Watch Out Harry Fox, Loudr Is Coming For You

loudr-main

Up until now there have really only been three ways for independent artists to easily release cover songs legally: purchasing a mechanical license from Harry Fox Agency’s (HFA) service Songfile, purchasing a mechanical license from Limelight (which Google acquired in 2011) or distributing the music with Loudr. Sure, the traditional way was to go to the publisher directly with a notice of intent and then report (and pay) the publisher directly, but this is not a viable option for independent artists.

But, Limelight is shutting down its song clearance program next week. So Loudr is swooping in to pick up the slack.

Loudr is undercutting their only competition, Harry Fox, by offering a cheaper service. For $15 (less if bought in bulk), any artist can obtain a compulsory mechanical license simply by estimating the quantity they will sell and then calculating that by the statutory royalty rate set by the government (9.1 cents per download/physical sale). If the artist ends up selling MORE downloads than they initially estimated on Loudr, the artist can go to their completed order and repurchase license for a 50% discount (on the service fee).

Loudr and HFA (Songfile) pass on 100% of the royalties (paid by the artist for obtaining the license) to the publishers.

Both Loudr and HFA’s Songfile service charge 1 cent per stream which is MUCH higher than what every streaming service is paying per stream for mechanical royalties.

Loudr’s CEO, Chris Crawford told me that they overestimate this rate by so much because it’s “market rate” that has been set (by HFA). But, I would advise artists NOT to pay for a license for streams because most services already pay publishers directly (more on this below) AND if a publishing company actually wanted to audit an artist, they could only demand the amount legally owed to them which is an extremely complicated equation based on each streaming service’s revenue and subscriber count.

Here’s how US streaming mechanical royalties are calculated (set by the US government):

hfa-streaming-guide

See the other charts for all other streaming options here.

You don’t need a mechanical license for streams on Spotify, Rdio or Deezer!

And this is where it gets a bit tricky (and awfully confusing for the Loudr/Songfile customer). Spotify pays mechanical royalties directly to Harry Fox and then Harry Fox pays these royalties out to the publishers. The royalties artists see on their statements from their distributor (CD Baby, DistroKid, TuneCore DO NOT include mechanical royalties). So Spotify streams should not be calculated when purchasing a license from Loudr (or Songfile) for a cover song – even though most would think they would be. Similarly, Rdio has a direct deal with Music Reports Inc. (MRI) and Deezer’s mechanical royalties are paid directly to collections agencies in the territories in which they are available which then get distributed to the appropriate publishing companies. Loudr lists SoundCloud and Bandcamp streaming as examples of services which you’d need to pay for streaming mechanical royalties, however they don’t explicitly list which streaming services require a mechanical license and which don’t. Technically, hosting a streaming cover on your website requires a license.

Loudr’s CEO, Chris Crawford, mentioned to me over the phone this morning that most US streaming services are moving in the direction to pay publishers (or HFA/MRI) the mechanical royalties directly anyways.

+Want To Know Who The Best Digital Distribution Company Is?

Also, currently SoundCloud doesn’t pay anything for streams (except to WMG and soon to Sony and Universal). So an artist would be LOSING quite a bit of money if they bought a mechanical license to (legally) put their song on SoundCloud. They might as well continue the route of uploading their music (illegally) like most users have been doing since SoundCloud (and YouTube’s) inception and let the services sort it out with the labels and publishers later – like YouTube has (kind of) and SoundCloud is starting to do.

But YouTube is another case altogether. All sorts of laws are being broken here, but because YouTube has been able to monetize these illegalities, the labels and publishers have come around to getting paid for (illegal) cover songs and fan videos.

Loudr explains they will not license remixes or samples. These require permissions directly from the master owners (the labels). But no indie artist ever obtains these. It’s nearly impossible to do so as an indie artist. DubSet is looking to fix this, though. More on them in another piece.

Loudr will also not issue licenses for translations (“Let It Go” in Spanish) or derivative works (Weird Al) as this requires permission directly from the publisher/songwriter.

Bandcamp is releasing their subscription service any day now and it is unknown if they are going to pay out mechanicals directly to Harry Fox (like Spotify) or Music Reports (like Rdio) or require the rights owners to do that (like iTunes does in the US).

Regardless, every digital distribution service (and store – like Bandcamp or CD Baby) puts the burden of obtaining the mechanical license on the artist. Loudr is THE ONLY indie digital distribution service (open to any artist) to hunt down this license for the artist and handle all of the paper work. For their distribution service, they don’t require the artist to purchase the license up front, BUT they do take the most commission of any digital distribution service out there (30% for covers) for this hassle.

Loudr understands that 30% commission is a hard sell (especially when all they’re doing is sending their artists’ songs to digital retailers, so they setup this stand alone mechanical licensing service to allow artists to distribute with another service of their choosing (like DistroKid, CD Baby or Tunecore).

“The launch of Loudr Licensing puts us in a strong strategic position to empower artists, compensate music publishers, and continue scaling our technologies to support the mechanical licensing needs of enterprises in the music space.” – Chris Crawford, CEO, Loudr

Loudr has powered more than 50,000 licensing transactions to date for 7,000 independent artists including some of YouTube’s biggest stars like Peter Hollens, Lindsey Stirling, Taryn Southern, Pomplamoose, Jacob Whitesides, Tyler Ward and Mike Tompkins.

