The State of The Music Industry and the Delegitimization of Artists: Pt. 5 – When Good Laws Turn Bad

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

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 U.S. 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 (for example, sheet music 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” knows about these six rights or laws.   They have never heard of BMI/ASCAP/SESAC.  They created their music using Garageband at home in their own time. No one has ever educated them about US copyright laws in regards to music. 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. It sells, they do not know that there is a statutory rate “9.1 cents or 1.75 cents per minute of playing time or fraction thereof, whichever is greater” 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 songwriter 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% going 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 it works. 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.  The laws created in this country were made to protect and allow the monetization of copyright, but they were built around a model that is disappearing. They also certainly do not take into consideration the fact that the majority of music being created and distributed is happening outside of the old system.

Each one of these artists and songwriters deserves the same opportunity and income as other artists.   The problem is, there is no easy way to provide mass copyright education to the population of artists in the United States.  Worse, many of the laws in place assume there is some form of tracking that can occur around the use of a song to assure the songwriter and “label” get paid.  Music cannot be tracked unless it is registered somewhere that all entities plug into.

For this to happen, any artist that creates music must have some sort of tracking number associated with the music as soon as it is created.  This tracking number must get automatically deposited into the central database. This is just not going to happen.

Now add on top of this that those entities that use the music must have a simple way to pay everyone that needs to get paid.  For example, there is a DMCA compliant stream of the Figure It Out’s song, this money is paid to SoundExchange.  How can SoundExchange pay the money out if they do not have a name and address to send it to?

The old system, although creaky and not perfect, worked well enough, but technology created scale in a way that was never imagined.  The system is now broken but sadly, when these issues are discussed on Capitol Hill, there is no voice or representative for the millions of artists in the US that are now the new music industry.

As the old music industry works feverishly to plug the holes they see springing up, no one is paying attention to the gaping giant hole on that is now the real problem.  If attention is not paid, before we know it, the whole ship may go down.

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

Read the entire series

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

Part V: When Good Laws Turn Bad

Part VI: The Hills are alive…..

  • OzRich

    Isn’t the solution that TuneCore – as the first recipient of the track – provides information/education/links to the artists to make sure they understand the business they are entering into and to help ensure they “get 100% of [their]royalties” whether that’s master rights, publishing, recordings, syncs or performances?

  • Sounds like a great opportunity for a service. Just as TuneCore broke through the wall that iTunes once had, so too could a service consolidate all these revenue and rights issues for an independent artist. Just sign up the artist and, with technology, manage all of this for them. Maybe I should do it…

  • I have 2 songs with Tunecore that are now available for dowload on Itunes but I don’t know how to copywrite them, or if it’s worth the bother. Is it possible to just do a basic copywrite that doesn’t involve the leeches from attaching themselves to it?

  • When I started writing halfway decent songs, the first thing I thought about was copyrighting them. When I was fortunate enough to have a song recorded by a signed band (back in the ’80s), I was advised by peers to join ascap or bmi, and Harry Fox for mechanicals.
    Musicians and do-it yourselfers in general need to help each other out and share information. That hasn’t changed in this new world.
    There should be improvements in the current laws, but wide eyed beginners got screwed in the old days and they will get screwed now without some guidance. As one of the big players in the new DIY game, Tunecore can build a lot of good will by sharing that information. No need to wait for legislation, put links to these performng rights agencies on your site, with space for reviews of each by Tunecore users.
    The Figure It Outs will figure it out.

  • The point about the Internet changing the scale of things is well made and current laws might need adjusting to accommodate that but otherwise this blog makes no sense. Is the author really suggesting reforming artists’ rights because a fictional start up band are unaware of their rights? If the “Figure It Outs” are taking things seriously then they should educate themselves.
    The argument that current laws deny opporttunity is very weak; the chances of an unknown group being picked up for a major synch is remote in the first place. Also, how is making copyright law more lenient going to help any artist, least if all the “Figure It Outs”. Synch fees and other exploitstions provide a living for people like me. Without them, people wishing to exploit an artists work for financial gain (an advert, jingle, TV theme) are going to pay less. Even if all those unlikely events transpired and this fictional band were being sought for a major synch, is the author really suggesting that they’re more likely to be paid without agencies policing and administering their rights?

  • Jay Lindsey

    I’ve been somewhat confused with copywrite issues, publishing rights, ect, for a long time. This seris of articles has been a pretty good eye-opener. With all of the free music posting sites and internet radio stations available, Im curious of what kind of nightmares have come from using these places…other than a very little bit of exposure.

  • Always copyright your songs..( by sound recording or sheet music.)always read any contract thoroughly before signing ..make sure to have your own publishing company doesn’t cost much through BMI ..then you are protected as good as the law allows ..if it comes to push & shove …& it is good to have a lawyer friend ..that way you can keep your info upgraded every 6 months …for minimal fee
    Above all,.. keep good records ..old scribble sheet & copyright number ….
    Bobby Jon Key …

  • Steve

    Jeff, I understand that the majority of your target audience is just like the Figure it Outs, but being ignorant about your rights in music is no excuse. Your use of the hyperbole about the complications of the system was not meant to be educational, but rather to stir the pot. Sure, the system needs some bending–some addition and some subtraction–and the system is over-complicated, but you seem to suggest that it’s time to create a complete alternative and leave the old system behind. You may have disdain for the old system due to your current position, but certainly there needs to be some form of structure. I suggest you write some concrete suggestions rather than beat the ‘down with the man’ drum. The Figure it Outs have money floating around in the current system that they can’t collect because they are ignorant. There will be controls and education in place that will be necessary to make money regardless of any collection system in place.

