The Following Music Organizations Will be Dead or Dying In 5-10 Years…

Does the music industry still have a need for collective rights licensing organizations? Yes, it does. Will there be a need for their services in ten years, or even five? I’m not so sure about that.

collectivebundle

It’s simply called direct licensing, and it’s now seriously threatening a decades-entrenched industry of copyright collection societies.  Because once upon a time, it was impossible for a restaurant, club, radio station, or online music service to license or account to thousands upon thousands of rights holders, artists, and publishers.  But in 2013, the technology absolutely exists to enable one-to-one licensing, monitoring, and payout deals between rights owners and services.

Which is why the largest companies are aready embracing these direct-deal technologies. For example,

1. The largest music subscription service (Sirius XM Radio).

2. One of the largest independent labels (Big Machine (Taylor Swift, Tim McGraw, Rascal Flatts)).

3. The two largest music publishers in the world (Sony/ATV (EMI Music Publishing), Universal Music Publishing Group.)

4. The largest radio conglomerates (Clear Channel Communications, Beasley Broadcast Group, Entercom Communications, DMX.)

And, why these organizations are fighting it or figuring out a survival strategy.  Because in five to ten years, there may still be a need for blanketed, broad-reaching licensing agreements and intermediaries.  But at this technological pace, that’s speculative, and there’s a very good chance the following organizations will be critically endangered or even extinct

ASCAP

BMI

SESAC

SoundExchange

Harry Fox Agency

The Copyright Royalty Board (CRB)

PRS for Music (UK)

STIM (Sweden)

SIAE (Italy)

BUMA (Netherlands)

APRA (Australia & New Zealand)

SGAE (Spain)

SUISA (Switzerland)

GEMA (Germany)

JASRAC (Japan)

KOMCA (Korea)

… etc.

“Again, the premise of a regulatory agency combined with SoundExchange, an industry-wide organization for negotiating rates through a Copyright Royalty Board… that made a certain amount of sense given the state of information technology in 1980. It makes no sense today.”

Roger Noll, economist.

28 Responses

  1. Visitor
    Visitor

    They will certainly still be around (at least the majority of them) but they will likely be smaller a function differently! You only have to look at both Sony/EMI & Universal getting ASCAP & BMI to administer the royalties for their direct agreements to see these organisation aren’t going to go away just yet!

    Reply
    • FarePlay
      FarePlay

      Paul, your first line says it all:
      “Does the music industry still have a need for collective rights licensing organizations? Yes, it does.”
      Might as well put it out there one more time: the work of artists, i.e. creative content, is viewed by tech as digital road kill, and an obstacle to riches and new businesses.
      As Griffin Mill (Tim Robbins) said in The Player twenty years ago:
      ” I was just thinking what an interesting concept it is to eliminate the writer from the artistic process. If we could just get rid of these actors and directors, maybe we’ve got something here.”

      Reply
      • paul
        paul

        I certainly hope the future of collective rights licensing is not to avoid payments entirely. That would be pretty bleak and not exactly ‘disruptive’. I’m positing that the payment flow from company using content to the authors and rights owners will change dramatically — and that we’re seeing the early stages of that. That’s the focus of the piece.
        /paul

        Reply
  2. hippydog
    hippydog

    lets be honest.. The more you look at it the more you realize the entire system is outdated and slight wacky..
    If a musician is not being played on a radio station.. hmm. lets be clearer.. A radio station that reports and that the Pros actually USE the reporting numbers… Then… That artists will probably see zilch from the pros.. They can tour all over the place.. work every weekend. Constantly work in venues who PAY THE PRO’s, have thousands of fans.. be selling cd’s.. and nothing..
    90% of the money collected goes to the top 200 artists..
    IF what was actually publically broadcast (restaurants, halls, TV, bars, internet) was ACTUALLY tracked correctly, the payouts would be completely different (and a lot more fair)..
    but in reality the numbers are not fair, and not even “real”

    Reply
  3. Angry Music Industry Student
    Angry Music Industry Student

    I think is completely wrong. So many artists and publishers aren’t associated with the major labels and/or the major radio corporations like ClearChannel and SiriusXM. It is so naive to count the major labels as the only people making money off of copyright royalties facilitated by the PRO’s. I am also offended to think that as NON-PROFIT ORGINIZATIONS that they would suddenly go belly-up without the patronage of the major lablels. The major labels can do direct deals, that’s great. Doesn’t mean everyone has to… PLUS, in 5 – 10 there probably won’t even be any major lables (PEOPLE, remember we’re down to 3 after last year 😉

    Cheers!

