Tech Investor Says Songwriters Are Being Deceived. A Publishing Executive Responds…

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The following guest post comes from David Israelite, CEO of the National Music Publishers’ Association (NMPA), a trade association representing American music publishers.  It’s a response to an earlier guest post on Digital Music News from Jody Dunitz, a former executive at Sony/ATV who has been a sharp critic of ASCAP, BMI, and the NMPA for acting against songwriter interests.

Dunitz is Part of Tech’s Plan to Pit Songwriters against Artists & Advocates

It is incredibly arrogant for someone who left the world’s biggest music publisher for the other side to become a “Tech Coast Angel” to tell songwriters what’s good for them.  Now, in addition to investing in startups, Jody Dunitz has clearly also made it her mission to mislead music creators and instigate discord within the music community – to the tech community’s advantage.

In her recent piece, she confuses many of the current battles happening in the music industry in an effort to pit publishers and songwriters against record labels and artists – when our real battle is with the digital services who seek to pay us lower royalty rates, and the outdated government regulations that allow them to do so.  

NMPA has been fighting this multi-front war for decades.

To suggest that ASCAP and BMI, who were both recently dealt a devastating decision by the Department of Justice are “dithering” is not only false, it is insulting.  Immediately after the decision was handed down, BMI announced they would be launching a legal war to challenge the determination and ASCAP announced they would attack the decision on the legislative front.  Both moved swiftly and seriously to do everything possible to push back.

Just as aggressively, the NMPA is fighting on behalf of publishers and songwriters in the current Copyright Royalty Board (CRB) proceedings that will determine mechanical rates paid by digital companies for years 2018 – 2022.  In this effort, songwriters and publishers are united against the digital services who are seeking to pay as little as possible to use the music on which they have built their billion-dollar business.  The people on digital services’ side are people like Jody Dunitz, and she is using pieces like this one to try to make the music industry turn on its own in order to create a diversion to distract from the fact that if tech companies are successful, they increase their own profit margins while putting songwriters out of business.

“The idea that the “pie” of revenue is finite is a falsehood spread by tech loyalists who want to perpetuate the idea that there is no more money to go around – while services like Spotify, YouTube and Apple are valued in the billions of dollars.”

Overall, while our interests do not align 100% of the time, record labels, artists, publishers and songwriters are stronger when we work together to increase what music creators are paid.  The idea that the “pie” of revenue is finite is a falsehood spread by tech loyalists who want to perpetuate the idea that there is no more money to go around – while services like Spotify, YouTube and Apple are valued in the billions of dollars. Dunitz’s efforts to rile up members of the songwriting side of the industry with fictions only serve to drive a wedge between two sides that must work together if we are to be successful in achieving comprehensive change. Our goal is to update the laws and regulations that have held publishers back from negotiating with digital services as record labels are able to do. Should those bureaucratic barriers be removed, the market would decide how revenues are split, as it should be.

The fear mongering by people like Dunitz only serves to split our community and make it harder for us to advocate for higher rates across the board.  In her mind: as long as we are fighting with each other, we can’t be fighting with digital services for higher rates.  

We’ve seen what happens when labels fight with publishers. In fact we’re seeing it now as Sony’s record label has stepped into the CRB to fight for lower compensation for songwriters in the interactive streaming environment, when the battle is really between music publishers and digital services.  While every other label has stepped out of this proceeding to allow us to fight aggressively for services like Spotify to pay us more, Sony label has stepped in the middle, further complicating and damaging songwriters’ ability to get what’s fair.  This is a microcosm of what happens when people like Dunitz are successful in pitting labels against publishers: Everybody loses except tech companies like hers.

“We, too, should be able to negotiate with services directly, in a truly free market, to get fair rates for songwriters.”

As record labels participate in negotiations with services like Spotify to renew contracts in a truly free market, music publishers and songwriters are shown the world that they deserve but are prevented from entering.  We, too, should be able to negotiate with services directly, in a truly free market, to get fair rates for songwriters.

Our battle is with the outdated legal structures that prevent us from entering into these negotiations, not the record labels.  As an industry, we will not be baited into an internal war with our fellow creators, we will continue to combat the government bureaucracy that prevents us from fair-market wages and the digital services who fight to keep those rules in place so they can continue to benefit from below-market rates.

If Dunitz was truly an advocate for improving the music ecosystem she would agree that we have enough battles to fight without waging war on our own.

 

Image by David Goehring, licensed and adapted under Creative Commons Attribution 2.0 Generic (CC by 2.0).

 

 

9 Responses

  1. Jody Dunitz

    Dear Mr. Israelite –

    At any given moment in time (e.g, at royalty payment time), the “pie of revenue” is finite. That’s a mathematical fact. It is not a “falsehood spread by tech loyalists.”

