A Rational Solution to the Streaming Royalty Crisis…

David Ross is a respected analyst in country music and author of The Digital Solution: A Plan for Collecting and Distributing Streaming Music Royalties (get it on Amazon here).   A core component of Ross’ ‘Digital Solution’ is something called the StreamCollect Music Fund, which makes all streams equal (on-demand, online radio, video), and requires uniform payments from mobile and broadband customers, ISPs, and online streaming music companies.  Most importantly, it results in equitable payments to both songwriters and musicians.

(note: this has nothing to do with downloads, CDs, and other forms of music distribution. Just streaming.)

 

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38 Responses

    • David Ross

      Good question Chris. Labels/artists have historically been paid more than publishers/writers because labels had additional expenses such as shipping, manufacturing, returns, marketing, promotion, etc. The mechanical rate per song (9.1¢) which goes to publisher/writers is about 10% of the revenue from a ten song, $10 CD. In the streaming world many, but not all of those label expenses disappear so instead of a 10%/90% division (like the analog world) the shares for streaming should become more equal. The total royalty split of 33%/65% shown on the graphic is simply a guesstimate. The actual rate would have to be negotiated by both sides.

      Asking consumers to pay on the way into the store (internet) by using the ISP as a toll booth treats music as a public good and reverses the trend which has seen industry revenues shrink by over 50% in the last decade (RIAA). It insures that creators will be fairly compensated and delivers value to consumers. (There is a lot more detail and explanation on these topics in the book)

      Reply
    • David Ross

      Good question Chris. Labels/artists have historically been paid more than publishers/writers because labels had additional expenses such as shipping, manufacturing, returns, marketing, promotion, etc. The mechanical rate per song (9.1¢) which goes to publisher/writers is about 10% of the revenue from a ten song, $10 CD. In the streaming world many, but not all of those label expenses disappear so instead of a 10%/90% division (like the analog world) the shares for streaming should become more equal. The total royalty split of 33%/65% shown on the graphic is simply a guesstimate. The actual rate would have to be negotiated by both sides.

      Asking consumers to pay on the way into the store (internet) by using the ISP as a toll booth treats music as a public good and reverses the trend which has seen industry revenues shrink by over 50% in the last decade (RIAA). It insures that creators will be fairly compensated and delivers value to consumers. (There is a lot more detail and explanation on these topics in the book)

      Reply
        • Pandora+pays+too+much

          . . . . . and we finally get to the real problem that needs to be resolved. What is the correct split between publishers and recording right owners? A resolution within 10 years is wishful thinking. Neither side thinks they need the other. Unfortunately, until this issue is resolved, there will be no har-money.

          Reply
      • Anonymous

        “Asking consumers to pay on the way into the store (internet) by using the ISP as a toll booth treats music as a public good and reverses the trend which has seen industry revenues shrink by over 50% in the last decade (RIAA). It insures that creators will be fairly compensated and delivers value to consumers. (There is a lot more detail and explanation on these topics in the book)”

        Public goods are free. So you are saying that if this were to happen, a person could legally download all the music they want for free?

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        • Anonymous

          Taxing Internet access & legalizing filesharing is not even a new idea. I’ve seen it around since the 90s. The problem is, nobody wants it. It’s one of the few ideas both Internet companies and media companies agree is a horrible idea.

          Reply
        • David Ross

          This is about streaming, not downloading; but yes paying the ISP would give them a legal right to listen.

          Reply
  1. Remi Swierczek

    I AM GETING DIZZZZZZY!

    We have to get new fair use act and convert Radio and streaming to $100B music store.

    Simple, fair, profitable and HAPPY solution to ALL including blinded by ads Google BULLDOGGGGG!

    Reply
  2. George Johnson

    More collectivism and gross revenue payments into another “fund”. Only individual payments on a per-song basis at a real free market rate will solve this, but this is the problem with music business economics, political ideology gets in the way of actual copyright law and property law.

    100% Data Transparency by a computer program that tracks songs and then direct deposits your royalty into your bank account on a per-song basis. Simple as that.

    Copyright Law and Performances are both on an individual per-song or per-play basis. Radio stations don’t play 2 or 3 songs all at the same time, they wait till one ends and play the next one. 🙂

    Reply
    • Remi Swierczek

      Congratulations George, You are first human on the horizon with crisp and clean solution to this music Nerd Land.

      Your suggestions are outstanding but bit more complicated than simple conversion of Radio and streaming to discovery moment based music store.

      Reply
    • Name2

      Indeed. Get your record label’s IT department on developing that software right away.

      Oh, wait, you wanted the online retailer to foot the bill?

      Reply
  3. steven corn

    Three problems:

    1) If you are a mobile consumer and a broadband consumer, as many are, you will be paying $6.30/month combined. Unless that is legislated into action, no one will voluntarily pay this much. They will feel like it’s double dipping. It’s hard enough to get people to pay $4.99 per month.

    2) 15% of Internet Radio? Labels will never agree to such a reduction.

    3) There are two layers of admin at play here. First a 7.5% admin to the StreamCollect Fund and then another each to HFA, PRO’s and SX.