    Reply
  4. musicservices4less
    musicservices4less

    Someone please explain how with the foreseeable technology, a new “licensing/collection” system would work. It seems all you would be doing is replacing one intermediary for another. Forget the rate/data complexities, just who or what would do it? Don’t tell me the average band that has some regional or even national traction on radio and bars, etc. is going to direct license the 1000s of business users. Please tell me how!!

    Reply
  5. ok, but...
    ok, but...

    With a SoundExchange license you get non-interactive streaming rights to every recording ever created. Good luck creating technology that will accomplish that.

    Reply
  6. John Elliott
    John Elliott

    I don’t think I’ve ever read anything that fundamentally understands it’s subject matter so little. From pillar to post this is idiotic.
    My PRS statments covers over a 1000 tracks, under 18/20 pseudonyms/artist titles, used 10s of 1000s of times in over 50 countries, all of which have individual payment rates and methods. And not one of them signed to a major label or publisher.
    If you think we have the ‘technology’ to supersede the amazing work of the collection agencies (which on the whole run as not for profit btw. and also entirely in favour of artists!) you’re off your head, mate.

    Reply
    • J. Spradgett
      J. Spradgett

      Please look farther into the future than 3-6 weeks! Pandora doesn’t need Soundexchange because they only have 80,000 songs and most services are realizing they don’t need ALL the stuff. If Pandora can ‘genome’ these songs they can also use software to pay the rights owners on the recording and publishing side “Automagically”. The only reason they are going through Soundexchange is the keep the rates lower than the market would give them. You don’t think there are about 6 different companies right now trying to figure out how to replace this PRO system as we speak? It’s outdated and ridiculous.

      Reply
      • John Elliott
        John Elliott

        Firstly, I never once made mention of Sound Exchage.
        Secondly, what you’re talking about is an automated system for a radio station and online one at that! Blanket covered licenses regarding broadcast are simple to administrate but are a small percentage of Performance Royalties for composers and players. For online radio a system that you speak of would be fair. Online still accounts for a small percentage of income.
        The majority of royalties, however, come from physical broadcast which has a complex chain of international distriubtuion that can’t be implemented by designing a simple algorythm based platform. It took the best part of 100 years to develop the international network we have now and you think it can be replaced in 10? Just because of the internet? Because the web based royalty systems implemented so far have been fantastic and work like a charm ey?

        (You mention Pandora, who have to be continually chased by my Publishers for consistently and incorrectly identifying tracks, as their metadata reading abilites appear to be zero. Same goes for You Tube. Same goes for all of the online portals who operate under balnket agreements)
        Again, the majority of my income is made via !!!negotiated!!! licenses for broadcast worldwide, which in turn earns residuals for perpetuity from countless repeats from several networks per country, again worldwide. The royalty system on this basis is spot on and I know I’ve never missed a cent.
        With the proposed idea you will decrease payment amounts and increase the likelihood of mis-usage and mis-payment.
        Your problem, like most, is that you trying to re-focus a payment/usage system (not simply a licensing system) to the benefit of the end user, not the artist. These are payment services for artists set out to benefit them, not broadcasters, TV companies etc. etc. All with very little knowledge of what would actually need to be achieved.
        This is a case of broadcaster/musician neogtiation for creative content. It doesn’t need to be automated. It doesn’t need to be simplified. (For gods sake, I’m not even sure why this bothers people who aren’t composers or who own massive broadcast compnaies online or otherwise? None of this even effects the consumer!)
        This is how we get paid. Sales have gone. Live income is now dieing due to economic over-reliance. These societies represent musicians unions and minimum/living wage. They aren’t there to messed about with cos some kids just out of college reckon an accounting system is outdated.

        Reply
    • J. Spradgett
      J. Spradgett

      These “organizations” are scams in the end taking 18 months to pay you and holding millions in holding accounts (and collecting interest) while trying to find the real rights owners. Great gig if you can get it!

      Reply
      • John Elliott
        John Elliott

        The US has THE worst payment organisations in the world. Don’t tarnish everyione with the same brush. PRS pay 4 times a year. MCPS pays twice a year. PPL twice a year. If the US brought it’s collection agencies to task you might not see this as some kind of corporate conspiracy.
        PRS alliance in the UK is run non-for profit by an elected board of musicians. They have no one but the artists interests at heart. They aren’t antiquted conglomerates trying to steal money.

        When making such sweeping, dispariging statments about a global system I suggest you learn what’s going a little further afield than your own country.

        Reply
  7. Benom P.
    Benom P.

