By Stefanie Flamm
The music industry may seem like it’s settling into its predictable lull, but songwriters and publishers worldwide are fighting harder than ever for a fair marketplace:
- The US Department of Justice rules in favor of licensing regulations that many songwriters and publishers see as “a clusterf—k of epic proportions.“
- YouTube announces $2 billion in gross earnings for rights owners using their Content ID system.
- After a $750m buyout from the Michael Jackson Estate, Sony now owns the rights to 50% of Sony/ATV and its catalogue of over 2 million songs.
The Department of Justice passed new legislation that could mean smaller royalty payouts for songwriters across the United States.
When it comes to the world of publishing, the biggest news of the month, by far, has been the US Department of Justice’s recent ruling in favor “100 percent licensing,” meaning that for songs with multiple songwriters, a licensee only requires a license from one of the contributors (instead of each of them). The music industry as a whole is shocked and upset by this verdict, especially in the wake of petitions fighting for a total overhaul of the already-outdated legislation currently in place. Songwriters and publishers alike fear that this could mean lower royalty payout, more complicated work for PROs, and an increase in royalty disputes across the industry.
“Instead of making the necessary modifications, we have been saddled with a disruptive proposal that ignores songwriters’ concerns for our future livelihoods in a streaming world, serves absolutely no public interest and creates confusion and instability for all of us who depend on the efficiencies of collective licensing,” said ASCAP’s President Paul Williams released a statement on July 11th.
The DoJ’s decision was carefully thought-out based on the trajectory of the music industry in the digital age, stemming specifically from the idea that 100 percent licensing would make it easier for parties like Pandora to license music. However, even the US Copyright Office has put in a negative word about the verdict and urges the DoJ to rethink 100 percent licensing.
In a 33-page reaction to the new regulations, the US Copyright Office “believes that an interpretation of the consent decrees that would require these PROs to engage in 100-percent licensing presents a host of legal and policy concerns. Such an approach would seemingly vitiate important principles of copyright law, interfere with creative collaborations among songwriters, negate private contracts, and impermissibly expand the reach of the consent decrees.”
While music licensees see the DoJ decision as a smart move in the fact of the current prevalence of music streaming, they’re going to receive a lot of pushback from songwriters and publishers alike. It doesn’t look like BMI, ACSAP, or the US Copyright Office are looking to back down any time soon, so hopefully for the sake of publishers everywhere, the DoJ can go back to the drawing board and retool a system that benefits both the songwriters and the digital streaming services that are licensing music.
YouTube proudly announces $2 billion in gross earnings for rights owners through their Content ID technology, but the music industry needs more convincing.
YouTube announced in a July 14th blog post that they have collected over $2 billion in streaming revenue for rights owners using their rights management system Content ID, double what YouTube reported back in 2014.
For those unfamiliar with Content ID, the system uses audio files submitted to them by a partner (like TuneCore YouTube Sound Recording Revenue Service), and then detects those audio files on third-party videos uploaded to YouTube to monetize on behalf of the rights owner. In layman’s terms, if someone uses your song on a cat video that goes viral, you get paid for any money that the video makes as the rights owner of the music. It has been a lucrative service for many artists in the industry, with YouTube being one of the most popular methods with which to stream music.
“We take protecting creativity online seriously, and we’re doing more to help battle copyright-infringing activity than ever before,” Senior Policy Counsel for Google, Katie Oyama, said in the statement.
However, many songwriters and publishers on the other side of that $2 billion have a different perspective on YouTube’s news. Both labels and publishers alike have argued that Content ID fails to recognize as much as 40% of their music on third-party videos in YouTube. Additionally, while YouTube claims that 98% of the time rights owners prefer to monetize videos rather than take them down, representatives of the music industry believe that Content ID encourages YouTube piracy.
“Their pitch goes something like this: ‘Hey, advertising is good for you. Why not use Content ID to cash in on all the piracy by getting a share of revenue we can generate from ad placement?’ Well, they don’t call it piracy – but make no mistake, in the end, their whole scheme still depends on a culture of piracy,” said Maria Schneider in an op-ed for Music Technology Policy.
It’s hard to discern who’s really in the right with the Content ID debate, since rights owners are making a marginal streaming payout from each video play and, like any automated system, there will be hiccups based on similar sounding recordings, use of samples, etc. What’s clear is that YouTube is trying to make lemonade out of lemons for musicians who would otherwise be making nothing from these pirated videos. While it’s not an ideal situation for rights owners, one can hope it’s at least a step in the right direction as we learn to deal with the repercussions of the digital age in the music industry.
Despite protestations from competition, groups in the EU give Sony the greenlight for their $750m purchase of the Michael Jackson Estate’s 50% stake in Sony/ATV.
Since Michael Jackson’s death in 2009, his partial ownership of Sony/ATV and its massive catalogue of songs have been up in the air. Sony made moves to resolve this back in March of this year, agreeing to purchase Jackson’s 50% stake in the company for $750 million, giving Sony full ownership of the Sony/ATV catalogue. However, earlier this month, Sony competitors Warner and IMPALA unsuccessfully challenged the acquisition in Europe, slowing down the purchase but ultimately not grinding it to a halt.
Universal and IMPALA both came to the EU’s antitrust organizations in regards to the purchase, claiming that Sony’s acquisition of the over two million songs would create a market-distorting level of power in favor of Sony. The massive catalogue, which includes works from Taylor Swift, Lady Gaga, and the Beatles, alongside Sony’s administration of the EMI music publishing catalogue, gives the company a 28% global market share.
Upon the approval of the acquisition, the European Commission released a statement saying, “the transaction would have no negative impact on competition in any of the markets for recorded music and music publishing in the European Economic Area.” Representatives from IMPALA have called the verdict “clearly wrong,” but it looks like Sony still gets to walk away the winner of this fight.