Ari Herstand is a Los Angeles based singer/songwriter and the creator of the music biz advice blog Ari’s Take. Follow him on Twitter: @aristake

19 Responses

  1. JTVDigital

    Indeed, since Limelight is shutting down and since Loudr have always been focused on cover songs distribution, it makes sense for them to offer a similar service and issue mechanical licenses.
    But, ahum, where do you think Loudr get their licenses from? 🙂

    Reply
  2. Nathan

    As an artist who has been using Loudr since its early days, and who is now watching my other artist friends jump on board, I’m incredibly excited for this news. For me, this article is understated considering how pivotal this move could be.

    Reply
  3. Amy Engelhardt

    Great, so I’ll get more pennies for my work? OOOH, SIGN ME UP!

    Reply
    • Ari Herstand
      Ari Herstand

      I think you’re missing the point. HFA has been doing this for years. The 9.1 cent rate is set by the government. This just allows artists who want to cover songs a streamlined way to do it legally. So, if you want to cover a song and distribute it independently you would need to obtain a license. HFA or Loudr are your two best options – much better than having to go directly to publisher.

      Reply
  4. Tcooke

    ?Re: remix vs cover? What makes a rendition a remix and not a cover? Eg, if all instrumentation is the basically same notes and the vocals are the same, its a cover, even if guitars have been replaced by sidechained synths, drums to breakbeat, but similar pattern?
    Tks

    Reply
    • Ari Herstand
      Ari Herstand

      A remix actually uses samples (recordings) of the original master. A cover uses 100% new elements and is an entirely new recording.

      Reply
  5. Tcooke

    remix vs cover? What makes a rendition a remix and not a cover? Eg, if all instrumentation is the basically same notes and the vocals are the same, its a cover, even if guitars have been replaced by sidechained synths, drums to breakbeat, but similar pattern?
    Tks

    Reply
  6. Willis

    Good luck, Loudr. The old guard isn’t going to let any change happen. There have been several before Loudr and there will be more after it vaporizes.

    Reply
  7. Musician Who Understands

    Ari Herstand

    “Here’s how US streaming mechanical royalties are calculated (set by the US government):”

    You think the government set the mechanical royalty rate for interactive streaming?

    Ari Herstand

    “You don’t need a mechanical license for streams on Spotify, Rdio or Deezer!”

    You think you don’t need a mechanical license for interactive streams on sites like Spotify?

    Ari Herstand

    “But YouTube is another case altogether. All sorts of laws are being broken here, but because YouTube has been able to monetize these illegalities, the labels and publishers have come around to getting paid for (illegal) cover songs and fan videos.”

    You think YouTube is engaging in (and monetizing) “all sorts of illegalities“?

    You might want to spend a little more time actually learning about this stuff, before you write about it.

    Reply
    • JTVDigital

      “You think the government set the mechanical royalty rate for interactive streaming?”
      He was only referring to downloads apparently (9.1 cents per download/physical sale)
      ““You don’t need a mechanical license for streams on Spotify, Rdio or Deezer!”
      That’s a risky / misleading statement indeed.
      “You think YouTube is engaging in (and monetizing) “all sorts of illegalities“?”
      In theory, monetizing a cover song on YouTube without a synchronization license is illegal yes. BUT thanks to agreements with some major publishers, it turns out that most cover songs are tolerated, since it generates revenues for original right holders.

      Reply
    • Musician Who Understands

      JTVDigital

      “He was only referring to downloads apparently (9.1 cents per download/physical sale)”

      And the point was, the government didn’t set that rate. they never have. Music publishers AGREED to that rate, in a voluntary settlement.

      JTVDigital

      “In theory, monetizing a cover song on YouTube without a synchronization license is illegal yes. BUT thanks to agreements with some major publishers, it turns out that most cover songs are tolerated, since it generates revenues for original right holders.”

      You both seem to be forgetting that this “theory” has already been tested – multiple times – and proven false. Under the DMCA, YouTube can allow cover videos to be put up, and simply has to take them down, when notified. Theory debunked.

      That’s precisely why we have the publisher settlements and participation in the You Tube Content ID system. Publishers can’t stop YouTube users from uploading, so, they had to agree to something that at least gets them some money out of it.

      It’s just silly to say YouTube is doing “illegal” things, when numerous federal judges have explicitly said it is not illegal. We may wish it was illegal and want the DMCA to be interpreted differently (or modified) but, as it stands now, YouTube is clearly not “illegal.”

      Reply
      • JTVDigital

        Sure it’s not “illegal” in the sense that there is a compensation given to right holders.
        The “theory” is that a synchronization license is required to use pre-existing music on a video work, this is not related or specific to YT.

        Reply
  8. Kevin Erickson

    Correction: Bandcamp’s subscription service is already out, and it does indeed require artists to take care of any licensing themselves.

    Reply
  9. Anna

    Why is using Loudr or HFA better than going to publishers? Wouldn’t you be saving $15/song and basically just writing an email to a publisher and then sending them a check? Not a rhetorical question, very curious as am releasing an album of almost half covers in the next year. Thanks!

    Reply
  10. Mike King

    Good stuff, Ari. I was wondering who was going to fill the void left by Limelight.

    Reply
  11. Howlin' Waters

    Some while back I attempted to get a Mech License from HFA to do a little local recording of a cover tune, and they wanted so much money up front it was laughable – especially from someone who was obviously not going to get the song released nationally/internationally. Just a few copies to sell at shows and put on my websites.

    So I opted to tell them to screw off and never bothered to contact them again. I hope Loudr and whoever else comes along gives HFA a run for their money. They come across as old, out-of-date, greedy and inept when dealing with indie artists.

    Just my own opinion,

    Howlin’ Waters

    Reply

Leave a Reply

Your email address will not be published.

Verify Your Humanity *