Taylor Swift’s Big Machine Gets Paid

By George Howard
(Follow George on Twitter)

Hell occasionally does freeze over, apparently. Continents shift. I have to say that I never thought I’d see a day where the terrestrial radio stations paid a performance royalty to the owner of the sound recording.  Now, to be clear, this tectonic shift did not occur due to new new legislation, but, apparently, occurred via free-market negotiations.

The implications of this deal between Clear Channel and the Big Machine Label Group (home to, among others, Taylor Swift) are potentially huge, and not just for performers/labels with respect to finally being paid when their copyrighted material is publicly performed, but for the industry as a whole.  It signals a move towards transparency, which could/should lead to new participants entering the music industry.  As such, we may finally see some innovation.

This is exciting.

Let me step back for a moment to frame the issue. As discussed frequently on these pages, when an original song is created and fixed in a tangible form (written down or recorded), the author of that song is immediately granted a copyright for that song.  The copyright that is created is for the tangible manifestation of the “idea” of the song (the lyric and melody).  Now, when a label (whether that’s a third party, or the artist herself acting as her own label) releases (either as a physical good (CD, LP, etc.) or download) a recording of this song, the label owns the copyright to the release; this is the copyright to the sound recording.  For ease of understanding, we’ll apply industry-standard nomenclature and refer to the copyright in the sound recording as (P), and copyright to the song itself as ©.

One of the exclusive rights that the copyright holder of the song (the ©) automatically is granted is the right to publicly perform the work.  This means that the copyright holder is the only one allowed to perform the song in a club, but it also means that no radio station, restaurant, or any other public place, can play these songs (via radio, etc.) without the copyright holder’s permission.

In order to expedite the process of getting the necessary permissions, and compensating the copyright holders when their songs are publicly performed, clearinghouse agencies— known as Performance Rights Organizations (PROs)—were created. In the United States there are three: ASCAP, BMI, and SESAC.  Each of these entities represents songwriters. These songwriters grant the PROs the right to negotiate with entities (radio stations, TV stations, clubs, restaurants, etc.) on their behalf, and issue licenses to these entities.  These licenses give these entities that desire to publicly perform the copyrighted material of the artists represented by the PROs, the right to do so.  The PROs charge a fee for these licenses, and, after deducting their costs, distribute the net collected money to their affiliated writers based upon the amount of public performances the respective artists have over a period of time.  It’s a complicated formula, but, in a nutshell, songwriters whose music is publicly performed more often and to more people, get more money than those whose songs are publicly performed to fewer people and less frequently.

As one can imagine, one of the largest revenue streams with respect to public performance revenue, is money paid to the PROs from radio stations.  Every time a radio station plays a song, the writer of that song is owed money.

Here’s where things get interesting, and where recent developments make things really interesting.

While the songwriter gets paid (i.e. the person who holds the ©), the owner of the sound recording (i.e. the label/person who holds the (P)) does not get paid when their copyrighted material is publicly performed on terrestrial radio.

The United States is one of the very few countries that does not legally mandate a right of public performance in the sound recording (the (P)) for terrestrial radio broadcast.  This means that in nearly every other country in the world, when a song is played on the radio, both the person who wrote the song (the owner of the ©) and the label (the owner of the (P)) who released the song get paid.  Additionally, this payment in the sound recording (the (P)) tends to be broken up so that not only does the label get paid, but also the performer of the song gets paid too.

To put it into context: In the United States, when Whitney Houston’s version of Dolly Parton’s song “I Will Always Love You” gets played on the radio, only Dolly Parton (the author of the song—the © holder) gets paid a public performance royalty.  Neither Whitney, nor the label that released the song and owns the copyright to the sound recording (the (P)) gets a dime.  In nearly every other country, both Dolly Parton and Whitney Houston’s estate get paid.

There has been ongoing effort by various policy organizations to change this anomaly, and make the US consistent with the rest of the world, by having broadcasters pay a public performance royalty to owners of sound recordings, but—for a variety of reasons, largely political—these efforts have failed.

Progress, of course was made when the Digital Performance Right in Sound Recordings Act of 1995 and 1998’s Digital Millennium Copyright Act (DMCA) granted owners of Sound Recordings exclusivity for public performance via digital transmission.  This means that when a song is played on Internet radio, satellite radio, etc., the owner of the sound recording (and the performer) is paid a royalty. For this type of public performance (specifically, non-interactive digital transmissions, i.e. streams), an entity called SoundExchange administers licenses and collects; in other words, SoundExchange does what ASCAP, BMI, and SESAC do, but only on behalf of the owner of the sound recording (the (P), and only for digital transmission).  Even with this legislation, there has been no modification to the law with respect to terrestrial broadcast.

