This site is a blog for musicians and music industry people. It is a free educational resource and it is also the way I advertise my music consulting services. I am an entertainment professional with deep roots in the music industry. Throughout my music career I have been a major label A&R representative, a music supervisor, an artist manager, a reality show producer, a bass player and the head of a digital record label.
Posts Tagged ‘ascap’
Major labels continued to take issue with Apple’s appeals to start a streaming music service. And YouTube spokespeople officially confirmed the channel would be launching a subscription music service later this year. Also, ASCAP released payout details and other financial information for 2012.
Major Labels Continuing to Resist Apple’s Streaming Music Service
Apple, Inc. has reopened talks with record labels in order to secure rights to start its previously-attempted streaming music service, according to a March 7 exclusive in the New York Post. But labels are continuing to push back due to an incredibly low royalties proposal. Apple, initially tried to license music for this new streaming service in time to release it alongside the iPhone 5, but the industry’s largest publisher, Sony/ATV, ultimately killed the plan by refusing to negotiate.
Sources said Apple initially made an offer to Sony of 6 cents per 100 songs stream, which is half the 12 cents per 100 songs paid by Pandora, the leading online radio service and the company Apple has identified as its major competitor in this corner of the digital marketplace.
Labels have agreed that Apple’s music service could potentially offer them a new revenue stream. But they are reluctant to agree to such a low price in the midst of highly-publicized music industry fights against Pandora’s proposal to lower its current royalty rate. Because Apple also currently has $137 billion in cash, many also believe the company should have to pay at least the rate set by the Copyright Royalty Board, which is 21 cents per 100 songs streamed and applies to companies without established broadcast stations.
Terrestrial radio-run online services like iHeart Radio pay 22 cents per 100 songs streamed, whereas subscription service Spotify pays 35 cents per 100 songs streamed – the highest rate among digital music services.
Apple has been further motivated to get into streaming radio because it has seen 50 percent of its iTunes revenue come from mobile devices, with Pandora being one of the top apps in the App Store.
Apple is also looking to its proposed iRadio to help it take better advantage of its iAds advertising platform. Sources said that record labels are asking for an up-front fee and a percentage of ad revenue along with the streaming fees.
Apple’s chief music negotiator, Eddy Cue, caused problems when he tried to pull in Sony/ATV in order to roll iRadio into the iPhone 5 Launch. When Sony/ATV declined, he was forced to approach Universal, Sony and Warner reps, who have yet to be satisfied with a deal from Apple. An unnamed music industry source close to the situation revealed that everyone at labels is still preparing counter offers after a string of initial meetings.
Rich Greenfield, a media anlyst with BTIG said that there could be a real opportunity for a service like iRadio in the marketplace: “People spend two hours a day listening to radio. Google, Apple and Amazon are fascinated by the opportunity to get into music in a bigger way. Pandora doesn’t make any real money … Everyone is trying to figure out a better structure.”
YouTube Entering the Subscription Music Service Sector
Streaming media giant YouTube will officially launch a subscription music service in late 2013, said Fortune. After on-going media speculation, the service has announced it has its own negotiating team in place and an operating unit, but will have some elements that overlap and complement new features that could be part of Google Play, Google’s Android music platform.
The two new streaming services are different but part of Google’s efforts to grow its presence in the creative digital marketplace. Google Play is a digital locker for music that allows users to buy, store and sort their tracks. But YouTube’s service will allow users to listen to tracks for free. Both will likely have subscription fees that will provide additional perks for users, including, in the case of the YouTube service, ad-free access.
The news of YouTube’s new service was released by sources in the music industry and at Google: “While we don’t comment on rumor or speculation, there are some content creators that think they would benefit from a subscription revenue stream in addition to ads, so we’re looking at that.”
YouTube has remained free up to this point, despite being one of the world’s most heavily-trafficked music services. It currently sells ads against its music videos, giving a cut of revenue back to record labels.
Fewer people subscribe to streaming music services, and of those that do, spending per month is lower than in other sectors. However, major music labels have still managed to make money through streaming services. The Warner Music Group earned about 25% of its digital revenue from streaming in 2012. However, labels still have not reached an agreement about how much of their content they should give away and are still working on the details of providing a better user experience on YouTube’s upcoming service, particularly within the ever-growing mobile space. Both representatives of music companies and YouTube are concerned that if they go with a “freemium” business model, listeners might once again get used to not paying for music, once again putting all the pressure on ad sales to subsidize free content.
