtyrottensinnermusic

            Sign me up for the TuneCore Music Publishing.  I am having great success with the artists I currently have on my little TuneCore Label, and would like to see what we could do in a broader market? This is great by the way.

    • bomber music

      Well put Songer.

    • JeffCore

      YOU WROTE:

      Very interesting. If you’re now going into the business of mass-negotiating public performance licenses as a competitor/alternative to ASCAP and BMI who have been doing this for over 50 years and have armies of experienced licensing lawyers at the ready, what can you tell us about your policies in this area?
      REPLY:
      I can tell you that by law, an entity must get a public performance license to publicly perform a song. The rate to be paid is a one to one negotiation and open to the free market UNLESS you are with BMI/ASCAP

      BMI and ASCAP operate under consent decree – this means the US government can intervene and reset (i.e. lower) rates.

      For example, read this recent ruling on DMX vs. BMI –

      http://www.filmmusicmag.com/?p=5992

      SESAC – the third PRO in the US – does not have to operate under consent decree.

      ASCAP and BMI are pretty transparent about their distribution systems down to specific weightings, rules, etc.

      I would LOVE to see specifics. For example, please tell me the specifics of the interim license between YouTube and BMI and ASCAP. How much is YouTube paying for a blanket license? how was this number determined?

      YOU WROTE:
      Since you’re touting “more transparency”, what are your specific policies in terms of pricing these direct performance licenses, and what % of the license will you be taking for administration, etc?REPLY:
      Pricing is as much as we can get for the songwriter, % will be less than than BMI/ASCAP as we have a more efficient system and thereby do not need more manpower to figure out where to send the money.YOU WROTE:These are fair questions if you’re asking songwriters to give up their ASCAP/BMI royalties and choose your company to negotiate these licenses instead of the established performing rights organizations. If you’re ready to offer a better deal, great!REPLYThat’s my plan. Just on digital public performance with those entities we already work with.

  • http://www.facebook.com/people/Qc-Funk/685440063 Qc Funk

    This newsletter was very insightful and resourceful,.,. especiall to all musicians .,,.,.etc

  • http://www.facebook.com/people/Qc-Funk/685440063 Qc Funk

    This newsletter is very resourceful,for anybody n the biz right now since the entire industry is all over the place scrambling for crumbs of any and everybody

  • Dirtyrottensinnermusic

    Your fooling your self.. 

  • Paul proudlove

    it is this way someone is and somehow is not

  • Limbe

    In Africa especially Tanzania…This music business still a problem,Artist still get less compare to what they have done!! tunecore  you should think of Africa

  • http://www.facebook.com/LeeFoxRox Lee Fox

     tunecore said, “When I read things like what you wrote it upsets me, not because you find it frustrating and confusing, it is, but because the system is built to create this sort of confusion.”

    You are saying there is a conspiracy to disenfranchise artists and prevent them from accessing and utilizing the royalty collection systems in place?

    • Anonymous

      @ lee

      To some degree, yes.

      Your money is being given to other people as you are not able to collect it. Music Publishing and the global collection system is a complex and hard to understand system that, in my opinion, works to the advantage of the old school.

      Right now, a lot of money that is yours is going to them. If the system is made simpler, they have to give up this money.

      By keeping it complex, non-transparent and requiring multiple middlemen, it keeps them in the loop and relevant while also allowing them to make money off you whether you like it or not

      why would they want to change it?

  • Kaleimarston

    some people think “no one will pay for music anymore”
    when really thats not the case
    people will still pay for music that they care about on a personal level 
     

  • KINGJULEUS

    RE “public performance is one that occurs either in a public place or
    any place where people gather (other than a small circle of a family or
    its social acquaintances.) ”

    RE: http://www.ascap.com/licensing/licensingfaq.html

    This public performance thing has me thinking…….

    I hear “music playing” almost
    everywhere I go, When I’m on hold(on the phone)
    Obviously including live(cover) music
    at small local pubs. Who really monitors
    all of this public performance. It’s everywhere.

    I always thought that when I was at a bar(club, public place), and
    they played a CD(or played an mp3) that the bar owns, they didn’t
    have to pay for that. I guess I was wrong, they
    need to pay an annual fee to ASCAP

    • http://twitter.com/RaiderATO Tim Eubanks

      They need to pay, but the reality is that they often don’t. Most often because of ignorance. ASCAP, BMI, SESAC will grant a blanket license for establishments playing music. They’ll pay set amount which will be divvied up to who the PROs data says was played. Some media are easier to track than others (Jukeboxes can be monitored easily, but cover bands can’t). The PROs are often guessing. But they have some good formulas they use. If they didn’t, they’d be replaced by someone who did it better.

      FYI: There are allowances for playing terrestrial radio without having to pay which include the # of speakers and the area of the room.

  • Chief Macaulay Okolugbo

    Not only in Tanzania even in Nigeria no copy right control and the government are yet to look into the the copy right issue as serious business

  • http://profiles.google.com/spritesuper3 sprite super3

    I exclaimed with joy so much. There is no field for songwriter or composer as the stores do not ask for it nor want it from a distributor. In addition. The copyright stuff can be really confusing. What you state is not
    accurate. Please take a moment to read the Six Legal Rights PDF, it
    should help clarify things.Thanks for sharing this post so much.

    video di
    matrimonio

  • Illoozer

    HOW can an artist check that his/her song is downloaded once or 100 times. WHO is controlling the downloads from a store? 

    • Anonymous

      The stores themselves are controlling the downloads

      they are automated systems that have to be right as, if they are not, they would get sued out of existence by the majors and other rights holders

  • Maksudur Rahman Shuvo

    Transport truck sales

    Our inventory is all over
    Canada & USA. These trucks are owned by the trucking companies or
    owner operators who have asked for our help to locate retail or wholesale
    buyers and we Buy & Sell Used Trucks including Sleepers,
    Daycabs and Straight Trucks!

    Other services we offer:

    1. Financing (new and used trucks)

    2. Extended Warranties (used trucks)

    3. Factoring to help your cash flow!

    Please check out our website to learn more at:> http://www.dsstrucks.com/