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Ticketing for live events is not only under the Justice Department’s microscope but front and center for music fans across the country. This focus places our industry at a crossroads. We can either stay with the status quo, in which events are egregiously expensive and funds go to resellers rather than artists and venues, or we can use this moment to support reform that benefits the broader live event ecosystem.
For too long, fans, artists, and venues have been caught in an unchecked marketplace riddled with speculative ticketing, deceptive practices and exorbitant price gouging.
But all is not lost. We have an opportunity to establish guardrails that protect fans, create trust and promote a healthy live event industry.
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The Fans First Act is the right bill, at the right time. If passed, this important bipartisan legislation will bring much-needed enforcement and transparency, prohibit deceptive websites, disclose resellers, and ban speculative ticketing. That is why we call on Congress to pass this important legislation and move it to the White House for signature.
The Problem
To understand why we need the Fans First Act requires a full understanding of the problem and how we got here.
Fans find themselves in a perfect storm. Amid inflation and an unpredictable economy, they face bots, brokers and skyrocketing prices for live experiences (concert ticket prices have increased by 35% since 2019), according to Pollstar. While fans are eager to see their favorite acts and artists live, too many cannot.
Music festivals are a prime example of live events looking to adapt to the current economic environment of increased costs for fans (tickets, travel/lodging and food) and rising production fees. Unfortunately for fans, this means canceled events. This year, manyfestivals have been canceled as organizers look to consolidate and adjust to rising fees and economic constraints.
Dig deeper into the fan experience and we find that many fans’ first engagement with live entertainment is through a reseller on a secondary ticketing site, sometimes posing as the actual venue.
Fans are often asked to cough up well over $500 for a decent ticket on the secondary market, and that’s for real tickets. A buyer has no sense of clarity about the primary ticket seller. For example, Seattle fan Kerry Dellisanti had her own dream crushed when her $895 nosebleed ticket for a Taylor Swift concert turned out to be speculative (fake). Her friends ended up enjoying the show without her.
Fans across genres and localities are frequently deceived by fake tickets. Many book non-refundable travel and hotels for concerts they think they have a real ticket for, but they’ve been scammed.
Everyone is losing in this environment.
Unscrupulous brokers and illegal bots have been increasingly detrimental to consumers. As they resell tickets at the highest possible price, it’s having a direct impact on the full ecosystem of live events, harming fans, artists and venues alike.
Sky-high profit margins for the secondary ticket seller means fans are seeing fewer shows and spending less on venue concessions and merchandise that sustain organizers and artists. When fans show up at a venue with a fake or overpriced ticket, the predatory seller who defrauded them is nowhere to be found. It is the venue owners, artists and small businesses who are left to pick up the pieces of this unchecked ticketing ecosystem.
The Solution
Our industry is at a crossroads. Cater to the resellers and brokers who have no investment in the concerts? Or swing the power of the live performance industry back into the hands of fans, artists and venues?
We call on Congress to pass the Fans First Act. Fans, artists and venues are the lifeblood of the live entertainment industry and their experience should always be at the forefront. The time is now to give the industry back to the people who make it tick and get back to what makes live events and music so important — and what fuels local economies across the country.
The connection. The experience.
Julia Hartz is co-founder, CEO and executive board chair of Eventbrite.
Stephen Parker is executive director of the National Independent Venue Association (NIVA).
A time-tested revenue model in the theater and concert world is to price the front seats highest, and sell them early to the act’s dedicated followers, then fill out the house with cheap seats to optimize cash flow and lower risk. Recorded music does the opposite: when an album drops, an artist’s music is immediately available on all streaming services to every subscriber, leaving no room for passionate fans to self-select into pricier options.
In gaming, at least since the days of Minecraft, superfans have been given early access to titles prior to their publication, generating revenue, feedback and word of mouth.
Movie studios use a similar model, charging for early access to cinema screenings of major films roughly 45 days before they are widely available to stream (typically first as a purchase, then as a rental). Apple used this windowed approach seeking to maximize revenue with Killers of the Flower Moon and Napoleon, as did Amazon Prime with Air.
The record industry seems to have missed the memo. Other than an early misfire trying out streaming exclusives on the artist-owned Tidal service, it doesn’t use a windowed approach. This is a huge missed opportunity.