Still, the subscription-based model is not necessarily more lucrative than relying on advertising. Free attracts more customers, but when there is a subscription fee attached, the customers have to actively pay for music, which brings in much-needed money to an industry that has been struggling for over a decade and just this year saw its first increase in sales in 13 years.
YouTube may already be creating features to complement Google’s future music service: The site started embedding click-to-buy links on user-uploaded songs that lead back to Google Play, Amazon MP3 and iTunes. Many experts speculate a user’s “collection” of music, purchases and listening histories might eventually be visible between the two platforms.
YouTube and Google will release more details in the coming months as the services develop.
ASCAP: $827 Million in Royalties in 2012
The American Society of Composers, Authors and Publishers (ASCAP) announced that it distributed more than $827 million in royalties to songwriters, composers and publishers in 2012, up from 2011. Last year was also the fifth consecutive year ASCAP passed the $800-million distribution mark. Annual revenues for the organization were $941 million – the third highest revenues in history – but still 4.5-percent lower than in 2011.
Cable revenues were up 20 percent, and foreign revenues made up for the decline in revenue earned from radio and background music. ASCAP also saw growth innew media and general licensing for bars and grills, hotels and live pop shows.
ASCAP President/Chairman Paul Williams said, “Our goal in 2012 was to ensure a healthy, steady stream of royalties to our members who depend on ASCAP’s advocacy and collective licensing to pay the rent and put food on the table. The music of our members is more popular than ever all around the world, especially through the proliferation of online and wireless services. We are navigating in a complex, rapidly changing environment in which huge, cash-rich technology companies are developing business models that fly fast and free with our copyrights. Only a thriving community of songwriters and composers – who can make a decent living from their work – can ensure a vibrant music eco-system going forward.”
ASCAP CEO John LoFrumento added, “Looking forward to 2013 and beyond, the news is good. We are poised to return to year-over-year growth in our domestic revenues … With foreign revenues remaining consistently high, we are looking forward to a bright future for our members in the coming years.”
ASCAP added brand-new features to its online tools in 2012, such as ASCAP OnStage, ASCAP Play Music and a new-and-improved mobile app that allows members to access the PRO’s tools on their mobile devices.
More details about 2012 financials can be seen on the ASCAP website.
Music licensing and royalties took center stage this past week as 40-year-old music services company DMX won a groundbreaking case against two performing rights organizations and SoundExchange hit the $1 billion-in-royalties-paid mark. And some entrepreneurs are emerging that will help independent artists find new and more efficient ways to make money from their music merchandise packages in the changing industry climate.
DMX Case Win: A Challenge to PRO Licensing Structures
A court ruling in favor of long-standing services company DMX will likely help ease the process of music promotion and make licensing more transparent and set the stage for more direct licensing between commercial music providers and the music industry. A press release issued last week detailed the outcome of a case between DMX – a 40-year-old suite of services that includes music services, strategies and promotions, music licensing and others (and has a partnership with Pandora) – and two major performance rights organizations (PROs), ASCAP and BMI. The ruling will reset fee structures and take some market control over PROs when it comes to determining copyright owners’ earnings.
For many years, ASCAP, BMI and the smaller SESAC have had little competition when it comes to licensing compositions for public performance. In 2006, DMX began to provide direct licensing services in order to streamline the process of directly compensating publishers who were using their services and save them money. This practice also gave publishers greater control over their work, allowing them to negotiate and license their music directly with commercial music providers such as DMX and Muzak. This case determined that this new licensing structure is a viable option for publishers and other artists.
Chris Harrison, Global Director of Content/Licensing for Mood Media, the company that owns DMX said this was a landmark decision for publishers, composers and authors: “We have effectively loosened the middle man’s grip on licensing and associated performance rights fees. After decades of imbalance, the playing field is at last fair and consistent.”
The court ruling also provides more incentive for authors, composers and publishers to license music directly, as they will be able to gain more exposure through commercial music channels. Payments of royalties through direct licensing will also be more dependable, as entities will be required to pay consistently and on time and provide transparent details about how licenses dictate music can be used.
