fraud

On July 19, Songtrust sent an email — part update, part apology — to the 350,000 songwriters who use the publishing administration company to collect their songwriting royalties. Songtrust’s message pointed to friction in this process: “slower registration timelines” for songs, which in turn would slow the flow of income, plus a “slower response rate” for writers who believed they were missing money or had other questions. 

The slow-down had a few causes, wrote Downtown Music Publishing president Emily Stephenson, including “new leadership,” a new “organizational structure,” and the implementation of Know Your Customer-style registration and payment processes to combat “increased fraud in the music industry.” (Downtown Music Holdings owns Songtrust.) “We recognize that these changes have caused frustration,” she added.

Four former Songtrust employees believe these delays have their roots in plans the company put into motion before this year. The ex-employees describe Songtrust as a “pioneering” organization that did something no company managed to do before: Offer professional-level publishing administration services to small, independent songwriters. “Before Songtrust,” Stephenson tells Billboard, “there was really no way for them to collect mechanical royalties.” 

The global publishing system was developed over decades to serve the needs of several thousand writers, not several hundred thousand. “The problem with music publishing,” according to one former employee, “is that scaling is nearly impossible because it’s kind of like an archaic, dark art.”

So as music creation exploded and Songtrust was “trying to sign so many people” starting at the end of 2019 and into 2020, a second former employee explains, “the technology couldn’t keep up with the volume.” 

At times, former employees say, that volume — of both new songwriters and new compositions — simply grew faster than the company could handle. (Songtrust is almost certainly not the only organization that has had trouble keeping up with the surge in music creation.) “Making the promise to help the little guys and then not following through on the best technology and best employees and resources — that’s where they f—ed up,” adds a third former employee. “That’s just not a feasible business model.” (Half a dozen former employees spoke in total, all on the condition of anonymity for fear of alienating former colleagues.)

Downtown Music executives disagree. “As the music industry grew, Songtrust grew, and we’re evolving to better serve independent songwriters,” Stephenson says. In a post-interview email, Songtrust executives added that despite “temporary delays in responding to writer inquiries,” the company “has continued to process and pay out royalties accurately and on time to all clients who have submitted accurate tax and payment information.” Multiple songwriters who spoke to Billboard about payment difficulties would take issue with that statement.  

“All Songwriters Deserve Publishing Administration”

Traditional music publishing companies focus on just a slice of the world’s songwriters — the top earners. One publishing administration executive says it’s not even worth it for his organization to work with “the bottom 80%” of clients because the cost of doing so would exceed the revenue collected. 

Songtrust launched in 2011 with the belief, as Stephenson puts it, “that all songwriters deserve a publishing administration solution.” The company has paid out more than $130 million in royalties so far, according to Downtown Music Holdings president Pieter van Rijn, and 2023 payouts are on pace for “another record year.”

To collect publishing royalties, most songwriters either sign with a publisher or a publishing administrator. Otherwise, it’s possible to register songs with both a performance rights organization (PRO) and a mechanical rights organization, but Songtrust facilitates what would otherwise be a complex, time-consuming process for a one-time fee of $100 per writer, plus 15% of the royalties it collects. 

In many cases, that may not amount to much; although some independent songwriters earn enough publishing income to live on, many earn next to nothing. And while there may be less money in this part of the market, the administrative work can be just as complicated, if not moreso. “It is a laborious task to onboard and disseminate music publishing information, particularly with DIY artists who are disadvantaged because they don’t have the knowledge base to understand the questions you’re even asking,” says Jeff Price, founder of another publishing administration company, Word Collections.

So it’s not surprising that former Songtrust employees say writers often make mistakes when registering their songs — claiming 100% ownership of a co-write, for example. Also, since it was relatively easy to sign up for Songtrust’s services, “if someone wants to register fraudulent things, they have the tools,” explains one former employee.

Fraud is a concern across the publishing sector. “If you do not register your songs with a PRO, someone else will within a few months, almost guaranteed,” according to one label founder who also oversees a publishing operation for the acts he signs. “Artists don’t know what publishing is to begin with, and there’s a lot of confusion and disinformation, [creating] a perfect recipe for fraud. This problem is only getting worse, especially for international artists finding success for the first time in the global marketplace.”

In the case of Songtrust, a former employee says that fraud on the platform — such as users registering songs they didn’t write — “creates distrust” with some of the societies charged with collecting royalties around the world. “That was happening to a big extent,” the former employee continues. 

There were also times, former Songtrusters say, that the societies simply didn’t have the technology to keep up with the number of songwriters it was representing — and that some of the societies focused their resources on the big writers and publishers who generate more revenue. “At scale, issues of bandwidth and efficiency are always a challenge when you have software-based rights administration,” a veteran rights administration executive says. 

Songtrust is in “daily communication with our partners at the collecting societies,” Stephenson says. “We maintain a very positive relationship with them and we’re constantly looking with them to improve the way we can support songwriters.”

In a post-interview email, Songtrust executives added that “the fact that [publishing administration] is a complex business does not change our belief that it is a worthwhile, meaningful service” for the long tail of songwriters. 

“There Are Always Issues”

At the end of 2019 and the start of 2020, former employees say Songtrust amped up its efforts to sign more songwriters, which taxed the company’s internal systems. (Around the same time, Downtown Music also went on a buying spree, acquiring the distributor CD Baby in March 2019 and the tech and services company Fuga in January 2020.) 

One former employee says that the company “really put their money into marketing.” The mindset, according to this person, was “let’s make us as shiny and inviting as possible on the front end, but we’re not going to fix any of the backend technology.” 

In another former employee’s view, Songtrust was “not prioritizing actually doing the job that we’re supposed to be doing” — registering and paying songwriters. A third former employee says simply, “if you invite too many people to your house, it’s gonna fall apart.”

Stephenson rejects the idea that the company was too focused on growth. Downtown Music executives also pushed back on former employees’ accounts of technical troubles. “Technology was not the issue” for Songtrust, van Rijn contends. “Based on the input of societies, we did improve our KYC [know your customer] and registration and data processes,” he notes. “Part of that is technical. Part of that is operations.” Van Rijn also points out that the $130 million Songtrust has paid out to date is money that “otherwise may not have found its way to the songwriter community.” 

The fact that small, independent songwriters have the means to collect royalties is fairly new; the publishing business wasn’t built for a world in which anyone can write a song on an app, upload it right away, and immediately start earning money around the world. Some amount of friction is inevitable when so many songwriters need to be integrated into the intricate, infamously opaque global music publishing system.

“When you have outcomes that you don’t like as a customer, or even as a partner, it’s easy to talk about incompetence,” says the veteran rights administration executive. “The reality is that these are the outcomes based on the way rights administration happens in the world.”

Some of the challenges faced by Songtrust are “endemic” in publishing, says Price, the Word Collections founder. The administration executive agrees: “Whether you’re a big company or a small one, there are always issues. It’s just that you’re going to get way more issues the bigger you are.”