Tuesday, March 20, 2012

You're Not Getting Your Royalties

tunecore logo graphic from Music 3.0 blog
Last week Jeff Price, the founder and CEO of TuneCore, wrote a very profound piece on the Hypebot blog about the amount of songwriting royalties that aren't making it back to the songwriter, especially from digital sales. It's always been a given that a major label would do everything it could not to pay you any royalties at all, but the following goes way beyond our worse nightmares.

This is a very long post, but well worth the read if you have any sales at all.
"While the major music companies' revenue from music sales has gone down, they have a brand new increasing income stream: revenue generated from the sale of other people's music. In the past five years, hundreds of millions of dollars of songwriter royalties have been generated and never paid to the songwriter, or have been given to Warner Bros, EMI, Universal, Sony and others based on their market share- estimates put this new income at over half a billion dollars.
Once these companies get the money, they keep it and don't account to anyone.

All the while, the songwriters that earned this money have no clue their pockets are being picked, their royalties are not being paid, and their rights are being violated.

I discovered this infringement and lack of royalty payments while embarking on a journey to discover how much money TuneCore Artists earned as songwriters. In the past three years, TuneCore Artists have sold over 500 million songs and earned over a quarter billion dollars from the sale of the recordings of their songs. With the help of Jamie Purpora, the former SVP Bug Music Publishing Administration and now President TuneCore Songwriter Publishing Administration, we identified another $60 to $70 million earned by these artists in songwriter royalties. The upsetting part, over 70% of this money never made it back to them. And keep in mind, I'm only talking about artists that use TuneCore—there are many more.

This infringement and lack of payment is one of the biggest outrages of the music industry and yet it is rarely talked about and even more rarely understood.

It needs to stop.

Let me explain the nutshell version of how it happens.

The new music industry is global. However, outside of the United States, digital services require additional rights, use different royalty rates and pay the owed royalties differently than the United States music industry. The end result is:
  • The digital music service does not get all the rights needed from songwriters and therefore never pay the songwriter the money he/she is owed. 
  • At the same time, local performing rights and collection agencies outside the U.S. illegally take a % of the songwriter's money while making it impossible for the songwriter to get what's left over. 
  • This illegally obtained songwriter royalty money is then given to other major music companies in that country. 
These other major music companies knowingly take other people's royalties from the collection agencies. (Why not, it's free money earned off of music sales from songs they don't represent that they do not have to pay royalties on).

This scheme is beyond outrageous, it's wrong, it needs to stop (and it's why we launched the TuneCore Songwriter Service).

How do they get away with it, three reasons:

1) The existing global songwriter administration system was built for analog, not digital.
The old school music industry was built for the world of analog TV, AM/FM radio and 12" pieces of vinyl or 5" circular pieces of plastic; it was not built for the digital world. However, this old "analog" system is used for the administration of royalties from the digital world causing other people's money not to make it to them. The "analog" songwriter collection and administration industry knows this is occurring but has no motivation to change its existing system as it allows them to take/earn hundreds of millions of dollars off of other people's royalties.

2) It's cheaper to violate copyright than pay songwriters.
The new emerging digital music services have no simple solution to get licenses from and make payments to copyright holders; it's a pain, it's complicated, and, for the moment, it's cheaper to take on the potential legal liability than invest resources and time to comply with the law and pay the right people.

3) The complexity of copyright law and a lack of transparency create huge barriers to understanding.
The complexity of copyright law, the total lack of transparency by the collection agencies and the inability to audit anything, and you have a perfect storm for global copyright infringement with hundreds of millions of dollars of other people's money getting siphoned off and/or not paid to the millions of rightful copyright holders."

Please read the rest of this post since it has information that's vital to your well-being as a songwriter.

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jordannah said...

I love how there are a couple of big time entrepreneurs who are standing up the the major label industry.

It is important to have some people in power (who are not artists) to be able to stand up for musicians who work hard and should earn a living.

If musicians are living and working within the means and rules of a contract, they should be compensate within the means of a contract.

There is no reason, for record label execs to be making 7 figure salaries and not paying out artists who will earn 5 figures for one hit song.

I'm glad that Price is saying something. Does it benefit him to attack the major label industry? Of course, but he's not attacking the industry, he is stating facts that need to be addressed by law.

Great post.

.jordannah elizabeth

Rand Bliss said...

Yet another discouraging hurdle to contemplate for someone barely at the starting line already (yours truly;-)


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