One way for recorded music to open a more lucrative, superfan-based future is to turn to one of the icons of its past: vinyl records. Rapper Travis Scott figured this out, pressing 500,000 double-vinyl records of his Utopia album and making it available the same day he dropped it on streaming services. Scott has now sold the majority of them at $50 a pop, taking the risk, and reaping the reward. What if he had released those analog vinyl records before the album was launched digitally on streaming? If he had sold half the stock before the digital release, he would have grossed $12.5 million, perhaps banking $10 million of that as profit, all while supercharging his marketing machine as all those superfans paraded their prized product to their friends.
A limited-edition package of Scott’s Utopia on red vinyl.
Courtesy of Cactus Jack Records
Like the boy who cried wolf, we’ve been told again and again that the resurgence in vinyl is a blip, not a trend. Yet for 18 straight years it has continued to surpass expectations. For the past three years, it’s made up over a tenth of all label revenues from the consumer and this year will see labels reap over a billion vinyl dollars, with no slowdown in sight.
Analog is surging in book publishing, too, as printed books are now outselling their digital counterparts 4-to-1 and bookstores are ascending. Not long ago that would have seemed inconceivable.
Now let’s look at where the vinyl meets the road: the math. While streaming is a music industry success story, it’s also a commoditization story – selling more and more for less and less. Back in 2001, Rhapsody charged $9.99 to access 15,000 catalog songs; today Spotify et al charge roughly the same for 120 million songs. Add the impact of family plan, where typically three people share a $15 per month account and the value of an account user has fallen by 10% and that’s before you adjust for inflation. Vinyl is bucking this trend. Since 2016, retail prices for the platters that matter have risen 30%.
Will Page
Anjelica Bette Fellini
For a streamer to provide a record label the same amount of value from an album as a vinyl buyer, a customer would need to press play over 5,000 times — or stream for almost two weeks straight without sleep. Let’s be crystal clear on what this comparison really means: consumers are paying more for the same with vinyl but paying less to access more with streaming. So if you want to hedge your intellectual property bets, you’d better put some chips on black and spin the wheel at 33 1⁄3.
Management guru Peter Drucker once quipped that “the customer rarely buys what the company thinks it’s selling him.” In the case of vinyl, over half of buyers don’t even own a record player. So they’re not buying the music — they’re buying merchandise that gives them a sense of identity and connection to the artist. With streaming, you merely press your thumb on a piece of glass; owning, holding and displaying a curated vinyl record with unique artwork has much deeper meaning to a fan.
There are similar conundrums concerning vinyl’s relationship with the creator. Remember that streaming unbundled the album – so you could have nine filler songs on a killer Number One record yet not get paid for those songs. The book Pivot showed that Gotye’s 2011 debut Making Mirrors was the most streamed album of the year, but it was all down to one hit: Somebody I Used to Know. Strip that hit out and this record falls out of the Top 100.
Vinyl captures more in the unit value — no fan can realistically give your album $30 via streaming — and all songs receive the same payout. Saturday Night Fever soundtrack is arguably the greatest vinyl success story in history; yet the obscure Ralph MacDonald track “Calypso Breakdown” from that album earned the same as the Bee Gees signature track “Staying Alive” for every album sold. Investors in music catalogs should take note: supporting more vinyl releases stands to monetize the vast majority of songs currently owned that make almost no money from streaming.
Vinyl is not without its challenges. Measuring the size of its remarkable continued success story is just one. Recent changes by Luminate, the go-to source for industry data, wiped off 40% of the measured volume overnight, by flipping from extrapolating the size of the market to counting only those who opt in. That’s getting fixed, and will assuage the people it’s upset, but the point remains, there’s way more vinyl being purchased than Luminate measures.
Fred Goldring
Natasha Fradkin
There are other challenges, too. If counting bricks & mortar retail is hard, what about tracking online physical retail that’s based anywhere yet serves everywhere? London-based Juno is a corner kick from Camden’s famous market and serves not just the UK and US, but Brazil and China in equal measure. Add the burgeoning second-hand platforms like Discogs and you get a sense that the true size of the market is a lot bigger than we give it credit for.
This brings us back to the potential of vinyl’s first mover advantage. Until the latter part of 2023, vinyl faced an enormous manufacturing backlog and demand far exceeded supply for even the biggest artists. Many vinyl albums were released many months after their initial streaming release.