Recently, however, there has been movement.  As reported recently in Billboard, Clear Channel, the largest US owner of radio stations, has agreed to pay a public performance royalties for sound recordings (the (P)) to the Big Machine Label Group and its artists.

Lots of interesting details here.  First, because Clear Channel has made a deal directly with a label, and negotiated their own rates rather than relying upon statutory rates (set by the government), they bypass any clearinghouse agency.  As Clear Channel not only broadcasts terrestrially, but also online, this means that SoundExchange has been cut out of the equation.  This means at least one thing for sure: the label will get more money, as there’s no intermediary (SoundExchange) to take a cut.

Further, the Billboard article states that Big Machine will split the money they receive with the artist.  I have questions about this.  First, I assume that Big Machine will only split this money with the artist if the artist is recouped.  Second, I assume that there is some pretty great tracking and accounting going on in order to be able to determine which play (for which artist) resulted in what income.

The implications of this deal for the industry are uncertain; could this be the spark that ignites the dynamite of change, or will it simply be an anomaly? However, there are implications to be drawn with respect to the way the business is changing.

For instance, Clear Channel CEO Bob Pittman, in explaining his rationale for doing this deal, stated: “What we are really trying to do is come up with a predictable model.” I’ve been proclaiming for quite some time that one of the biggest obstacles standing in the way of moving the music business forward is the lack of transparency, and thus the lack of predictability.  No rationale person would invest in a business model where they cannot understand/assess the risk/reward due to a lack of transparency.

The confusion around payments for public performance (both terrestrial and digital) is a GREAT example of a business model with no predictability.  Smart money (i.e., investors, entrepreneurs) is standing on the sidelines of the music business, and keeping their money on the sideline until a more predictable model emerges.

One sure-fire way to improve predictability (and, related, transparency) is to do what Clear Channel and Big Machine have done: strip out the intermediaries, and do deals directly.  In this manner, Clear Channel knows precisely what they will have to pay in order to broadcast—digitally or terrestrially—to the owner of the Sound Recording: Big Machine.  Similarly, Big Machine knows what to expect in terms of payment for their Sound Recordings.

Hey record business: this is how you run a business! You own an asset, and you exploit that asset for a fee, and, over time, certain elements of predictability emerge.  This predictability allows you to forecast, and adjust your business accordingly.  It’s somewhat shocking that this even has to be stated, but, apparently, it does.

What should be very clear, and very unsettling is that this cannot end just with payment for public performance of the Sound Recording (the (P)).  By this I mean, just as SoundExchange has been disintermediated with respect to the Sound Recording, ASCAP, BMI, and SESAC could/should be taken out of the equation with respect to collection/distribution of fees for public performance of the copyrighted songs (the ©).

To be clear, this direct licensing approach works best (and maybe only works at all) with labels that have substantial rosters/catalogs.  Big Machine is able to make a deal like this because they have artists like Taylor Swift, Reba McEntire, Jewel, the Mavericks, and Tim McGraw.  Neither Clear Channel, nor any other broadcaster, is going to have the time or interest in negotiating licenses for public performance for thousands/millions of individual artists, and thus intermediaries are necessary.  However, what this deal shows is that there is room and need for new ways of doing things.  TuneCore’s Worldwide Publishing Administration is a prime example of this.

What’s most exciting about this deal between Clear Channel and Big Machine is that it shows not only a rare gesture of innovation in an industry that innovates all-too-infrequently, but also a move towards predictability and transparency.

This increased predictability and transparency will attract an increasing amount of new money and new approaches to the record industry.

The net effect of this will be that old, ingrained customs—ones that no one can even remember where they came from (Why don’t we pay a performance royalty in sound recordings for terrestrial broadcast? Why aren’t movie theaters required to pay any public performance royalties?)—will finally be called to question.

So too will institutions and entities who have operated under a veil of obfuscation and confusion and lack of predictability.  When it becomes clear that there is really no Wizard behind the curtain, we’ll finally be able to make some progress towards creating a more equitable, transparent and predictable business. Can’t wait.

