During the Midem panel, How the Music Industry Manages Innovation (which I moderated), Incubus’ manager, Steve Rennie, laid into the head of UK songwriters’ collection society PRS, Robert Ashcroft. Rennie questioned why it takes several months for songwriters to get paid for online music usage.
Ashcroft responded: “Do you want to get paid fast or correctly?”
In 2007, PRS processed 15 million music usages – five years later that number had grown to a whopping 124 billion.
That includes every Spotify stream, Deezer stream, We7 stream, YouTube stream… the list goes on. And while the services notify the stream of the song, collection societies have to divide the minute royalty payment it generates between those who composed it, who often don’t have equal shares in it and are signed to different publishers – all with publishing deals that, in turn, stipulate different splits.
If that isn’t complex enough, add that online music usage is divided into mechanical and performance rights. For example, in the UK, 75 percent of a download is deemed to be mechanical, while 25 percent is performance. The reverse is true for pure streaming. And other countries use different splits between mechanical and performance (in the US, for example, there is no performance right to a download).
Add to this that Universal Music Publishing has withdrawn its repertoire from the societies to negotiate deals through France’s SACEM on a pan-European basis, so every music service has to withdraw the Universal rights from their invoices, while other major publishers have made similar moves…
You get the picture – this is beyond complex.
Yet it all has to end up as one monthly invoice on Apple’s – or any of the other music service’s – desk. If it adds up to more than 100 percent (which can happen when the songwriters behind a song register differing splits of the song with their respective societies), then the service may keep the royalties in escrow until the disparity has been corrected.
No wonder deciphering how each payment on a royalty statement is calculated requires not only a degree in copyright but also in math – and most songwriters give up before they slip into a coma.
“We’re working very, very hard and investing millions and millions of pounds to get this right,” Ashcroft tells me. “Because if we don’t make a success of the world of online – making it easy to licence, easy to get an invoice, and easy to get your money – then it’s not going to work.”
Setting up the Global Repertoire Database is going to be huge help in simplifying the process. PRS is also advocating setting up European publishing rights hubs for licensing and back office, so that music services don’t have to make a deal with every single European society to be able to launch – and the invoicing process doesn’t have to be duplicated, at great cost, in every single society.
Chances are that some of the smaller societies – and the least transparent ones (I’m looking at you Greece) – will not welcome this proposal with open arms. But, personally, I’d like to get paid both quickly and correctly. Looks like it may still take a few years for that wish to come true.