    Bonus problem: there is a major assumption that the administering bodies can all accept the same data format. I suspect that it would take a major redesign of the database for each company. That involves a large investment in time and money. Where is that going to come from?

    Bonus, bonus problem: SX has plenty of problems handling the data already coming in and paying out royalties. Under this plan, SX’s data load and royalty obligations will increase exponentially. Why is that a good idea?

    Reply
    • Anonymous

      This whole idea assumes consumers are just going to bend over and pay up. Broadband consumers will never voluntarily agree to pay $0.01 per month for a music industry slush fund. Nor should they. The idea that they should have subsidize a struggling industry “just because” is ridiculous. Especially when they are still expected to pay for their music on top of this.

      Reply
    • Mike C.

      Bonus, Bonus, Bonus problem – the entire premise assumes all internet users stream music at the same rate, the same frequency. Obviously, they dont. It’s a tax on light-to-nil streamers and a subsidy to heavy streamers. Given the fact that heavy users don’t really enjoy paying anything now, and problems 1, 2, and 3 from steven c., this leaves pretty much no one happy…

      it’s a nice idea for artists & musicians, but the likelihood of this ever flying seems remote..

      Reply
  4. Name2

    The bulk of this giant money pot is $11b. from consumers.

    You basically want a tithe of $3.15 a month from every broadband/mobile subscriber. Good luck with that.

    Sounds to me like the good old days of proposing a music tax on blank CDs because obviously anyone copying data onto a CD is a THIEF THIEF THIEF.

    Reply
    • Anonymous

      Even if started with good intentions, you know this money will be distributed in some kind of way that fucks over small artists over time. All this government welfare for business is just a return to aristocracy.

      Reply
  5. Musicservices4less

    At least this proposal is recognizing that there is a significant cost involved in the music business other than paying its creators and this is administration of rights. Along with the rights of creators comes obligations to them as well usually in the form of payments and accountings. This is the big area that tech companies hate, hate, hate to get involved in. They don’t want to become a BMI/ASCAP/Harry Fox because that would mean a tremendous investment in additional technology and increase in employment and the related headache of dealing with thousands and thousands of creators/copyright owners. So what was Goliath’s, Organges and Spotinmyeye’s answer? Basically, I’ll just do what I want to because I have VC’s money behind us and if it fails who cares! I have mine so you go figure out how to get yours. So now we are all scrambling on how to get ours . . . Take a look at today’s (Wednesday) NYT article on what some of the state’s attorney general’s are doing regarding Goliath and others. Interesting.

    Reply
    • Name2

      Per the gigantic Sony data dump, Mississippi’s AG, for one, is enjoying direct payouts from the MPAA to fuck over Google. We’ll decide what’s “interesting” for ourselves. If the Times article points out that State AGs are potentially on the MPAA’s gravy train, then yeah, that’s interesting reading.

      Reply
      • David

        What the Sony papers actually show is that the studios have set aside $500,000 for legal advice, including a retainer to a *former* (not current) State AG. That is peanuts compared to what Google spends, not counting their subsidies to numerous stooge organizations like the EFF.

        Reply
    • Name2

      I’m sure the private streaming corps will be happy to administer rights — for a cut. That’s what publishers do, after all. And that’s how the industry works now.

      Or was this task ALSO supposed to be financed out of the magic 30% which is currently paying for infrastructure, bandwidth, customer support, development, etc.

      Reply
  6. Sully

    Well, the distributors are getting the content FILES from someone. Wouldn’t that party would be the best point to apply leverage to from a writer/publisher standpoint…?

    Reply
  7. Anon

    And why would the major labels, who control the bulk of the master rights, want to do this?

    Reply
  8. Casey

    I find it hilariously sad that some artists/labels/songwriters feel so self-entitled that they believe they deserve to receive revenue from taxing other industries. And to call this a rational solution is mindblowing.

    Luckily both consumers and broadband giants like Verizon and Comcast would be entirely against this making its chance of being a reality virtually zero.

    Reply
    • Chris H

      I feel the same way about lesser cable channels, but nothing has changed on that front either.

      Reply
  9. Name2

    which makes all streams equal (on-demand, online radio, video),

    To quote Paulette Goddard to Rosalind Russel in ‘The Women’ (1939):

    “I’m making him pay for something he wants. You made him pay for something he doesn’t want.”

    Reply
  10. nypbbob

    This isn’t rocket science. Somebody needs to find a way to make more money without pissing off consumers with a million useless ads or paying subscriptions. The same Damn business models are so stale its devaluing content.. And the consumer experience sucks.

    Time for change.

    Reply
  11. Tim Wood

    +1 to Name2’s point. This is a 2010s redux of the ’90-’00s blank CD tax, which reprised the would-be ’80s blank cassette tax. It’s still a silly idea. I almost never stream music; the experience is still much inferior to listening to local bits. I will not pay into a music industry slush fund.

    Reply
  12. Hippydog

    Quote “(note: this has nothing to do with downloads, CDs, and other forms of music distribution. Just streaming.)”
    .
    and thats the problem..
    for any solution to gain traction it has to at least acknowledge if not incorporate the other forms of distribution..

    Basically tunehunters idea makes more sense then this one..

    Reply

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