________________________________________________________________________________________

George Howard is the Executive Vice President of Wolfgang’s Vault. Wolfgang’s Vault is the parent company of Concert Vault, Paste Magazine, and Daytrotter. Mr. Howard is an Associate Professor of Management at Berklee College of Music

  • Katy Boyd

    This is not just very cool indeed, but well overdue!!! And really great news for all of us artists….. YEAH!

    • http://twitter.com/gah650 George Howard

      I sincerely hope so, @be7fa1b75016176fb57976b2336867a7:disqus .

      George

      • Alvin

        I am wondering why CC would do this deal in the first place. Are they really feeling that much heat from Soundexchange on the digital side or the potential of new legislation imposing a rate?? Certainly Big Machine wouldn’t have suggested pulling their records from CC airwaves?

        • Ken

          exactly my question : why would CC do it if there is no legal requirement? The only “card” I see that Big Machine has is to pull their records (actually their SONGS as they can’t pull something there is no legal right to). Can someone explain?

          • Anonymous

            my guess:

            The world is moving to digital.

            Each time a song is streamed via a non-interactive digital service CC has to pay a royalty
            There is a statutory royalty the government set that CC wants to be lower
            So they bargained with Big Deal to set a new rate that is lower than is paid to SoundExchange
            SoundExchange charges a 6.7% admin fee and then pays 5% of the money to unions. A total of 11.7% being taken off the top of Big Machines Gross revenue.
            Big Deal cut out SoundExchange as a middleman for collection, removing the 11.7% admin and union fee therefore allowing CC to pay a lower rate. Big Machines makes more money even though less is being paid – the “fee” to CC for doing this is to pay Big Machine for AM/FM radio play.
            CC says OK as thats whats in decline.

            This sets a new rate as a precedent. Other labels are now going to want it as well. This sets more precedents
            And the next time they go to rate court to fight over what should be paid to SoundExchange, CC can show that the rates the govt set are higher than the actual market rate and therefore should lowered
            Jeff

          • http://twitter.com/gah650 George Howard

            @d02e5538525d1db22361b7a8208e101b:disqus , @07518c3294a7d3ac5c8430abfef77065:disqus , @tunecore:disqus (Jeff), Thanks for the conversation. While I agree with Jeff’s summation, I don’t want to discount their stated rationale for doing the deal: predictability. Clearly, they’re not going to do a deal that costs them value in exchange for predictability, so one can assume the direct deal is – on balance – a better value (not just monetarily, but also with respect to having a better sense of forecasting, etc. (this is KEY with respect to access to additional capital, etc.).

            I really think this is at the root of it: sophisticated business people simply will not engage in overly-speculative businesses.  The lack of transparency with respect to an ever-increasing revenue stream ($ from streaming) is therefore unacceptable; so, they’re trying to change it.

            George

          • Brian Lewis

             I started my indie label to produce a lost live performance from 1969 for one of Australia’s most famous bands. I have one foot in both camps…however, I decided 60% royalty to the band plus they pay for nothing to do with the release, and the only costs are mechanical licenses and CD manufacturing costs that are deducted from gross income. For the first time in their lives they will get revenue from sales…43 years late, but as they say, better late than never. Tunecore info like you provide is priceless for us newbies…

    • Jane23

      I heard that the broadcaster are trying to have the sonwriters royalties cut down in order to pay for the artist royalty. If this is going to be the new way, god save us all from those greedy accountants and lawyers that are in charge of the music business now. This are the sign of the times… the times of American Idol and all that non-sense way to be involve with art.

      • http://twitter.com/gah650 George Howard

        @a49b3b0814936a6ae2499c9d6a2928ae:disqus , oh yeah. the broadcasters are going to resist paying a pub perf in SR (i.e. the (P)) with all their might.

        they’ll take two approaches:

        1. they’ll tell policy makers that if they pass legislation to force the b’casters to pay the SR royalty, that they (the b’casters) will not agree to favorable rates for the politicians re-election ads.

        2. they’ll threaten to go from playing music to all talk.

        it’s why I’d rather have the market negotiate these things than the govt.

        (not to say the government never gets it right – i think, for instance, the compulsory license around mechanicals works fairly well).

        George

  • Katy Boyd

    This is not just very cool indeed, but well overdue!!! And really great news for all of us artists….. YEAH!

  • http://www.facebook.com/thatsdavewarner Dave Warner

    You’re assuming that any major label has a solid and transparent accounting system that will show artists what they’ve actually earned? That’s an EXTREMELY faulty assumption, especially when countless major label artists have sued their labels for improper accounting. For all we know, there’s a bean counter somewhere telling Whitney Houston’s estate that she still hasn’t recouped yet.

