By George Howard
(follow George on Twitter)

You’re an artist — a songwriter.  Your song is played on the radio. Because you wrote the song, you — and you alone — have the exclusive right to “publicly perform” your song (it’s one of the six exclusive rights you get when create a copyright).  The radio station that played your song didn’t get your direct permission to play the song you wrote. They didn’t have to. Instead, they paid a fee to the Performance Rights Organizations (ASCAP, BMI, and SESAC).  In exchange for this fee, the Performance Rights Organizations (PROs) issued the radio station a license that gave the station the right to play (publicly perform) the copyrighted songs of any artist who have affiliated with the PROs.

You — as a responsible writer, and a writer desiring to be compensated for your work — affiliated with a PRO.  In so doing, you granted the PRO with whom you affiliated the right to negotiate on your behalf with those who publicly perform music (radio stations, TV networks, venues, restaurants, etc.).  Additionally, you granted the PRO the rights to issue licenses on your behalf, and — perhaps most importantly — collect on your behalf and distribute this money to you (after taking their cut for overhead).

All good, right?  Obviously, a clearinghouse agency (the PROs) needs to issue these blanket licenses.  The alternative — anyone desiring to publicly perform someone’s copyrighted work having to negotiate on an individual-by-individual basis — is far too inefficient.

There is a problem, however.  Going back to the hypothetical at the top: a songwriter who has affiliated with a PRO (and submitted her song submittal form to said PRO) having a song played on the radio.  How much did she earn? How much did that station actually pay her for the right to use her exclusive copyright?

I’ll be damned if I know.

This doesn’t seem like it should be too hard to determine, right?  Obviously, a smaller station (one with fewer people listening) will pay less than some mega-watt station (with millions of listeners).  No one is saying there isn’t a range of what is paid, but there should be a way to accurately define and communicate what you earn when your property is sold.

Imagine if someone wanted to use your real property (your house, your car), and said they’d make sure you got paid for this usage, but they wouldn’t tell you how much.  Would you do that?  Of course not.

And yet, that’s precisely what’s happening with public performance royalties.  Sometimes you get paid; sometimes, if you haven’t earned “enough,” you don’t.  In either case, getting any sort of precision about what you’re owed is…impossible.

How does one build a business with this “anti-data?”

I’ve been singing from the rafters for some time now saying that the continuous, consistent, systematic obfuscation around the rates associated with public performance (particularly, with respect to streaming) is the type of hindrance that keeps the “smart money” — and thus, innovation — out of the music business.

I have my fingers non-optimistically crossed that an undeniably innovative and fantastic service like Turntable.fm can emerge from this gauntlet of obfuscation unscathed enough to still hold any value (is Turntable.fm interactive (sort of)? Non-interactive (sort of)?).

It’s one thing to be frustrated by how this information fogginess has an impact on the development of new business models, but it’s personal when the same haze of information creates yet another barrier for the individual artist.

This is decidedly non-trivial.  As we hurtle inexorably towards a “business model” that dominantly revolves around income derived from public performance (streams), as opposed to income derived from the sale of downloads/physical, what once was sort of the cherry on top of the sundae, is now the entire dessert.

For any artist hoping to sustain their art on their own terms, they must devise a plan that includes multiple revenue streams.  For most of these streams — income from gigs, income from subscriptions, income from merch, etc. — forecasts can be generated and refined.  However, for arguably the most material income stream — uh, streams — no such forecasting can occur.

You can’t build a business without information.

Additionally, this lack of information extends out to individuals in a very odd and disquieting manner: PROs frequently enter into deals with entities who represent a group of writers, and yet the PROs will not disclose the terms to these writers who they (the PROs) represent. While I understand the elements of non-disclosure agreements, the fact remains that if I hire a third party to negotiate on my behalf, I should be able to know the terms of this negotiation.

The PROs for too long have not been held accountable.  It’s high time we begin demanding more transparent information with respect to the money collected and paid out.  Additionally, we must demand more transparent and understandable rate structures around public performance.

One of the main reasons the PROs have been able to ignore the (perhaps muffled) calls for more clarity and accuracy has been because they’ve enjoyed a virtual monopoly (or oligopoly) for nearly 100 years (ASCAP was founded in 1914).

Fortunately, technology has created easier ways to track public performances and a PRO is not needed for digital public performances (i.e. streams).  Instead of helping the songwriter, the PROs inadvertently get in the way, take more money from the songwriters, pay out less frequently (if at all), and no one has any idea what the rate per stream is supposed to be to know if they are being paid the right amount.

This is exactly why TuneCore is launching a new service to protect songwriters.  TuneCore is able to go directly to these entities and get this money — all of it — back to the songwriters more quickly and get more money into their pockets.

With transparency the world changes, money cannot be as easily taken or misappropriated, decisions and business plans can be made, and shoulder shrugs of “I don’t know” will no longer hold water.

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George Howard is the former president of Rykodisc. He currently advises numerous entertainment and non-entertainment firms and individuals. Additionally, he is the Executive Editor of Artists House Music and is a Professor and Executive in Residence in the college of Business Administration at Loyola, New Orleans. He is most easily found on Twitter at: twitter.com/gah650

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