A rise of small vinyl manufacturing plants have significantly decreased lag time and backlog. Travis Scott used the Poland-based team at Pressing Business to manufacture 500,000 double-disc, multi-cover, multi-colored Utopia albums in just five weeks, allowing for the highest vinyl debut for a hip-hop artist since records began in 1991. Combined with streaming, the album stayed at #1 for five weeks.
The record industry should start selling and delivering vinyl as an early access opportunity, not an afterthought. Pre-stream vinyl releases can create scarcity, exclusivity and therefore additional revenue from superfans who will jump at the chance to be the first to hear the music or own a limited edition version. Artists will benefit creatively as well, as superfans are the ones most likely to truly appreciate the album as a body of work, curated as the artist intended (and, many would argue, with better sound). Once music is thrown into the ocean of streaming, it often gets lost at sea, and all stakeholders lose something valuable. It’s time for the record industry to embrace the vinyl first mover advantage that is hiding in plain sight.
Will Page is the author of Pivot and former chief economist of Spotify, and Fred Goldring is an Entrepreneur, Entertainment Lawyer and co-founder of Pressing Business.
In the music industry, I’ve realized how important it is to open doors for others. Being a Latin woman in this industry means running into quite a few locked doors. These barriers aren’t just about missing opportunities; they often come down to gender or where we come from, making it feel like we’re all scrambling for a key that’s hard to find.
After nearly 15 years in this field, we’ve been lucky enough to enter rooms we never dreamed possible. Having secured a seat at the table and pushed open doors that were once closed to us, we feel a deep responsibility to keep those doors ajar for others. This journey has highlighted the unique hurdles women face in the music industry and has motivated me to ensure these doors stay open, particularly for other women aiming to make their mark and overcome the challenges we once faced.
In the MIDIA Women in Music 2022 survey, when respondents were asked what would encourage women and other “non-male gender identities” to grow in the music industry, mentoring and coaching opportunities were overwhelmingly the top response. It’s a resource I wish I had when I was coming up through the business, as I often faced a lack of access to other women, and particularly fellow Latinas, who could help guide me throughout my career. I was fortunate to have lots of great colleagues who inspired me but I was always craving that deeper connection and a safe space to have open conversations with women in this industry who have stood where I did or could offer fresh perspectives.
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As a foundational team member at Symphonic Distribution, I’ve navigated the challenges of expanding a business within a small music market. As a Latina, these experiences have equipped me with the insight to provide the mentorship opportunities I always wished were available to me, to others. With the launch of the Women Empowered+ Program at Symphonic, we’ve created a testament to the belief that mentorship can change careers and lives, particularly for women.
Since beginning the program in 2022, we have connected 165 mentors from companies across the music industry with 340 mentees spanning the U.S., Mexico, Latin America, South America, Europe and Africa. This initiative reflects our commitment to dismantling the barriers that disproportionately affect women in music, providing them with the guidance, support, and opportunities they have historically been denied.
As we prepared to launch our third year of the program this March during Women’s History Month, I began reflecting on what we have been doing well and what we could do better going forward — not just at Symphonic but in the industry in general. With this perspective, I’d like to share some suggestions and insights aimed at creating effective mentorship programs for women and diverse genders in the music industry, for companies committed to making an impact.
Structure Objectives and a Matching Protocol
Define the program’s objectives upfront, ensuring both parties have a mutual understanding of their roles, expectations, timeline and time commitment. Launch the program with a clear framework, pairing mentors and mentees based on complementary interests and career goals. We created a simple Airtable form with all the details we felt were needed to fully understand each of our mentors and mentees.
Resources, Support and Honesty
Provide training and/or resources to prepare participants for effective mentoring relationships. The cornerstone of an effective mentorship is confidentiality, fostering an environment where open and honest conversations can occur, grounded in trust and mutual respect. Maintain a support system for addressing challenges, while allowing flexibility to meet diverse needs and schedules. This ensures the program is both supportive and adaptable to individual circumstances.
Feedback and Community Building
Implement a continuous feedback loop to refine the program and recognize participants’ efforts and achievements through the program through surveys. Foster a community of past and present mentees and mentors to encourage networking, shared learning and ongoing support, enhancing the overall impact and sustainability of the mentorship initiative. This can be done via Facebook Groups, Slack, Whatsapp or any other community-building platforms. We discovered that some of the mentors and mentees can help by being the community manager for these.