    Good luck tracking down individual songwriters and publishers worldwide to do direct licensing deals – even when the advent of the Global Repertoire Database comes to form. And how will people negotiate and collect for rights like “broadcast mechancials” and other royalties/rights that don’t exist in the U.S., but U.S. writers/publishers are entitled to? All that will be direct as well? I don’t see it.

    Reply
  8. dont see it
    dont see it

    i also don’t see it happening. there are now hundreds of thousands (instead of just thousands) of artists, with millions of songscollecting royalties, from licensing tracks to youtube to radio, live venues, etc. direct licensing to each of them seems impossible.
    Sirius etc. could directly approach big labels, but it would be exceedingly difficult to get all the indie labels and self-publishers on board.

    As the other guy said above — how am i going to collect $ from a tv station in Slovakia (or 75 other ‘foreign’ countries) if there isn’t some governing body, like ASCAP, w/collection agreements?

    Or– if nonpayment occurs, how to enforce it? At least with a PRO, they can make sure mistakes are corrected (and do all the time).

    Reply
  9. paul
    paul

    I think a number of big points are being missed in this debate, and a lot of it is my fault. So let me ask a few more questions…
    (1) dying
    In business, the maxim goes, if you’re not growing you’re dying. How many of these organizations will be growing over the next 5 to 10 years?
    (2) small vs. large
    Much of this debate is focused on smaller rights holders, which are absolutely more difficult to direct-license. And they may be the core reason for many of these societies to exist in the future. But please consider the large percentage of transactions that come from major rights owners, like, for example, Sony/ATV. I wonder what percentage of transactions and payouts come from the largest, let’s say, 5-10 percent?
    (3) third party specialists
    Please consider how a company like Sirius XM Radio can do direct licensing. The answer is that they contract an outside firm specialized in this area with a goal to claim lots of real estate: in this case, it’s Music Reports, Inc. Others will also seek outside specialists, which spells free market competition for the societies.
    (4) limited catalog
    Furthermore, please consider that someone like Sirius (and Pandora, and Clear Channel, and Entercom) don’t need all the stuff. They will play material they can license, the rest they can work around. It’s a difficult reality, but it is a commodity model of music and when it comes to listeners outside of core aficionados and zealots, I’d say it works.
    (5) performance of societies so far
    Are you happy with the performance of your society? At MIDEM, manager Steve Rennie couldn’t stop complaining about slow payouts. Whenever we write an article about SoundExchange, everyone complains about their bad tracking, bad metadata, slow payouts, and hundreds of millions in holdings.
    That’s not every society of course. But is that a system worth protecting?
    (6) relentless march of technology
    So, the technology exists for Sirius to directly license, with more usage freedoms and flexibility, and lower royalty rates. That’s where technology has gotten us so far. Remember: this doesn’t stop, progress keeps moving faster — this discussion will be extremely different in 2,3,5, 10 years.
    thanks for listening/reading.
    /paul

    Reply
    • John Elliott
      John Elliott

      1. Personally I think Collection Agencies should be non-for-profit entities, not businesses, which kind of negates the growth principal. In the UK that’s how it is. Will they be more efficient, faster and fair? Yes. The improvement in distribution in the UK over the last 10 years is admirable.
      2. I see you point, though I stand by my above point. If this was the case, the future you describe along with current organisations would in essence evolve into the same thing. Regardless of simplicity and automation it’s naieve to think musicians and composers wouldn’t need ‘gatekeepers’ and administration to ensure fairness. Who would do this? Why would you replace the current organisations who’s raison d’etre is to look after the well being of the same people?
      3. As I just mentioned to a chap above, I can fully understand how in an effort to improve the current system, certain broadcasters could shift to an bespoke system and cut out the middle man. Just becasue this is the case doesn’t mean it would work as an efficient model for what is an infinitely complex network of usage and fair payment. (BTW. these organisations would incur the not in-considerable expense of an accounting system that has to directly pay to each musician/composer or estate in the whole world. There are millions.)
      4. This is where I become confused. These companies broadcast licenses are bandwidth oriantated and usage playlists are used to divide royalty sums in a fair/unfair manner. The amount of tracks in their database is irelevant it’s just their choice. They pay per member/user/listener acitivity not based on the number of tracks on a hard drive.
      5. This is where you might explain the majority of conflict. The US agencies are dreadful. No disrespect, but they are the worst in the western world. In Europe we are party to continually improving systems both in fairness and efficiency, which is why I am a little reluctant to start strapping up the noose. Our union is appaling. The PRS is one of the few organisations that actually stands up for us.
      p.s. Steve Rennie is a manager. 2 weeks will be slow to him. 🙂
      6.Technology should drive our current systems to improve, not dumb them down. Simple is not better. There is obvious improvements to be made.
      However, you infuraite me with the term ‘low royalty rates’ and ‘usage freedoms’. You do know broadcast royalties are predominantly paid direct to the artists? No label cut? No label involvement! The only thing that doesnt! The only fair aspect of the industry that exists and you want us to do away with it? So the only people who suffer would be them? Why should we lose out to improve user experience?
      I think once you ignore the US, get your head around the fact these are organisation that exist for the benefit of musicians, run by musicians (in the UK at any rate) and aren’t there to be cheapened for the benefit of what are in essence the future ‘big’ corporations, you might have a better understanding of why musicians and composer find this kind of debate so enfuriating.
      Put simply, why should artists take the hit to pave the way for the new era of HBOs and Foxs?

