– a Six Part Series

by Jeff Price

Part V: When Good Laws Turn Bad

Read Past Chapters
Part I: Music Purchases and Net Revenue For Artists Are Up, Gross Revenue for Labels is Down
Part II: The Impact of DMCA Streams and Why They Should Be Considered
Part III: How a Skewed Perspective Delegitimizes Artists
Part IV: The Growth Phase is Over? Improved Label Margins

Upcoming chapters:
Part VI: The Hills are Alive…..

In addition to this framing of “unsigned” artists as a lower or less valuable class, the laws in this country specifically created to protect copyright holders and artists now create obstacles for opportunity and revenue collection.

As a starting point, in the U.S., any entity that wants to license music for TV, film or internet to “synchronize” with a moving image (called a “synch” license) usually starts by finding the music and then going to the websites of one of the three U.S. public performance agencies (ASCAP, BMI or SESAC).  This allows the licensing entity to learn who controls the master and publishing rights. It also allows the licensing entity to make certain they are complying with US laws by paying – via the performance agency – for any public performances.

If a song/artist is not registered with a public performance agency, there is no easy way to find the point of contact to get the licenses. In addition, if an artist is not registered with a performance agency, licensors have no way to pay the additional required public performance royalties thereby creating legal liability. In these cases, the licensing entity usually moves on to another song and the artist loses the opportunity.

Let me provide a more practical example – a group of 19 year-old kids in a band called the “Figure It Outs” record a bunch of songs on their computer at home.

To paraphrase an article from ArtistHouseMusic.Org founder John Snyder:

“The second they make their idea tangible, six ‘exclusive rights’ attach to that work, and they are their rights as the author or creator of that work to do with as they wish.

These six rights (in no particular order) are:
• exclusive rights of reproduction
• distribution
• public performance
• the right to make derivatives (translations, books, movies, video games),
• the right to publicly display (applies more to visual art than to music),
• the right to control the digital transmission of your work

The entire music business is built on the song and these six exclusive rights.”

However, no one in the “Figure It Outs” has any idea about any of these six rights or laws.   They have never heard of BMI/ASCAP/SESAC.  They do not know what they do not know.

They then hear via a Tweet that they can have their music on iTunes via TuneCore.  They go to TuneCore, upload their song, click iTunes and pay TuneCore the up front fee.  The music is now live on iTunes. It sells, they do not understand or know that there is a statutory rate of $0.091 that must be paid to the publisher for the reproduction of the song. All they know is they made $0.70 from the sale of their single.  They also do not know that in 2008, legislation was passed dictating that the on-line interactive subscription pay to stream services must pay the publisher of each song a percentage of the revenue collected by the music store.  Unlike payments from download stores like iTunes, the mechanical royalty on interactive streams must be administered and paid out separately from the money made from the sale of the master. Despite a federal law requiring this payment, most of this money sits uncollected by the self-distributed artist.  The on line streaming services have no easy way to administer the payments and the copyright holder (in this case the artist) has no idea they are not being paid.

The “Figure It Outs” then want to have their music on DMCA compliant radio like Slacker and/or Jango.  They upload it to those sites where it becomes available to play under DMCA compliant laws and receives organic plays.

They have no idea what the DMCA is. They do not know if terrestrial radio and/or non-terrestrial radio pay out revenue from the play of the songs.  They do not understand that 50% of the DMCA collected money is paid to the copyright holder and 45% goes to the featured artist, or individual or band who recorded the track with the remaining 5% goes into a fund supporting backup singers and session musicians. And they never heard of SoundExchange as an entity to register with to collect this money.

Now some music supervisor from a big production company hears one of their songs and wants to use it as the theme song to a new TV show.  The supervisor goes to the websites of ASCAP/BMI/SESAC to learn who controls publishing, master and who is the point of contact on record.

The “Figure It Outs” do not understand that they have two rights to their songs – the master and the underlying copyright.  They do not know what a synchronization license is or how they work. They also have never been told that some organization will go out into the world to police and monitor public performances of their behalf.  They do not know how these rates are even calculated or how they are paid. They have not incorporated or created a separate publishing entity as required by the public performance agency as they have never heard of any of these concepts or rules.

Without this knowledge, they lose opportunity.  Compound this with the framing of them as illegitimate or of a second tier.

Things need to change.

Part IV of this series will discuss: The Hills are Alive…..

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