By bringing the next generation of female music executives up through your mentoring program, we are in turn training the next generation of mentors who will be able to reach out and continue to help bring people in. Whether mentoring or being mentored, we are all contributing to the common goal of making things better for those who come after us.
As we gear up for another year of fostering connections and growth through the Women Empowered+ Program, I’m reminded of the transformative power when we choose to support and uplift one another. We encourage every company in the music industry to create similar programs to cultivate more diverse talent and hope our experience can be a guide for others to take action and inspire even more women to join our industry. In a world where the music industry’s doors seem heavy and unwelcoming, let us be the force that opens them wider, inviting in the voices of women who have waited for their chance to be heard. Together, we can ensure that the next generation of female talent finds a nurturing space where their goals are encouraged, supported by a community that understands the unique challenges they face and believes in the power of mentorship to change not just careers, but lives.
Janette Berrios is the vp of corporate marketing for Symphonic Distribution, a leading independent music distributor with a global presence. She was included on Billboard‘s prestigious Indie Power Players list in 2022 and 2021 and was honored with the “Wonder Women in Latin Music” award presented by the LAMC and Amazon Music.
In November, I quit my job in generative AI to campaign for creators’ right not to have their work used for AI training without permission. I started Fairly Trained, a non-profit that certifies generative AI companies that obtain a license before training models on copyrighted works.
Mostly, I’ve felt good about this decision — but there have been a few times when I’ve questioned it. Like when a big media company, though keen to defend its own rights, told me it couldn’t find a way to stop using unfairly-trained generative AI in other domains. Or whenever demos from the latest models receive unquestioning praise despite how they’re trained. Or, last week, with the publication of a series of articles about AI music company Suno that I think downplay serious questions about the training data it uses.
Suno is an AI music generation company with impressive text-to-song capabilities. I have nothing against Suno, with one exception: Piecing together various clues, it seems likely that its model is trained on copyrighted work without rights holders’ consent.
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What are these clues? Suno refuses to reveal its training data sources. In an interview with Rolling Stone, one of its investors disclosed that Suno didn’t have deals with the labels “when the company got started” (there is no indication this has changed), that they invested in the company “with the full knowledge that music labels and publishers could sue,” and that the founders’ lack of open hostility to the music industry “doesn’t mean we’re not going to get sued.” And, though I’ve approached the company through two channels about getting certified as Fairly Trained, they’ve so far not taken me up on the offer, in contrast to the 12 other AI music companies we’ve certified for training their platforms fairly.
There is, of course, a chance that Suno licenses its training data, and I genuinely hope I’m wrong. If they correct the record, I’ll be the first to loudly and regularly trumpet the company’s fair training credentials.
But I’d like to see media coverage of companies like Suno give more weight to the question of what training data is being used. This is an existential issue for creators.
Editor’s note: Suno’s founders did not respond to requests for comment from Billboard about their training practices. Sources confirm that the company does not have licensing agreements in place with some of the most prominent music rightsholders, including the three major label groups and the National Music Publishers’ Association.
Limiting discussion of Suno’s training data to the fact that it “decline[s] to reveal details” and not explicitly stating the possibility that Suno uses copyrighted music without permission means that readers may not be aware of the potential for unfair exploitation of musicians’ work by AI music companies. This should factor into our thoughts about which AI music companies to support.
If Suno is training on copyrighted music without permission, this is likely the technological factor that sets it apart from other AI music products. The Rolling Stone article mentions some of the tough technical problems that Suno is solving — having to do with tokens, the sampling rate of audio and more — but these are problems that other companies have solved. In fact, several competitors have models as capable as Suno’s. The reason you don’t see more models like Suno’s being released to the public is that most AI music companies want to ensure training data is licensed before they release their products.
The context here is important. Some of the biggest generative AI companies in the world are using untold numbers of creators’ work without permission in order to train AI models that compete with those creators. There is, understandably, a big public outcry at this large-scale scraping of copyrighted work from the creative community. This has led to a number of lawsuits, which Rolling Stone mentions.
The fact that generative AI competes with human creators is something AI companies prefer not to talk about. But it’s undeniable. People are already listening to music from companies like Suno in place of Spotify, and generative AI listening will inevitably eat into music industry revenues — and therefore human musicians’ income — if training data isn’t licensed.
Generative AI is a powerful technology that will likely bring a number of benefits. But if we support the exploitation of people’s work for training without permission, we implicitly support the unfair destruction of the creative industries. We must instead support companies that take a fairer approach to training data.