  • John

    This article is nonsense. If you are going to make music you should understand what rights you have and what you need to do to profit from your creation. Period

  • L.B. Higginbotham

    Go ahead beat the “down with the man” drum;especially if The Figure It Outs are a 1970’s group or older because now they will also have the depreciation of their Social Security to think about!

  • What about barcodes…where do barcodes fit into this picture? From what I’m seeing in online music-selling venues, barcodes are still essential; ya can’t sell a can of pinto beans without em. Who figured this out for the “Figure It Outs”?
    Also, what about securing R.I.A.A membership? Will the “Figure It Outs” really figure this one out?


    YES I ALSO WAS CHEATED, TRICKED, Etc. by “JANGO AIRPLAY” I PAID OVER $550.00 to play and sell my song and at the end (after 2 phone calls & 3 emails they told me NO!! you are NOT GETTING ANY MONEY all the money we made it was for promotion (over 9,400.00 (in 5 to 8 weeks) they tooked 100%) even after they told me that a least I was going to get my investments back. I ASK CONGRESS TO “URGENTLY MAKE A LAW” FOR EVERY INDUSTRY OR INDIVIDUALS THAT MAKE MONEY FROM SOME-ONE OR OTHERS; TO MUST PAY DECENT SHARE/ROYALTIES/COMMISSIONS/Etc.
    By: ROSS’ 11/11/2010

  • There should be one agency where every song is listed and the publisher then you can easily find out who you need to follow up with all these sites are emptying our pockets I am sick of it – they are making millions and the artists who provide the outlet for these companies are getting screwed – something needs to be done

  • Who are these Jango people who keep e-mailing me every week claiming I have such and such a fan? They don’t honestly believe I’m going to fall for this lot of baloney do they? and pay them good money to play my music. I have a good Soundclick audience, Last FM listeners, general surfers to my website etc.
    Regarding Copyright, the only true quality editions of my Piano recordings are those for sale via Tunecore, which are not accessible in full anywhere without payment. The Copyright is mine under British and International Law as far as it can be protected. But when their cash has been paid for a track I realise I cannot keep tabs on all my “babies”.

  • Rocker

    I guess the Figure It Outs should learn a bit about the music business. The copyright laws are there to help and protect creativity.

  • I got tossed out of ASCAP in 1994 for no reason (my dues were paid in full). JEWEL made the money from MY lyrics AND my song WAS copyrighted!! I got screwed by TAXI and DiscMakers. Talked to a lawyer – she said “you got screwed”. Good Luck kiddies.

  • anonymous

    We should give up copyright protections because some artists are too creative/lazy/uneducated to learn about their rights? What kind of logic is this? Tunecore, you would serve the artists who help YOU make money by writing more articles on protecting our rights rather than encouraging us to give them up (we already give up plenty at this point). I am pretty certain that any artist making music, whether it be in garage band or Pro tools, etc. will be “findable” by a music supervisor…if they heard them, they can find them…(and I’m pretty certain that a performing rights organization will be happy to help them at that point) and those artists will serve themselves by finding a great music attorney who will guide them through the process quickly. Any music supervisor offering a deal, if it’s worth a damn, will work with an artist and make sure they get what they need, while that artist is protected as well.

  • This system is huge and so ASCAP, BMI and SESAC are there to help organize how people get paid for licensing. Its the way this mess is set up and it works. Yes it takes forever to get royalties for licensing/radio but that’s because the revenue streams come from all over the place. I’m just glad with all the songs that are out there….(over 100,000 released every year)that I can collect money from my little contribution.
    This is a perfect opportunity for bands to take ownership of their business and be legit and not just some punks. The minute things become organized and serious is the minute a band can go from punks in a basement with crappy songs to making the decision to stop recording on garageband, get jobs and pay for a legit recording with a producer or engineer. They need to read the book called… Music, Money and Success by Jeff and Todd Brabec. If they aren’t willing to take steps to be educated then they should quit making music and quit trying to start a half heart business that will fail in two years. The better the recording and songs the more doors will open.
    Stop whining. Copyright helps people keep from getting ripped off. Make wise and educated decisions and for Pete sake make great music.
    Also…in a copyright violation hearing a judge will not even see a case if the song was not copy written through the US copyright office. So mailing your crap back to yourself doesn’t work…

  • I fail to see how the publishing references here would apply to The Figure It Outs who act as de facto publishers the second they release their music. They collect all of the revenue from Tunecore and therefore would have no reason to break it into separate funds for a non-existent third party publisher.
    It seems to me that much of the core of this was meant merely to make the music industry seem as complicated as possible by referencing every possibly revenue stream which most self-released artists would never have to deal with.
    If they’re releasing music online they should register with a PRO as a performer and as a publisher to be able to collect the majority of potential revenue streams. It’s really as simple as that.

  • I live in Canada and have my songs registered with SOCAN, with an affiliation to ASCAP in the US. This works, after reading this I went to ASCAP and did a search for me and my music, my name turned up showing my SOCAN registration. I’m a little older than the average rock/rap(current)songwriters out there and have covered more bases maybe…., if you are seriously releasing music you wrote, you need this part of it covered.

  • Kenneth H. Williams

    Jeff I cannot thank you enough. I’m a published writer and I’ve long been a member of BMI. I wasn’t even aware of the other revenue streams you mentioned. My association to Tunecore is paying off in spades!!! Just this information along is priceless! Thanks so much.
    Kenneth H. Williams

  • i want to have my own music

  • Darryle Totty

    We only make hits.

  • Anonymous Coward

    John, that’s the most retarded thing I’ve ever heard. Sharing music with the world isn’t about money primarily. At least, not to the artists I listen to. 🙂