    The fact that Spotify, YouTube, and Apple are valued in the billions is a non-sequitur in the debate about royalty shares. Corporate valuation is not currency that can be used to pay royalties – unless one is willing to accept micro-fractional stock certificates (whose value fluctuates daily or is wholly speculative) rather than cash for royalties. Thus, only revenue in that pie is available to pay royalties.

    Removing the “bureaucratic barriers” that prevent publishers from direct licensing songs to the streaming services will not increase that revenue pie. If 83% of streaming revenue is already paid out, there’s only 17% left. Presumably, even you will agree that the services need some of that to pay other expenses and, in the spirit of a free market, return some profit to investors.

    The “truly free market” rates for songs will hit a wall preordained by the inordinate royalty share pre-empted by the labels. You have often opined that song and recording rates should approximate the 50/50 split enjoyed by synch licenses and that if publishers are permitted to negotiate with services directly, they will, somehow, squeeze an additional 35% (to add to their current rate of 15%) out of the remaining 17%. That is the fiction that disserves songwriters.

    Direct licensing would empower publishers to play shenanigans with advances and royalty flow-through to writers, just as labels have been doing to artists. ASCAP and BMI are the songwriters’ best advocates because they actually have fiduciary duties to serve songwriter interests in ways not imposed on publishers. But ASCAP and BMI must reorder their priorities if songwriters are to be saved.

    Jody Dunitz

    Reply
    • FarePlay

      This reminds me of the story about rearranging the deck chairs on the Titanic.

      Reply
  2. Musicservices4less

    Dear Ms. Dunitz,
    My company has owned and controlled its musical compositions for a number of decades. Now that it is obvious that streaming has and will continue to replace physical sales, I do not (and never did) want to be a partner in the online Tech retailers business. Just like I did not want to be a partner in each brick and mortar retailers business. To be clear, I do not want to be paid on advertising revenues or any other revenue based formula.
    Just let me negotiate flat penny rate so I can estimate how much revenue I will receive and let the online Tech retailers figure out how to run a real business based on inventory costs that are fixed. Let’s all be big boys and girls and run businesses on their own. And if the online Tech retailers do not want to pay me on that basis, give me the option not to sell them. Please! And thank you.
    Best, Musicservices4less

    Reply
    • Someone Who Understands

      Dear Musicservices4less
      If you do not (and never did) want to be a partner in the online Tech retailers business or the brick and mortar retailers business that preceded it, and you do not want to be paid on advertising revenues or any other revenue based formula, and you want to negotiate flat penny rate, then you should convince Mr. Israelite and his member publishers to create an efficient marketplace for their vast catalogs, that could actually replace the out-dated statutory license.

      At this point, the statutory license isn’t going to go away unless and until there is something that can replace it that can address the vast amount of licensing transactions that need to occur. That isn’t just a business reality. It is the political reality for NMPA and its members (something they don’t seem to have figured out, yet).

      So, convince them to establish a comprehensive database and licensing structure, within which you can price YOUR works as you see fit.

      Please! And thank you.
      Best, Someone Who Underestands
      Reply

      Reply
  3. Steve Dave

    Not a single substantive point made by Israelite in response to Dunitz’s original piece. Shocker.

    Reply
  4. Kevin

    Jody, thank you again for speaking up and wording things in a way the intelligent supporters of songwriters and creators can understand. The enemy has always been within the music industry itself. All that money is being paid out from tech companies and like so many criminal investigations (and TV/films), let’s start following the money before we point fingers at who is right or wrong.

    Reply
  5. Shlomo

    NMPA wants an open market? Than they should compel publishers to remove mandatory MFN clauses for synch licenses. Very hypocritical David

    Reply
  6. Industry Masochism

    David Israelite will not be baited into an internal war, unless that war is with Sony Recorded Music or songwriters who might like to know what (or if) they’re being paid and what the Big Three pubs got out of the deals.

    Reply
  7. Bill Tuck

    Just out of curiosity, are there any other songwriters out there who share my view that conversations of this type between Mr. Israelite and Ms. Dunitz do very little to address the best interests of songwriters? For example, I cannot for the life of me understand why I should prioritize the DOJ’s decision in regards to 100% licensing by PROs over getting rid of the compulsory licensing law that is still on the books in this digital age. If I write a song and pay to produce a sound recording and market it myself, then I would really like to have the same legal rights as the manufacturer of a flashlight, whose competitors cannot simply copy and sell the same design without incurring potential legal liability. But in my songwriting scenario, a record company has the legal right to immediately re-record my song and compete with me in the marketplace.

    As far as the DOJ’s 100% licensing decision, my solution has simply been to withdraw from ASCAP. It’s an insignificant gesture coming from an unknown songwriter, but if some of the more successful songwriters started following suit and forcing potential licensees to deal with song licensing on a case-by-case basis instead of having the convenience of only having to deal with 2 or 3 large organizations that represent a majority of songs in the marketplace, then I suspect we could significantly alter the conversation about outdated consent decrees.

    Reply

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