    Also, why exactly are we lauding Clear Channel for making a deal like this, when it seems pretty obvious that A.) any deal a huge corporation like Clear Channel makes seems likely to price smaller competitors out of the game, and B.) the labels already pay huge sums of money to “indie promoters” to get their new releases on the radio in the first place — a practice that often blocks indie artists and labels from mainstream radio exposure — and would really just be getting refunded a small percentage of that money through these royalties, which might never even make it back to that artists, because the label bills them for the “promotion”?

    • http://twitter.com/gah650 George Howard

      @facebook-581972613:disqus 
      Dave,

      thanks for the comment. You’re completely right about labels and their accounting system. I tried to articulate this when I said the following:

      **Further, the Billboard article states that Big Machine will split the money they receive with the artist.  I have questions about this.  First, I assume that Big Machine will only split this money with the artist if the artist is recouped.  Second, I assume that there is some pretty great tracking and accounting going on in order to be able to determine which play (for which artist) resulted in what income.**So, yes, undeniably, accounting is at the root of this, but we now have (at least) two parties how can audit each other (can’t audit the PROs). More importantly, with respect to your excellent second point about WHY CC would make a deal like this, and how it relates to the smaller artists. I stated the following:

      **To be clear, this direct licensing approach works best (and maybe only works at all) with labels that have substantial rosters/catalogs.  Big Machine is able to make a deal like this because they have artists like Taylor Swift, Reba McEntire, Jewel, the Mavericks, and Tim McGraw.  Neither Clear Channel, nor any other broadcaster, is going to have the time or interest in negotiating licenses for public performance for thousands/millions of individual artists, and thus intermediaries are necessary.  However, what this deal shows is that there is room and need for new ways of doing things.  TuneCore’s Worldwide Publishing Administration is a prime example of this.**

      Look, I’m not naive. I don’t think that CC or Big Machine are acting out of any other motivation than their own self-interest (as all rationale actors do). My hope is that the unintended consequence of these actions is – at least – a disruption of the current practices, and at most a full change.

      Thanks again.

      George

      • Audioboy

        Excellent read on the situation George.

        • http://twitter.com/gah650 George Howard

          @b65a5a3ceab38bfde812d0c57b4eb98f:disqus thanks.Best,

          George

  • Sam Tall

    I need some corroboration on this, but I seem to recall reading that labels eschewed performance royalties for sound recordings because, at the time that it was being invented and improved, they believed radio was a fad technology that would not stick and was therefore not worth the massive amount of paperwork to deal with. Of course, now that everything is digital and instantaneous, there’s a way to do so efficiently and they’ve been trying to unravel their tangled web of deliberate neglect ever since. As for cinemas, I was under the impression that they used to be required to pay out royalties and, at a point when the film and music industries were best of friends, it was agreed that cinemas weren’t making enough money to have enough spare to pay royalties. Now that we have national cinema chains, money is a non-issue.

    I could be wrong about any or all of that, but I wanted to put it out there in case there was the possibility that it was the labels’ fault in the first place because that seems to be the cool thing to believe nowadays.

    • http://twitter.com/gah650 George Howard

      @f6900f6c3b7522187e72ca988f39d0c2:disqus , you may be right (I’ve heard a lot of different explanations – none good). Yours, however, is emblematic of the industry’s historic practices; i.e. resisting/ignoring/fighting technological change to their detriment.

      My hope is that those days are nearing an end.

      Best,George

  • AesopFableMonster

    I agree with @facebook-581972613:disqus . I doubt that labels are going to be forthcoming about the breakdown of radio plays. For all intents and purposes, shouldn’t the count match what they give the PROs and SoundExchange? That’s the only thing I can see that should lead to “transparency”. Because as an artist, if Clear Channel is giving varying reports to any entity, then that nullifies any advantages this seems to propose.

    • http://twitter.com/gah650 George Howard

      @AesopFableMonster:disqus , thanks for the comment. I’m not sure I’m following. The labels don’t give ASCAP and BMI anything (currently, they have nothing to do with each other). The labels DO register with SX in order to get their distributions of what SX has collected on their behalf for non-interactive streams.

      My point is that CC – having entered into a relationship with a label directly, with – as would be the case in any agreement – both parties having audit rights – these parties will only do business with each other so long as there’s transparency. 

