The following MBW comes from David Israelite (pictured), the President & CEO of the National Music Publishers’ Association (NMPA). The NMPA is the trade association representing American music publishers and their songwriting partners.
The Covid pandemic has changed a lot about how songwriters write songs. Songwriting is often a collaborative effort, and many songwriters are adapting by learning to write in different ways.
A lot more may change this year. The United States Department of Justice is considering important issues right now that could improve how songwriters make a living, and the question is whether the music industry can adapt to ensure that songs receive their proper value from digital music services. After all, without songs, these services wouldn’t exist.
This affects all songwriters. While most people get into music because they feel an artistic calling, there is a business side that creators must understand in order to advocate for changes that will help them make a living from their gifts.
“ASCAP and BMI are incredibly restricted – and their writer members pay the price.”
Today’s songwriters face an incredibly challenging industry. For an artist, a hit song can turn into a tour, an endorsement deal and countless opportunities. But for those who are strictly working songwriters, their revenue streams are much more limited and increasingly reliant on how they are paid by streaming services. The people behind the music are paid so much less than they deserve not because their contributions are losing value, but rather because of how the antiquated rules of how the federal government decides that value, instead of the marketplace.
The majority of songwriter income comes through the licensing of public performance rights, which most songwriters collect through either ASCAP or BMI – and these Performing Rights Organizations (PROs) provide enormous benefits. While today there are more than just two PROs, only ASCAP and BMI are incredibly restricted – and their writer members pay the price because the price of the songs in ASCAP and BMI’s catalogs are not valued in a fair way.
These restrictions are due to a decision in 1941 about how ASCAP and BMI should operate. A lot has changed since then.
Unlike other forms of property – like books and artwork – songwriter’s work isn’t bought and sold in a free market. Instead of streaming companies negotiating with music publishers for the value of songs, they go to ASCAP or BMI for millions of works, and if a price cannot be agreed upon, a federal judge in New York decides the rate. This flawed and arbitrary process has resulted in royalties that are undoubtedly lower than what songs are worth.
Because there are millions of songs that streaming services want to license, there is a need for efficiency, but that efficiency should not come at the expense of the value of music. There is a way to isolate how songs are licensed to the relatively few dominant streaming services – operated by giant tech companies – while still enjoying the efficiency of licensing songs in bulk to places like restaurants, venues and bars.
Amazon, Google, Apple, Spotify, and XM/Sirius, owner of Pandora [are] all being advantaged in their negotiations with songwriters due to antiquated regulations.”
Today’s digital licensees are valued in the billions and trillions of dollars. The vast majority of music streamed in the U.S. is consumed via one of five very large companies — Amazon, Google, Apple, Spotify, and XM/Sirius which owns Pandora. These companies both individually and collectively dwarf not only every individual music publisher, but the music publishing and songwriting industries as a whole.
In fact, on Wednesday the House of Representatives Judiciary Committee will hold a hearing with the CEOs of Amazon, Google, Apple, and Facebook to address antitrust concerns related to their dominance in the digital market. What do all of those giant technology companies have in common? They are all being advantaged in their negotiations with songwriters due to these antiquated regulations.
These companies are nothing like the fledgling broadcast industry of the 1940s, and they don’t resemble today’s general licensees, yet they benefit from the same protections. An unintended consequence of these decades-old rules is that songwriters are essentially subsidizing massive streaming companies. This must be fixed.
Allowing songwriters to negotiate their digital streaming rights directly with digital services makes practical sense, and is a narrow shift that will have a massive impact on songwriters. These rights are extremely valuable as streaming services pull in millions of subscribers, and are valued in the billions. Yet because of these Justice Department restrictions, songwriters aren’t seeing the profits from these platforms’ popularity.
Artists and record labels negotiate directly with streaming companies, as they should. Doesn’t it make sense for music publishers, who regularly represent their songwriter partners in deals, to be the ones negotiating with the services who want to use their work? The Justice Department should let publishers do their jobs.
“We must fix this system which was put into effect in 1941, before streaming was conceivable.”
You read a lot of headlines about how streaming is helping music recover since piracy devastated the business. But in many ways, under the current system, it is simultaneously saving the record industry while slowly sinking the songwriting industry because of the fact that songwriters and publishers can’t negotiate the fair value of songs with streaming services.
Songwriters want to keep creating. They want streaming to grow and to benefit from that growth. Allowing them to do so requires a change that is simple, narrow, and fair.
The Justice Department is supposed to determine what is just, and that is undoubtedly giving songwriters the right to maximize the value of what they create, because it is what around which the whole industry is built.
We must fix this system which was put into effect in 1941, before streaming was conceivable. While the world is dealing with so many pressing issues, music continues to be a comfort, an inspiration and a career for many. Attention must be paid to this now, or tomorrow’s creators will never have a chance.
Music Business Worldwide