DMX began offering new fee structures after a court ruling in 2010. However, the most recent decision solidifies these structures and will allow DMX and other companies like it to continue to offer options to rights holders and music users. Harrison added, “We’re happy that we can continue to provide quality music programming and services to our clients at affordable and competitive rates. We’re also excited about what this means for our ability to curate great music from even more artists and share that with our clients and customers.”
SoundExchange: $1 Billion in Earnings for Artists
Non-profit digital PRO SoundExchange announced on Monday that it had earned $1 billion in digital royalties for artists and labels since it started up in 2003. The organization collects royalties from streaming music providers such as Sirius XM, Pandora and other music channels and passes them along to signed and unsigned artists. In a business where digital releases are starting to surpass physical releases and artists need to actively stay on top of all revenue streams to earn an income, SoundExchange is becoming increasingly important.
SoundExchange’s president Michael Huppe marked the achievement by saying, “This milestone reflects the fact that the digital music industry is evolving and will continue to grow … We’re optimistic about where the music industry is headed and see opportunity for SoundExchange to help both creators and digital music services thrive.”
More than one-tenth of the $1 billion paid out by the organization in the last year has been given to artists in the past few months. SoundExchange distributed $108.6 million in royalties during Quarter One of 2012, which was the first time this amount was over $100 million in one quarter since its inception. Huppe chalks this success up to a focus on data management and the fact that technology platforms are getting more sophisticated as time progresses.
The U.S. Copyright Office officially named SoundExchange the only administrative entity for the collection of digital royalties. Despite its ongoing efforts, there are still tens of millions of dollars in digital royalties still unclaimed, which is partially due to the fact that artists are skeptical when the organization contacts them that it is a real service.
All musicians and copyright holders can sign up for SoundExchange. Anyone who wants to collect royalties needs to send in a W-8 or W-9 form and a government-issued ID via email, snail mail or fax. More information can be found here.
Merch Entrepreneurs Helping DIY Artists Earn More
The now tired, old conversation about how technology is changing the music industry and how all artists have to take more control over their own careers has caused many music business entrepreneurs to shift focus from talking about what artists no longer have, to the new opportunities they have to earn a living. And according to an article by freelance journalist Natalie Burg published this past week in the blog for creative professionals Concentrate, one of the emerging markets for music startups is merchandise distribution.
One company that has emerged is the merchandising logistics startup Whiplash. According to founder Sean Hurley, “When the label system sort of collapsed a bit, bands were trying to reach their fans directly … Selling digitally is how you get the music out there, but if you have shirts or posters, how do you get out those things that are value added that fans do want?”
For years artists of all sizes have relied on merch to supplement their income as part of live shows and tours. However, many artists feel overwhelmed by the logistics of shipping posters, t-shirts or other products from their websites, packing hundreds of items and shipping them out to fans. While it also provides services for other “small brands,” Whiplash has noted that its services are particularly well-suited to the ever-changing music industry.
The company was actually the first of its kind in the music business. While living in Seattle, Hurley struck up a friendship with Modest Mouse and eventually became the band’s tour manager. Once his tenure was over and he moved to Michigan, he was approached by frontman Isaac Brock to help run the online store for his label Glacial Pace Recordings. He teamed up with tech entrepreneur James Marks to help get the store running, and eventually launched Whiplash in 2009 with him and technology advisor Mark Dickson.
Together, they started to drum up other clients in the music industry, like record label and art company Ghostly International. They now handle 50 different clients and expanded to a 3,000-square-foot warehouse in May, proving that today’s artists and labels have a huge need to seek personalized help when it comes to selling and earning a living off their merch. According to Hurley, “It doesn’t feel like we’re exclusively music, but I guess it is a big part of our thing … We’re banking even more on that type of client too.”
Because it has been such a hit with independent musicians, Whiplash has been particularly focusing on finding new ways to bring services to this type of client. It recently developed a new kind of packaging that would help protect LPs during the shipping process and also has customized fulfillment software so it works more seamlessly with the wide range of website interfaces DIY artists use.
While Whiplash is the first to directly address the very unique needs of the DIY and indie musician market, its success illustrates that there is certainly space and demand in the market for other merch-fulfillment companies. And Hurley said it is more ecommerce than live shows that have made his company so viable: “The whole landscape has changed because of Internet sales …It’s still a fairly new phenomenon.”