      This (audit rights) is a great leap forward in terms of shaking things up.

      George

      • AesopFableMonster

        I know that the labels don’t give the PROs anything. I was talking about the integrity of the info Clear Channel gives to the PROs vs the info they give to the labels they have struck deals with. If I’m an artist that is also the songwriter, then the info CC gives the label should be the same info CC gives ASCAP and the like regarding the number of radio spins. Unless the label makes me privy to their report, there is no way that I as an artist can compare the reports (report CC gives to label vs report CC gives to PRO) to verify that there is no discrepancy. CC can tell the label that there were 25,000 spins in a specific period, while telling ASCAP and the like that there were only 10,000 spins for the same period. How am I to know that all parties are getting the same info?

      • AesopFableMonster

        I know that the labels don’t give the PROs anything. I was talking about the integrity of the info Clear Channel gives to the PROs vs the info they give to the labels they have struck deals with. If I’m an artist that is also the songwriter, then the info CC gives the label should be the same info CC gives ASCAP and the like regarding the number of radio spins. Unless the label makes me privy to their report, there is no way that I as an artist can compare the reports (report CC gives to label vs report CC gives to PRO) to verify that there is no discrepancy. CC can tell the label that there were 25,000 spins in a specific period, while telling ASCAP and the like that there were only 10,000 spins for the same period. How am I to know that all parties are getting the same info?

        • http://twitter.com/gah650 George Howard

          good point. you as artist – who is owed accounting from the label for all streams of revenue – *should* see this accounting.

          however, i deeply understand your skepticism.

          my point is the same as yours: we need more transparency.

          George

  • Silenthwk

    I do believe this will create a better, more attractive business model due—-The transparency is long overdue. I do agree the (P) as you put it, should get a performance cut. But I do not believe there will be any organization rising to collect performance royalties (C) for songwriters
    better than ASCAP and yes maybe the other PRO’S. Maybe the PRO’s can join forces to help with (P) collecting should it all start becoming the norm of the industry as in other countries.
    Great article any way you wanna look at it though! Thanks!

    • http://twitter.com/gah650 George Howard

      @234efa83edcfb9a360e75062f5a286eb:disqus , thanks for the kind words.

      my hope is that through competition, which has not existed for a century, the PROs will HAVE to improve, or their customers will seek substitutes. Happily, substitutes (and alternative methods) are emergine. This is ALWAYS good for markets.

      Best,George

  • http://twitter.com/daveowensmusic Dave Owens

    Great for “them” but I can’t help but think that, despite the lack of transparency of the PROs that are currently representing us indies (I actually like SESAC’s team that I deal with), this is only separating us further. As mentioned, we can’t just call up Clear Channel…and also as mentioned, this will drive more stations away from major label music…but will that enable us indies to find more opportunities on those stations? I guess they’d have to reconsider their relationships with Clear Channel. This could move into many different directions. Here’s to hoping it’s one of positive revolution and evolution among radio because I still believe in the power of radio for us!

    http://www.daveowensmusic.com

    • http://twitter.com/gah650 George Howard

      @twitter-36550108:disqus , all good points, and no easy answers. However your last line is the right one: viva la revolucion!

      George

  • http://www.facebook.com/betsy.gain Betsy Gain

    Thank you so much for explaining all this!  I am getting ready to release my first album.  As my own record label, I am trying to write contracts with the musicians that will be fair and practical in the long-term for the new industry that is emerging.  Some musicians just performed what I wrote, and some added original ideas.  It is a challenge to imagine future sources of potential revenue and sort-out where it should go.  I am a member of ASCAP, and I just signed-up for the tunecore songwriter service, which I hope will make things easier.

    • http://www.facebook.com/betsy.gain Betsy Gain

      -and I loved your explanation about how there is no acceptable business model for any rational person, so don’t expect anybody with half a brain to invest in this mess until it’s fixed!

      • http://twitter.com/gah650 George Howard

        @facebook-548698267:disqus , yeah, that’s really the thing. the music business has been so rife with crony-ism that outsiders just sort of scratch their heads in wonder and move towards more transparent/predictable industries.

        however, like all unethical systems, this too will collapse (has collapsed?) under its own weight.

        then (and only then) opportunities to rebuild emerge.