      Reply
    • Jody Whitesides
      Jody Whitesides

      Music Reports is busy doing what? Getting blanket licensing rights from 1,000’s and 1,000’s of publishers. Why? To allow companies like Amazon, Google, etc., to pay for the right to use music for broadcast. That’s akin to another company you have on your list of dying companies. Namely Harry Fox.
      It is rather insane that you’d think any individual company is going to hire their own people to hunt down hundreds of thousands of people to license music from. If there is someone missing the big picture here, I think it’s the writer. Who obviously doesn’t get the intricacies of the different rights involved with music.
      By this very same logic of “if you’re not expanding, you’re dying” Apple should have shut it’s doors about 15 years ago. Yet now it’s the most profitable tech company. And in an interesting reversal Dell is now the one that should shut it’s doors right?
      Reality is some economists have a very warped sense of the use of living and dying. And what companies should and shouldn’t do. Direct licensing doesn’t account for royalty collection. Every organization you list deals with some facet of broadcast collection in their respective territorry. That’s a very different reality from granting a license.
      Is this how the writer approaches his eating habits too? Constant expansion is healthy right?
      The U.S. is still of the few that doesn’t pay the Performers Royalty across all broadcast mediums. Sound Exchange is working on changing that.
      There will be more shifts and changes in the music business over the next 5 to 10 years for sure. But doing away with royalty collection for broadcasts isn’t likely to be one of them unless somehow the law changes. Doesn’t mean companies like Pandora won’t try, like they just did and failed – and found that the creators of the very content they use for their business model gave a collective “fuck you” to them in the process.
      Be careful what you wish for.

      Reply
  10. Thinking ...
    Thinking ...

    Very interesting discussion. What if the the societies became more integrated, more transparent, more efficient, and simply worked to always meet the needs of the market? Wouldn’t that be a recipe for survival and one that all companies strive for? What if the societies shared a hub of services (or offered their own which could possibly become market leading services) and even offered these services to the publishers, and other constituents for an appropriate fee? Wouldn’t that be a recipe for relevance in the evolving/changing music industry? How would you, as potential customers, react to an open platform of services you could use to pursue the means to do business as you saw fit – and even pay appropriate service fees to make your individual businesses more successful? Isn’t this the way of any industry? Could we see a brokering environment set up for licensing that enables whatever is deemed appropriate for business – let the market set the value?

    Reply
  11. Green Thumb
    Green Thumb

    Anyone ever licensed 1 million tracks before? Izrellhard.
    ….
    It’s not exactly like making a Tuna Sandwich. Although, both will leave awful tastes in your mouth.

    Reply
  12. @AllanDawsonMuso
    @AllanDawsonMuso

    Be careful what you wish for!
    It is true that technology is enabling new platforms for independent musicians, but cutting the collection agencies out of the loop is not likely to benefit anybody other than the unscrupulous end users (clubs, restaurants, advertisers, tv/radio, etc) who want to find a way out of paying – therefore exploiting the musicians who create the music, again!
    While the big old lumbering product based music industry didn’t help independent musicians very much, the collection agencies are not the bad guys – this is a figment of many people’s imagination! Of all the musicians I know who belong to established agencies, the most common feedback they report is that they often receive payments they didn’t realise they had earned – so that seems like a pretty effective system to me.
    Do you seriously think that without organised collection agencies operating on behalf of all musicians with the scale and legal clout to enforce the proper use of licences, as they do now, that direct licensing will be used accurately and honestly? It’s incredibly unlikely. Most licencees will just do whatever they can to unfairly offset, devalue or misreport their output, just like more and more venues try to do when it comes to paying their performers.
    This is a technological revolution, not an industrial massacre!Common sense must prevail or the music scene will die off very quickly!
    Allan Dawson
    Independent musician

    Reply

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