This past week was marked by music industry loss and innovative technology gains as indie labels reeled from destruction caused by the London riots, Universal Music Group sold defective products to valued customers, mixtape provider Datpiff provides an exciting marketing model for artists and ASCAP brings Netflix on board.
Datpiff Empowers the Mixtape, Helps with Artist Marketing
Free mixtape resource Datpiff came into the spotlight last month when Lil Wayne jumped on board after announcing he would be releasing a free mixtape through the site to reward his fans for patiently waiting for the release of his album Tha Carter IV on August 29. And even Forbes took notice of the site as an exciting business model in the rapidly-shifting music industry with an article published last week about how the site is developing as a happy marriage between artists, music lovers and even record labels.
Leesport, PA-based site Datpiff, which provides free mixtapes and mashups to music fans has been around since 2005, founded by now 27-year old music fan Marcus Frasier. The website attracts 9.8 million visits per month from 3.8 million people and has over a quarter of a million Facebook “likes” and almost 100,000 Twitter followers. It offers a user-based uploading environment (like YouTube). And Frasier has managed to keep pirated retail albums off the site by reviewing each submission himself before putting it up and more recently, by hiring an outside firm to keep quality control standards high.
As he told Forbes, when he first switched to the YouTube uploading model in 2008, “The queue to get on the site was sometimes two to three weeks. So we contracted with a company that did audio fingerprinting that could flag pirated material. That gave us the ability to grow.”
Many emerging online music providers have struggled to work with the music industry, in part because it has been very resistant to support giving away free or inexpensive music to fans. But Datpiff has become a great marketing tool for artists of all sizes, and Frasier has managed to create good relationships with even big recording artists like Jay Z and Kanye West (who also released a mixtape last month to advertise their new album) as well as both indie and major record labels. He says, about record companies, “They know the power of the mixtape. It’s in their best interest to keep the artists’ name going and to sample new styles and get feedback.” And because of the marketing powers Frasier’s site gives artists, he has been able to make money off more than just advertising and premium memberships. Many artists have upgraded their memberships to increase their exposure.
Because of his strong stance against piracy and his ability to prove that Datpiff provides solid marketing opportunities, Frasier has been able to build relationships with labels and artists and draw in a huge audience while other music providers struggle. And he has accomplished something unique in the music industry in that he’s been able to attract not only big artists like Lil Wayne and 50 Cent but also artists on smaller labels or with no labels. And there is an on-going conversation on his site facilitated by active comment boards and social media between Datpiff, artists and listeners, which strengthens the fan-artist bond. Datpiff provides an equal opportunity environment for artists of all sizes to build their fan bases.
Frasier is currently working to copy Datpiff’s model and spin out other entertainment sites through his larger company Idle Media. And he wants to make sure he continues to build future projects on his love for technology: “A lot of our best concepts come up just from us wanting to do something cool with technology. It’s still fun for us.”
Universal Music Group Inconveniences Classical Music Fans
Recently, paying customers on Universal Music Group (UMG)’s classical music site Passionato (a paid site geared towards audiophiles) noticed an odd noise on a variety of tracks. Users discovered the disruptive sound on the defective tracks was watermarking added by UMG after they asked Passionato representatives how to resolve issues with the site, which advertises that it provides “lossless” classical music recordings.
The exchange about this issue on the Hydrogenaudio message boards illustrates that Passionato representatives suggested everything from downloading pirated copies of files without watermarks (even though they had already paid for the watermarked versions), to remixing the files themselves. As Techdirt pointed out, watermarking tracks and then telling paying customers they have to go through the hassle of fixing the problem themselves alienates them and makes it unlikely they will continue to pay in the future.
ASCAP Licenses Netflix
On August 11, ASCAP revealed it would be entering into a licensing agreement with Netflix as the popular service shifts its focus from physical DVD rentals to streaming video. Netflix has become the most popular internet subscription service for film and television viewing, making up 61% of digital viewership in the U.S.
ASCAP decided to provide the license because subscription-based streaming services are emerging as a great source of revenue for ASCAP members whose music has been placed in films and on television. ASCAP also recently announced license agreements with Spotify and Turntable.fm and plans to tie up agreements with Hulu and Amazon in the coming months. ASCAP already has licenses with 18,000 different companies, including start-ups, huge internet companies and mobile networks.