        Best,George

    • http://twitter.com/gah650 George Howard

      @facebook-548698267:disqus , thanks for the kind words, and I’m glad you found the article helpful.

      congratulations on taking control of your career!

      with respect to the musicians you’re working with, you’re going to need to really consider when (if ever) to divide your (c) in the song. Without knowing any details of your situation, as a rule, you want to avoid dividing your (c). 

      in order to do this, you’ll need to have the musicians who performed/recorded with you sign work made for hire agreements. You’ll need to have a lawyer help you draft one up.

      I know it seems like a pain, but it could save you a tremendous amount of money and time.

      best to deal with it now.

      George

      • http://www.musicbybillbogaardt.com/ Bill Bogaardt

        Hi George,
        Brilliant article, and I will forward this article to all my musician friends. I have been watching the Copyright/Pro royalty “game” for years, and your article creates “transparency” in what (in the least) an artist should become aware of on their own. At least there is “movement” in the Industry! Great article and I’ll be following your continuing comments.
        Thanks!!
        Bill Bogaardt

        • http://twitter.com/gah650 George Howard

          @4380a651a40dfe06d2bfcba77f8ae41f:disqus ,

          thanks VERY much. spread the word.

          Best,George

    • http://www.musicbybillbogaardt.com/ Bill Bogaardt

      Type your comment here.Hi Betsy, Regarding your “release of your cd”, please heed the words of George Howard regarding the “Artist made for Hire” Agreement with your musicians, before you go into the recording studio or release your CD. A classic court case here in Canada was the Sarah McLachlan case, where a musician tried to get a cut as a co-songwriter. Lesson to be learned. When it comes to money, your best friends turn to vultures.  There’s a great book you can get,(much easier in the U.S. than Canada) called  Music Law by Attorney Rich Stim. Excellent resource and even INCLUDES all the Agreements you’ll ever need,  on a CD-ROM, but specifically you’ll be able to find the Agreement George Howard spoke about, called ” Artist Agreement for Hire”. The book costs about $49.00 (approx) but you’ll save yourself thousands of dollars in legal fees.
      Cheers! 
      Bill Bogaardt

      • http://twitter.com/gah650 George Howard

        @4380a651a40dfe06d2bfcba77f8ae41f:disqus thanks for the wisdom, Bill.

        Best,George

  • http://www.facebook.com/MelissaCrossForReal Melissa Cross

    So, what do you think this means for the “black box” distributions?  For decades, royalties have been held in escrow (allegedly, and God help us if the money is not there anymore) in Europe and other Territories for U.S. artists’ broadcasted on terrestrial radio in retaliation for the US policy that has blocked their artists’ collection of (P).  When do you predict that will be addressed now that this precedent has taken place?  Or will it just be ignored because the Big Machine deal  was a business transaction that didn’t involve the performing rights organizations?

    • http://twitter.com/gah650 George Howard

      @facebook-724896219:disqus , thank you for bringing up this important point. As you state, due to the lack of symmetry between US and ROW payments for public performance of SR, the artists get caught in the middle. Essentially, non-US PROs say, “Hey, if you’re not going to pay OUR artists when their music is publicly performed in the US, we’re not paying your [US] artists when they get played in our country.”

      This money (and other $) then gets caught in near-term purgatory, and is then distributed – based upon market share – to publishers.

      Talk about an inexact/crazy system!

      As you say in your final sentence, the BM deal would – likely – alleviate these issues as it’s a direct deal.

      Thanks for this great point!

      George

  • http://www.ariel-kalma.com/ Ariel Kalma

    I am curious, how much cut does Sound Exchange takes?
    For me it works with SX because I finally get something back, which I never got before. And it’s easy to register with them directly.

    • http://twitter.com/gah650 George Howard

      @a2151fcb4148693d13c469fd99b778d2:disqus , your question – and my (or, frankly, anyone else’s) inability to give you a clear, concise answer to that question exemplifies my point with respect to obsfucation.

      To be clear, I’m not saying that it is simple to delineate all the royalty streams for all usages, etc., but so what!

      Why not try.

      The fact is (and the point of my article) that via this lack of trying to be transparent has (finally) provided incentive/opportunity for people just to bypass the system altogether.

      Best,George

  • http://www.facebook.com/franzdickson Franz Dickson

    Many thanks Mr Howard on how you continually and repeatedly seek to inform artistes on their rights and the value thereof together with the need for a more transparent Music industry.Your  harping on the matter really does lead to insight on the issue.That in itself is remarkable and very commendable.