And those companies do exist. There are a number — generally startups — taking a fairer approach, refusing to use copyrighted work without consent. They are licensing, or using public domain data, or commissioning data, or all of the above. In short, they are working hard not to train unethically. At Fairly Trained, we have certified 12 of these companies in AI music. If you want to use AI music and you care about creators’ rights, you have options.
There is a chance Suno has licensed its data. I encourage the company to disclose what it’s training its AI model on. Until we know more, I hope anyone looking to use AI music will opt instead to work with companies that we know take a fair approach to using creators’ work.
To put it simply — and to use some details pulled from Suno’s Rolling Stone interview — it doesn’t matter whether you’re a team of musicians, what you profess to think about IP, or how many pictures of famous composers you have on the walls. If you train on copyrighted work without a license, you’re not on the side of musicians. You’re unfairly exploiting their work to build something that competes with them. You’re taking from them to your gain — and their cost.
Ed Newton-Rex is the CEO of Fairly Trained and a composer. He previously founded Jukedeck, one of the first AI music companies, ran product in Europe for TikTok, and was vp of audio at Stability AI.
For as long as there’s been a “music business,” creators have been fighting for their fair share, and modern history is replete with examples of corporations trying to shortchange music makers.
Case-in-point: AM/FM radio, where U.S. broadcasters have been getting away with paying artists $0 from their $15 billion-a-year revenue – despite the fact that music is their main input. Their argument? Because radio is supplying “free promotion” for the musicians, they don’t deserve a cut of the profits. Big broadcasters have been pushing this excuse since the 1930s.
Fast forward almost a century, and we’re now seeing this play out with new technology – most recently with the dispute betweenTikTok and Universal Music Group (UMG). Using the same argument as radio broadcasters, TikTok claims its platform provides “free promotion” to artists, and it’s therefore trying to undercut what they pay for the use of their music. But UMG refused to fall for this ploy and has now pulled all of its content from the platform until TikTok agrees to an appropriate licensing fee. As a result, about one-third of the most popular recordings on TikTok, including music from Taylor Swift, Justin Bieber and Billie Eilish, are now unavailable on the platform. (And this trend may grow if the dispute expands to the publishing side of the business, with indie publishers’ TikTok license due to expire in April.)
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UMG is doing the right thing by standing up for its artists. The label is making the case that creators should be paid fairly for the use of their tracks, in line with other platforms. (It also seeks to protect artists from the harmful effects of unregulated AI and encourages online safety protocols for users, two things all of us should support.) UMG recognizes that the lure of potentially viral promotion is in no way a substitute for fair compensation to hard-working creators.
Long before social media, companies using others’ musical property have sought to avoid paying fairly for that privilege because of this outdated argument around “promotion.” They tried it in the case of piano rolls, silent movie theaters, retail stores, music venues and even peer-to-peer file sharing platforms like Napster and Grokster. In each of those instances, companies tried to underpay (or not pay at all) for the music on the bogus theory that creators should “just accept the promotion, be thankful for whatever they get, and be on their merry way” – regardless of the immense profits they were making from the use of that music.
Thankfully, in the above cases, players in the music industry stood firm and refused to be blinded by the siren song of promotion. But that clearly hasn’t stopped others from trying the same trick.
TikTok is abusing its reputation as the place where new music is discovered. It’s true that many of today’s popular artists (like Lil Nas X, Doja Cat and Lizzo) first found fame on the platform. It’s also where catalog music is finding new life. There is no disputing the important role TikTok plays in the current music ecosystem. But that is an altogether different question than whether or not TikTok should compensate artists fairly.
Instead of using its power to pay artists less, TikTok should take the opposite approach. It should seek to be the digital home for musicians, the place not just where they can be heard, but where they want to be heard and where their value is recognized. This holds true for superstars, middle-class musicians and up-and-comers praying for their first breakout hit. And it starts with paying all of them fairly in recognition of the critical role they provide to the business, whether they’re receiving “promotion” or not.
Going forward, it’s important that key players, like UMG, take a stand against inequity on every platform that seeks to take advantage of creators.*
*SoundExchange is not involved in collecting sound recording royalties from TikTok.
Michael Huppe is president and CEO of SoundExchange.