Indie Catalog Destroyed by London Fire
The Sony DADC distributing warehouse caught fire as a result of the on-going riots in London last Tuesday at 4 a.m. The building contained the entire stock of 150 labels distributed by PIAS UK and PIAS Ireland, including Rubyworks, Model Citizen, 4AD, Warp, Rough Trade, Sub Pop, Secretly Canadian, Jagjaguwar, Drag City, Soul Jazz and Domino. According to Billboard, 3.2 million CDs and vinyl units were destroyed.
As labels and stores awaiting their stock panic, reports from PIAS continue to indicate that the warehouse has moved to a new location and is once again up and running. Sony DADC states is has found a new temporary distribution partner and will be ready to pack and ship orders within the next week. Representatives from Sony admit that their biggest challenge is going to be recreating a catalogue with as much depth as the one that was lost: “Re-manufacturing and getting stock in [outlets] next week of the top several lines is do-able, but we had over 8,000 lines at Sony DADC. [As for] whether they will all ever be re-manufactured, there’s obvious issues there and I think some of them will lose out in that process.”
A campaign to help artists and labels affected by the blaze called LabelLove has been set up to help with rebuilding efforts and is quickly garnering the support of music fans worldwide. Music fans are being encouraged to buy albums from one of the many labels affected by the fire: digital downloads of an album or physical albums from their local record stores.
Marc Hutner is a musician and producer and currently the Director of Membership at ASCAP (The American Society of Composers, Authors and Publishers). I normally summarize people’s biography in the first paragraph when doing interviews but Marc’s biography is a lesson in and of itself.
Marc, thanks for taking the time. I know you started out as a musician but how did you become Director of Membership at ASCAP?
I’m originally from L.A., and I am and was a musician who got signed (Marc was the singer and guitar player for a band called Sugartooth) to Capital/EMI Publishing in 1991. We went from Capital to Geffen in a classic A&R shuffle. We put out two studio records on Geffen and then I just continued doing music and producing. The Dust Brothers took me under their wing and taught me how to do sampling and computer recording back when it was still the wild frontier. Then I produced a band called Bicycle Thief, which was the singer from Thelonious Monster’s new band. That went on the road, and I went with them as a touring guitar player as well. Then I was in another band called Pleasure Club from New Orleans. That was a bit of a punk/gothic thing. We put out two studio records and one live record.
Was that through a label system or on your own?
We put them out on our own and then got picked up by an indie label out of Atlanta. We ended up selling more on our own than we did through a label. As a musician I’ve been on major labels, indie labels and released music completely independent. I’ve toured the world many times over for many years and have played in front of tens of thousands of people, and also had to cancel shows because nobody showed up. I feel like I’m in a good position to advise songwriters at ASCAP because I’ve been around a bit.
How did the job at ASCAP come up?
It actually came up because in the late 90s, Geffen was going through all kinds of awfulness, and my band had basically disbanded, and I was a little bit lost as all my other friends that weren’t musicians had gone and pursued an education and now were working. I was in my later 20s and without a formal education. So, I was trying to figure out a way to earn a living and stay in music. I knew an ASCAP rep in L.A. We met, and the stars aligned, and I got hired two weeks after that on a temporary basis, and then temporary turned permanent. I worked for about five years there in L.A., and then I quit to go back out on tour for a few years. Then I decided to move to New York, and the job opened up again, and I moved right in. I’m coming up on five years working there in New York. I’ve been on and off at ASCAP for about a decade.
Do you have anything active playing-wise these days?
I actually don’t play anymore. My stuff still gets licensed in film, TV and video games occasionally but I don’t pursue it at all and rarely pick up the guitar at this point.
Tell me in your own words what your job is as director of membership?
I sign up writers and publishers to ASCAP, and try to help them in anyway I can. Sometimes it’s in the form of advice, other times it’s helping them refine their songwriting skills through workshops, or helping them meet managers, labels, publishers, etc. The idea is to help ensure that they have the ability to earn a living through creating music.
Because ASCAP is a member-owned, not-for profit, we can operate very differently than most other music industry companies. If one of the writers I work with became the most successful writer of all time, I wouldn’t get a percentage, a raise or a bonus. That’s just not how it works. So what that means is, there isn’t a sense of territorialism with our writers, so we utilize all of our co-workers’ knowledge and connections when we need to – We have an L.A. office, a Nashville office, a UK office and an office in Puerto Rico. You get the advantage of a company that has a network all over the place. It’s a unique situation.