    • http://twitter.com/gah650 George Howard

      @facebook-100000679435195:disqus , Thank you!

      Means a lot to me.

      Best,George

  • Omnipresententertainmenthl

    Thank you for the article. Love and light your friend in music Heidi Little http://www.heidilittle.com

    • http://twitter.com/gah650 George Howard

      @aa94214cf8d4c23ea3a5ecae522853e4:disqus , my pleasure.

  • Iuh

    meet the new boss same as the old boss

    • http://twitter.com/gah650 George Howard

      @luh:disqus , I disagree. While – in any dynamic – there’s always a boss (yes, even if you’re your own boss – your customers become your boss), we need a different set of bosses, with different approaches.
      Of course, I do hope that for most their bosses are their customers (i.e. they’re their own boss).

      George

    • http://twitter.com/gah650 George Howard

      @luh:disqus , I disagree. While – in any dynamic – there’s always a boss (yes, even if you’re your own boss – your customers become your boss), we need a different set of bosses, with different approaches.
      Of course, I do hope that for most their bosses are their customers (i.e. they’re their own boss).

      George

  • http://www.VIPGQ.com/ Brian Shell

    George, I’m reminded of the information I learned recently at a seminar titled “Selling Smart” where they reminded us that there’s a chasm between the buyer and the seller… which is more emotional rather than intellectual… thus, more about trust rather than objective reasoning and rationale.  Their number way to remedy this was “break the pattern” . . . “interrupt the normal pre-programmed response.”  That way, you get “into the new” and can set aside “the old way” of doing business to really make true and lasting progress that is a win-win for all.

    The term “break the pattern” is the takeaway I got….ask first, talk later…. so we seek to understand first, and then to be understood. 

    That way, we build successful bridges across the emotional chasm for buyer and seller alike.

    Hope those nuggets of wisdom I appreciated at this week’s marketing class helps you all.

    Best regards,
    Brian Shell
    http://www.VIPGQ.com 

    • http://twitter.com/gah650 George Howard

      @d390cdb01bc5f2084f556c8302e46a2b:disqus , wonderful post. I’ve spent  about the last twenty years working on this type of dynamic.

      for me, it’s been distilled down to the ethos of The Cluetrain, and – in particular – the chapter “Markets are Conversations”:

      http://www.cluetrain.com/book/markets.html

      I’ve written extensively about this on my personal blog:

      http://www.9giantsteps.com

      thanks for continuing the conversation.

      Best,George

  • Lwa1609

    Interesting discussion. Being new to this business, I don’t understand, if all the money goes to the songwriter, how does the artist and the studio etc. make a living?
     

    • Anonymous

      in the old days, when artists were signed to labels, the artist traditionally made money off gigs, merchandise and sponsorships not music sales
      the very very elite few (i.e. U2, Madonna), also made money off royalty advances from the record labels
      However, in many of the cases, the artist was also the songwriter

      For example, John Lennon and Paul McCartney wrote their own songs.

      jeff

    • http://twitter.com/gah650 George Howard

      @5c9e8fbccda7f682d4f2f5670ac8db27:disqus :
      Two royalties:

      1. from the label to the songwriter, whether or not the person signed to the label is the songwriter. this license between the songwriter and the label is called a mechanical license and gives the label the right to reproduce and distribute the songs on their (the label’s) records. the rate of this royalty is set by statute ( i.e. law). currently, it’s just under a dime per song reproduced. 

      2. from the label to the artist signed to the label. this is commonly referred to as an “artist royalty.” this is contracted  between the label and the person signed to the label. the label typically pays either: a. a percentage of the list price of the CD/Download (typically between 12 and 18%) or b. some sort of net profit share (i.e. after the label recoups all their costs, they divide the income (i.e. revenue less expenses) with the artist.

      as jeff says, this second (artist royalty) rarely results in any money for the artist, as most artists don’t recoup (i.e. payback expenses) the costs of creating and promoting the release.

      mechanical royalties (i.e. #1 above), on the other hand are owed from record one sold, and thus the writers do tend to see $.

      George

  • http://twitter.com/TheFree_Lance Jeff A. Taylor

    Thanks for the heads up. As someone who has been following this for decades (I once had Hilary Rosen spin me from across a table for RIAA) I agree this COULD be a huge development in breaking down the status quo. 

    Keep pushing folks!

    • http://twitter.com/gah650 George Howard

      @twitter-338587175:disqus agreed, Jeff.

      it’s about continuing to push. hopefully, this is something that start tipping with more pushes.