Most songwriters understand the importance of affiliating with a performing rights organization (PRO), like ASCAP, BMI, GMR or SESAC in the United States — a critical step in making sure they can collect the royalties from public performances of songs they’ve written or cowritten. Even when signed to a publishing deal in which the publisher collects most revenue generated by songwriting, songwriters can still rely on collecting the writer’s share of public performance income from their PRO directly.
Is there an equivalent for artists who are signed to record labels? Enter neighboring rights!
“Neighboring rights” is simply the term used to refer to the public performance rights associated with a sound recording, which generates public performance royalties for artists and the sound recording copyright owner(s). The term comes from the concept that these rights are related to, or “neighbor,” the performance rights of songwriters. If you have performed on a sound recording (or are the owner or licensee of sound recording copyrights), you are likely eligible to receive “neighboring rights” royalties from the performance/broadcast of your recording around the world. This is where SoundExchange enters the conversation, but more on that below.
Here, we will detail what neighboring rights are and how artists can maximize their royalties collections both domestically and abroad to make sure they aren’t missing any money they are owed.
Music Copyright Primer
A short primer on music copyrights may be helpful before we dive into neighboring rights. Remember that any given musical work is comprised of two separate but equal components (each part receiving its own copyright): (i) the musical composition (i.e., the music and lyrics) and (ii) the sound recording of a musical composition. With neighboring rights, we are only looking at the recordings — more specifically, the contributions of the artists who performed, as well as the owners of the recordings.
Once a sound recording is created, the featured performers and the owner (or eventual licensee) of that sound recording are entitled, by laws in various countries around the world, to receive public performance royalties when the recording is publicly performed or broadcast. These are neighboring rights royalties.
While the U.S. does not recognize the full suite of neighboring rights in other countries (more on that below), there is a limited performance right in sound recordings that was established in the U.S. by the 1998 Digital Millennium Copyright Act. That limited neighboring right entitles performers and sound recording owners/licensors to neighboring rights royalties when their sound recordings are publicly performed via “noninteractive digital streams” (e.g., Pandora, SiriusXM and others where the listener doesn’t choose the order of recordings played).
What Are Neighboring Rights?
The term “neighboring rights” is one that confuses musicians and their representatives alike, but as stated above, it simply refers to the public performance rights that accompany a copyright for a sound recording. For the beneficiaries of neighboring rights (artists who perform on sound recordings and the owners of the sound recording copyrights), royalties are generated when a sound recording is publicly performed or broadcast (i.e., not sold) via terrestrial radio (e.g., an FM station), web radio (e.g., SiriusXM), television, digital streaming platforms, and public venues like restaurants and clubs.
Neighboring rights are derived from the 1961 Rome Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organizations, where various countries negotiated how to compensate performers for exploitation of their sound recordings that they did not directly agree to. The Rome Convention provided that signatory countries (excluding the U.S., which is not a party to the Rome Convention) must establish their own rules and regulations governing the performance of sound recordings, including royalty rates, the types of uses that qualify and the transferability of performance rights. As a result, the rules and regulations surrounding neighboring rights vary from country to country because they are determined by local statutes.
However, most countries that recognize neighboring rights (if not all of them) require a royalty to be paid to both the featured performer and the owner of the copyright each time that sound recording is publicly performed or broadcast. Similar to how public performance royalties for musical compositions are split into the separate “writer’s share” and “publisher’s share,” in practice, the total pot of neighboring royalties is split 50-50 between the featured performer (and the non-featured performers), on one hand, and the rightsholder, on the other hand, with these halves being the so-called “featured performer’s share” and “label’s share” of neighboring rights royalties. In this way, neighboring rights complement the performance right for songwriters.
Under U.S. law, only certain performances of a sound recording via what are called “non-interactive digital streaming services” generate these neighboring rights royalties. In other words, the performance of a sound recording in a bar or restaurant in the U.S. does not generate the same royalties that a performance of that sound recording in certain foreign countries would, but, featured performers on sound recordings or a sound recording rightsholders in the U.S. may still be entitled to collect neighboring rights royalties from performances abroad.
What About SoundExchange?
