The following guest post comes from Steve Corn, CEO of digital distributor BFM Digital.
Getty Music Pushing for Performance Free Licensing
This week, Getty Images announced a rebranding of their music platform from Pump Audio to Getty Images Music. On the surface, it is not really such big news. However, as I read their email blast, I came upon a very upsetting paragraph nestled (or perhaps buried) in the middle:
Performance Royalty Free – Flexibility and Simplicity for Customers
Why is performance royalty free an important new license model? Music licensing is fairly complex and not all music customers or potential customers fully understand the process. Many will license music only if the process is made simpler–one size does not fit all. There are also certain customers who need a simplified and streamlined licensing process because they routinely use high volumes of tracks, usually at a lower price which will accommodate their volume. Yes, this means individual returns are small or incremental, but these users are growing in number so we expect this sector (as part of the overall market mix) to be increasingly valuable for Getty Images’ contributors. We understand that it is possible that you may not want every track to be available for performance royalty free licensing, so we have added an option that will allow you to flag a track as “not available for performance royalty free” at the time of submission. We want to make clear, however, that excluding a track from performance royalty free limits its sales potential, so keep in mind it may negatively impact the likelihood of acceptance of your track. As usual, we will weigh the value of each track against its limitations.
This may seem innocuous however I feel that it represents a dangerous and growing trend in licensing music for audiovisual use (aka synch licenses.)
Getty Music (formerly Pump Audio) has made a thriving business of representing music libraries and independent artists for synch placements in a variety of audiovisual products. Along the way, they have been quietly amassing a catalog of music that is not only royalty free for the master recording rights, it is also free of any performance income royalties for the composition. While this is not mandatory, Getty is making a hard push to its artists to opt in for waiving their performance royalties. Right now, Getty has nearly 60,000 “performance free” music tracks as compared to 139,000 “rights managed”.
Why does this bother me? In my world of digital music, labels and publishers are in a constant fight to protect their royalty rates (see Pandora’s recent victory against music publishers). There is an unending struggle to maintain the value of music against the economics of the various digital music services.
However, Getty is now on the other side and is guilty of devaluing music by encouraging artists to forego one of the basic grants of copyright law: “…to perform the copyrighted work publicly” and the income derived from this right. Further, Getty is using fear tactics by saying that “…excluding a track form performance royalty free limits its sales potential…” Why is Getty creating a system that benefits from discouraging artists to defend their right to retain their basic rights? In other words, it seems like they managed to create a business model that purportedly will decrease your sales if you choose to protect your performance rights.
Their justification is that they are merely responding to customer demand. It is perfectly understandable that a large company like Getty wants to please its customers. That’s only natural. But Getty Music relies on artists to keep making music (all at their own cost) and licensing it to Getty. It seems counterintuitive to not only deprive the artists of a potentially long-term revenue stream but to actively encourage the artists to do so out of fear of lost opportunities.
Obviously, Getty draws a line in responding to other customer needs. It sets a price on its products and expects the customer to pay it. So why can’t they draw a line with regards to performance rights? It is because they generally don’t participate in such back end revenue streams. Their take is on the upfront license fees. So, it causes them no apparent harm to give the customers what they want in this regard. In fact it even gives them a competitive edge over other music services – all on the backs of the very artists that they purport to support.
The logic that Getty presents is that the loss of any potential performance income will be offset by the increase in license fees an artist may receive. On a macro level, it’s a no-brainer for Getty (read: Getty has nothing to lose). But, generally speaking, it will not work on the individual artist level. For the majority of artists on Getty, getting a synch placement will generate more revenue from performance royalties than from their share of the synch fee. (Certainly all the production music libraries understand this math.) With 1000’s of artists signed up to Getty Music, I find it very hard to conceive that any individual artist will see a substantial increase in the number of licenses issued enough to justify stripping away their performance royalties.
Royalty-free music libraries have been around for decades. Most such companies survive only because they earn performance fees from broadcasters, cable channels, etc. In fact, many have even given away their music for free knowing that they would likely make enough on the back end.
But now we are seeing a decline in upfront synch fees (classic supply-demand scenario) AND a coordinated effort to remove all other revenue sources.
So the promise of a Pump Audio/Getty Music has been to give the indie artist a chance at a synch revenue stream that they would not normally have. Definitely a noble endeavor without a doubt. A win-win, you might say especially for large licensing deals where Getty takes only 25% of the upfront fee. So why not leave the performance royalties intact?
Fortunately artists have complete control of the situation (at least, for now). It is not mandatory to waive your performance rights when you submit music to Getty.
I would strongly encourage all of Getty’s artists to think very hard of this classic, slippery slope before you tick the wrong box.