      Best,George

  • AmandaMcDowell

    It’s been my assumption that BMI ASCAP and SESAC were invented to protect the rights of the writer, and collect money owed them. How is this really making Clear Channel MORE accountable?  Or make any entity MORE likely to make a deal with a lowly indie? and Movie houses don’t have to pay royalites??? I did not know that.

    • Anonymous

      @Amanda

      ASCAP/BMI/SESAC are performing rights organizations. they are hired by the songwriter to audit entities publicly performing the songwriters songs
      Pls read this for more info – http://www.tunecore.com/images/artwork/templates/pdfs/tunecore_six_legal_rights.pdf
      The deal in this article between Big Machine and Comcast is between Comcast the owner of the recording – Big Deal. It is NOT a deal between Comcast and the songwriter.
      The information that Comcast provides Big Deal shows how many times the recording of the song was played. This is the exact information needed to determine how many times the songwriter’s song was publicly performed
      with this information, you can compare it against an ASCAP/BMI/SESAC statement and see if the two match. If ASCAP/BMI/SESAC’s statement is lower than what was reported to Big Deal, you will have caught them in underreporting to the songwriter
      In regards to an Indie – TuneCore is all “indies” and its customers have sold over 600,000,000 units of music in the past 2.5 years earning over $300,000,000 making it 40% the size of EMI and 25% the size of Universal in regards to US market share of digital music sales.
      The “indies” via TuneCore are a powerful voice and TuneCore. This has allowed TuneCore to enter into direct licensing deals for the songwriter. It is only a matter of time before it enters into direct licensing deals for the masters for things like interactive radio.
      In the US ONLY, movie houses dont have to pay public performance royalties. Outside of the US they do.
      jeff

      • Sam Tall

        It isn’t a deal between Comcast and anybody; I think you meant Clear Channel. Be careful not yo mislead anyone, Jeff.

        • Anonymous

          whoops! typo on my end

          youre right.

          ill go back and change it

          jeff

      • http://twitter.com/gah650 George Howard

        @e01433ed495e135082afe5b368a97b86:disqus   deal is  between CC and Big Machine (us old duded remember Big Deal as an eighties indie label).
        in any case, as @tunecore:disqus points out there are two different copyrights under consideration here, and the agreement between CC and BM relates to the copyright of the sound recording (the (P)). 

        prior to this deal, NO terrestrial radio station payed anything to the master holder.

        Best,George

  • Alvin

      The United States is one of the very few countries that does not legally mandate a right of public performance in the sound recording (the (P)) for terrestrial radio broadcast.
    The model in Canada and I believe other countries for public performance of sound recording for terrestrial radio broadcast  goes something like this:
    The royalty is split between label and performer. The performers are the actual musicians performing on the recording. A featured performer (artist) and side musicians are weighted differently.   The musicians are paid directly from their respective PRO.  The labels 
     In Canada  re:sound http://www.resound.ca/en/index.htm   governs the over all royalty program but the labels collect from the AVLA  (Audio Visual Licensing Association) and  Musician collect  from either  ACTRA Recording Artists’ Collecting Society www.actra.ca/racs  or 
    Musicians’ Rights Organization Canada (MROC)  www.musiciansrights.caThe amount that the label collects is often shared again with the “signed” artist. Most record contracts would consider this “other income” often split 50-50 or in the case of a net deal  or co-venture  100% collected by the label might go toward recoupment. It all depends what the record deal stipulates. 
    I wonder if Big Machine will share a portion of the royalty with the side players?

  • http://www.facebook.com/christine.cochran1 Christine Cochran

    This is a pretty exciting development. If nothing else, we see that the market is perhaps allowing, as you say, a spark that ignites the dynamite of change, or simply an anomaly. 
    Regarding the unwashed zillions of Indie artists out there…I don’t actually “get” what you mean when you compare “TC’s Worldwide Pub Admin” to the activity currently done by the PROs.  

    Isn’t publishing admin (whether executed via a third party or by a traditional publisher) vastly different than collection/distrib and lobbying for musicians (albeit the big ones) by the PROs. Or do you mean to add features and functionality to the base services of an Admin role? 
    Wow. The PROs are still un-audit-able? 

  • http://twitter.com/therealjsweet therealjsweet

    Best post I’ve ever read on this blog. Great news too…

  • Jasonbright500

    May be time to topple the tower