ASCAP is a not-for-profit company, right? Tell me about how the money flow works. An artist signs up for ASCAP and then they go out and their music gets played on the radio or on film and TV and…
A songwriter or publisher joins ASCAP, and because it’s a non-exclusive agreement, they need to register their songs with ASCAP… it’s the registrations that enables us to go out to the marketplace and represent the song, the artist or the publisher and collect the monies. Otherwise, if they don’t register it, we have to assume they don’t want us to because they have the right give away their music for free. So they register their songs, and then our purpose is to monitor the public performances and pay them performance royalties. This includes radio, TV, Internet, sporting events, etc – any time you go into a public area and you hear music, whether it’s in an elevator, in a shopping mall or in Central Park, a license fee has been paid to ASCAP for the right to play that music. We survey those performances and pay the writers and publishers for them.
Correct me if I’m wrong, but there are still people whose jobs it is at ASCAP to wander in and out of different public or retail places and make sure that licenses are in place or that music is not being played or it’s royalty free. Is that right?
Yeah. It’s our licensing department. It’s a serious undertaking if you can imagine. You walk into any restaurant in Manhattan, and you’re most likely going to see a little ASCAP sticker in the window saying they’ve paid their licensing fees and can have a live band, a cover band, the radio on, CDs playing. etc. The job of the licensing department is to make sure that happens. If you’re not paying a license fee, you can’t legally play ASCAP music
In films and TV, we receive cue sheets. A cue sheet is a sheet that lists all the music contained within the film or movie in chronological order. It tells us the song title, who wrote it, who published it, how long each piece of music was and how it was used. Was it background, vocals, off-camera, a theme to a show? That’s how we know what’s aired and how to pay it. All the different factors from who aired it, how it’s used, to the duration of the use factor into the amount of money that it generates.
Ball park, how many artists are registered with ASCAP?
We are approaching 400,000 at this point.
Really? I actually expected more.
Yeah. It seems like it would be. But it’s actually grown exponentially in the past few years.
As someone in membership you probably have thousands of artists who know you by name and want your attention, what’s the best way to get the attention of somebody at the membership department? Is it best to meet you in person at an event or cold call or get a referral? What works?
It can all work. You can make contact with anybody at ASCAP by putting a phone call in or showing up and asking to speak with somebody. If you’re an ASCAP member, you’re entitled to all that membership entails, which certainly includes being able to speak with an ASCAP representative. But you can attend one of our events and you’re sure to see one of us there, easily accessible
And announcements of those ASCAP events are through the newsletter or on the website, right?
Yes, exactly- but we are also at a lot of shows that aren’t our showcases, seeing bands and trying to stay current.
Here’s the tough question – ASCAP, BMI, SESAC … why ASCAP in your opinion?
When you join ASCAP, you’re a member. The terms of our contracts are one-year… very artist friendly. At BMI, you’re not a member, you’re an affiliate. You don’t have the same rights that you have at ASCAP. Their contract terms are two years as a writer and five years as a publisher. Therefore, if you want to resign from BMI, and say, join ASCAP, you are able to resign every two years, but you can’t take your songs with until the two-year writer contract and five-year publisher contract coincide, which is every ten years! Imagine that! At SESAC, their terms are three years.
From either your position at ASCAP or your years of being on the road, do you have any advice you could give that you wish someone had told you when you were just starting out – lessons you had to learn or seen learned the hard way?
I see the same mistakes over and over again. Generally, don’t get a manager until you actually need a manager. From my perspective, you don’t really need a manager until just before you have a label. That way the manager can still commission the deal, which you want, because the last thing you want is a manager who works for no pay. Because trust me, that won’t continue as a positive arrangement for very long. I always see people get managers way too early, and they’re usually really terrible managers or newbie managers who can easily turn people off or even burn bridges. I would also say, just do the very basic research on publishing and songwriting and performing rights. The way the industry is now, it’s moved to a world where the ASCAPs of the world are one of the few ways you’re going to be able to earn a living anymore. So knowing what that means is important. I highly recommend the book Making Music Make Money: An Insider’s Guide to Becoming Your Own Music Publisher by Eric Beall.
Learn more about ASCAP
Neeta Ragoowansi is the Director of Artist-Label Relations for SoundExchange. She is also an attorney, a keyboard player and the singer for an eight piece group called the Oxymorons. Her experience as a musician, as the Assistant General Counsel for the Kennedy Center and The National Symphony Orchestra and as an advocate in the music industry were what landed her in her current position. She explains her job educating and helping to find the thousands of artists and labels that are owed SoundExchange royalties
Tell me how SoundExchange differs from the other Performance Rights Organizations (PROs) like ASCAP, BMI and SESAC.
We are a performance rights organization, but we represent the performers and recording artists- that is, we protect the performers who go into the studio and put down the sounds- instruments or voice – onto a track. ASCAP, BMI and SESAC collect for songwriters and composer of the underlying musical work – the notes and lyrics on paper. So if you’re a songwriter or composer, sign-up with one of those. If you’re a recording artist, and put your talent down in a sound recording, sign up with SoundExchange. You can be a member of one of the three songwriter PROs AND SoundExchange – and you probably should be. It’s in no way a conflict. PROs help to collect and distribute the royalties that accrue when others publicly perform your copyrighted work. When you talk about music, you have two copyrights involved: the songwriter’s right to the music and lyrics on the page, and the musician or artist’s right to the sounds on a track – they may be the same person, but there are still two different rights. SoundExchange is the PRO that administrates the rights that come under the public performance of the sound recording. 50% of the royalty on each track goes to the performers or artists on the sound recording – 45% to the main recording artist and 5% to the session musicians and back up singers on that track, through RARoyalties.org. The other 50% of the royalties on each track goes to the owner of the master recording, which might be a record label or an independent musician.
Does SoundExchange cover all different kinds of mediums, or are there specific types of mediums that you cover?
SoundExchange collects royalties when sound recordings are used on satellite radio (like SIRIUS-XM) , Internet radio (like Pandora), on cable TV music channels, and certain other streaming services. SoundExchange DOES NOT collect for digital downloads (like iTunes or “podcasting”) or “on-demand” and “interactive” services like YouTube or MySpace, where a user can select and immediately play the song she wants to hear. SoundExchange also does not collect for the streaming of any audiovisual work, including music videos. We also don’t collect for sound recordings used on radio, because radio doesn’t pay artists for using their work – yet.
SoundExchange is hoping that will change, and we’ve teamed up with lots of organizations and artist advocates to support a bill in Congress called the Performance Rights Act (PRA). If it passes, PRA would mean that for the first time, corporate radio would have to start paying a royalty to artists and labels for the use of their sound recordings. Radio makes almost fifteen billion dollars a year in ad revenue from music stations alone, and they don’t share any of it with the artists who create the music. They do pay composers and publishers via ASCAP, BMI and SESAC; but because of a loophole in copyright law, the creators and copyright owners of the sound recordings are not getting paid. In the rest of the world, almost every single country pays their artists this way – the US’s only company on this is China, Rwanda, North Korea, Iran. That’s not good company to be in which it comes to protecting rights. Using an artist’s work to make money and not paying them a royalty is just wrong. We’re trying to get that loophole changed, so artists and rights owners can be paid fairly.
There was no SoundExchange until ten years ago?
SoundExchange began in 2000, and became an independent nonprofit in 2003. Legislation passed in 1995 (The Digital Performance Right in Sound Recordings Act of 1995) and in 1998 (The Digital Millennium Copyright Act) finally recognized the rights of artists and copyright holders to be compensated when others use their work, and the laws set up a stream of royalties for the recording artist and sound recording copyright owner. After some negotiations to decide what those royalties would look like, SoundExchange started collecting, and made its first distribution in 2001. We distributed $4 million that year. In 2009 we distributed $147 million.
There’s a ton of money that’s unclaimed by artists. Can you estimate how much outstanding money is owed?
There are millions of dollars owed to thousands of recording artists who’ve not yet registered with SoundExchange. Because SoundExchange and the performance right are relatively young, a lot of artists don’t know they’re owed this money, or they just haven’t signed the forms. Remember, unlike ASCAP, BMI, and SESAC, who collect only for their members, SoundExchange collects royalties for everyone who’s getting played, whether they’ve ever heard of us or not. Then we have to try to track down those artists and rights holders and get them to register so we know where to send the check. We regularly partner with industry associations, services and companies like ReverbNation, CD Baby, iLike, Sonicbids, The Blues Foundation, The Folk Alliance, The Vocal Group Hall of Fame and lots of others, to help get the word out about this right and these royalties. We match their member lists against the lists of artists we have money for, and then have them send an e-mail or a letter to that unclaimed recording artist and/or indie record label. In 2009 alone, we notified more than 15,000 artists, owed more than $9 million in all. If you think there’s even a chance you might be owed money, register at SoundExchange.com. It’s always 100% free.
So, a lot of your job right now is just an awareness campaign.
Yes, it’s a huge awareness and marketing campaign and it’s mostly about educating – outreach and education. Through conference panel, doing things exactly like this interview, talking one-on-one to artists at festivals, and making sure we get the word out every way we can. Maybe finally getting paid for their work just sounds too good to be true – sometimes artists think we’re an email scam. We find that even when artists have received emails from trusted sources (like their manager, their booking service, whatever) saying, “Hey, SoundExchange has money for you,” they don’t always believe it or do anything about it. But then they go to CMJ as a showcasing artist, for example, and get an email from CMJ saying we have money for them, and see our trade booth and see a poster with their name on it, that they finally remember the name SoundExchange and realize that this really means money for them. Sometimes it takes 3 and 4 and 5 contacts before people recognize that SoundExchange is legit, and sometimes a few more before they fill out the forms. People are just naturally skeptical, and this sounds like ‘free money,’ so it must be too good to be true. But it’s not ‘free money’ – it’s better – it’s money they’ve already earned. All an artist has to do is register with SoundExchange, and they can get paid when they get played.
At what point would you sign up for SoundExchange as an artist?
When you go into the studio to record and you come out with a recording that you release. As soon as you start sending out your recordings, you should sign up with SoundExchange. But I tell artists, anyone that’s even planning to do a recording, should go ahead and register. It usually only takes 10 to 20 minutes, and it’s free. We just need to know you exist, where you are and where we would properly send a check. In terms of recording artists, anyone that is a member of a band or featured artist in general should register with SoundExchange. There are certain housekeeping things that a musician needs to do and registering with SoundExchange is definitely one of them!
Is there any pre-requisite to sign up?
NR: There is no prerequisite other than that you are a performer on a commercially released sound recording and/or you’re the owner of the sound recording copyright (sessions musicians and back up singers on sound recordings are entitled to a royalty as well and they should go to www.raroyalties.org to claim theirs). The copyright in the sound recording is automatic, as soon as the original creative work (like the sounds made on your instrument) is fixed to a tangible medium (a CD, a digital track, MP3). You don’t have to go to the Copyright Office and register in order to claim royalties from SoundExchange.
Music Consultant: Where does this money come from?
At SoundExchange we administer the public performance royalty that derives from the non-interactive, digital transmissions of commercially released sound recordings. So when a streaming service like the ones we talked about before use a track, it generates a small royalty. At the end of the month, those services that use your track total up all the royalties they owe, and give that money to SoundExchange. They are also required to provide us with reports of use (playlists in a sense) so we know what they’ve played, and how to divide up that lump payment. This is very different from what’s happened historically with other performance rights organizations, where they tend to pay out based on sample data – a few weeks a year to represent all of what they play. SoundExchange strives to get what’s called census data – that is, the exact tracks they are playing, every time they play them. That’s the fairest way to pay, and so far, 95% of the royalties SoundExchange distributes have this track-level census data. How much each service pays for a track is determined by the kind of service they are, and how many listeners hear the track, under rules set by the Copyright Royalty Board at the Library of Congress. For the most part, artists get paid more the more people hear their tracks. So if you can get played on more stations, to more people, or even on SIRIUS-XM, or cable TV music channels (not the video channels, but the high-numbered radio-like channels), you’ll get paid more.
Do you have any general advice for artists?
Know all the places you can generate income from, know about all the special payment funds available to you out there, know your licensing rights/copyrights and educate yourself. Knowing licensing is the number one thing that artists can do for themselves. If you’re going to make a living, you have to know the income you can generate from various sources. Once you send a creation out into the world, it generates different streams of revenue – but it’s your responsibility to make sure they lead back to you. So, keep creating, know your licensing, go collect on that licensing and push your stuff out there in areas where you’re going to see income, such as the digital streaming of your music and recordings. And register with SoundExchange, so you can get paid when you get played!
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