As mentioned above, the U.S. only provides an exclusive right to publicly perform sound recordings via noninteractive digital streams, meaning that not all digital streams are equal. The key difference is whether a stream is interactive or noninteractive. For example, a stream of a sound recording on a platform like Pandora is noninteractive because the user does not get to choose much beyond the radio station that they listen to. However, streaming a sound recording on a platform like Apple Music is interactive because the user can choose how, when and how long to listen to that given sound recording. Therefore, a sound recording streamed on Pandora can earn digital performance royalties in the U.S., whereas a sound recording streamed on Spotify cannot. (Note: Spotify pays all rightsholders a license fee. It just isn’t obligated to also obtain a digital performance license from SoundExchange.)
SoundExchange is the only entity authorized by U.S. Law to administer, collect and distribute sound recording performance royalties. This means that if a platform like Pandora wants to obtain the rights to digitally stream sound recordings in the states, which would require the payment by Pandora of neighboring rights royalties to the applicable artists and sound recording owners, it has to go to SoundExchange for a license. Those license fees will make up the neighboring rights royalties generated in the U.S. and are payable by SoundExchange to the featured (and non-featured) artists and sound recording owners.
How Do I Collect Neighboring Rights Royalties?
Now that you know what they are, how do you actually collect these monies?
There are a few ways that featured performers and/or rightsholder in the United States can collect neighboring rights royalties abroad.
SoundExchange International Mandate. SoundExchange has collection agreements with its counterpart organizations abroad that allow it to collect neighboring rights royalties outside of the U.S. All the artist or rightsholder needs to do is register as a member and opt into the international mandate. This is the easiest and quickest option, and an added benefit is that SoundExchange pays out monthly.
Neighboring Rights Administration Agreements. There are several companies that specialize in neighboring rights administration and collection (e.g., Premier, Downtown) with which an artist or rightsholder can enter into a neighboring rights administration agreement. The artist or rightsholder authorizes the administrator to collect royalties on their behalf, and then it affiliates the artist or rightsholder with each society worldwide and collects neighboring rights royalties directly from all societies in exchange for an administration fee that gets deducted before the administrator pays out. Typically, neighboring rights administrators account quarterly or semiannually.
Affiliating Directly Abroad. Another option is for the artist or rightsholder to affiliate directly with the various neighboring rights societies in each territory abroad and authorize those societies to collect on their behalf in the applicable territory. Alternatively, in a manner akin to the SoundExchange international mandate, an artist or rightsholder could affiliate with one society in one territory and have that society collect worldwide. With either of these options, there would be no (or a small) administration fee, but the process for the former option entails a lot of work.
W. Joseph Anderson is a partner and Suna Izgi and Alex Spring are associates in Manatt, Phelps & Phillips, LLP’s Los Angeles office. Manatt is a multidisciplinary, integrated national professional services firm with more than 60 years of experience in the entertainment industry, representing a broad spectrum of creators and companies across music, film and TV, games, sports, and more.
Throughout history, music has embraced constructive change and innovation. And we will do so again as we confront the opportunities and risks of artificial intelligence.
Done right, AI should offer avenues for new growth and artistic accomplishment. When creators’ rights are respected, innovation thrives.
Already, music companies have unveiled compelling projects that use AI technologies in groundbreaking ways — with full consent and participation of the artists and rights holders involved. Working together with responsible AI companies, music companies are finding new ways to enhance production and marketing, gain new understandings from data and research, and improve wellness and health. They’ve used it to help identify new audiences for artists and pioneer new ways to celebrate iconic catalogs and performers. This is just the beginning of a new era of possibilities.
But many AI developers are resisting collaborative efforts by the creative sector to develop a responsible policy framework for AI, even though the elements of such a framework are straightforward and common-sense. In short, AI companies must honor:
Authorization: only use copyrighted music if it is authorized (for example, through a license)
Transparency: keep and disclose adequately detailed records of the content on which they train their systems
Authenticity: prevent deepfakes, voice clones, and similar violations of individuals’ rights in their own voice, image, name likeness and identity.
These foundational, consensus principles are detailed by the Human Artistry Campaign and supported by virtually the entire creative community. They set forth a baseline for responsible development and deployment of AI.
But as if on cue, some of the worst instincts of Big Technology have returned. Some AI developers claim it’s “fair use” to scrape up protected music so it can be copied and repackaged by their models. That’s just wrong.
Put bluntly, that’s digital theft.
In every legitimate market in the world, the use of others’ property requires the owner’s consent and agreed-upon compensation. Together, for example, music and technology have developed a burgeoning streaming market built on the common-sense principle that use of copyrighted creative works requires licensing and consent.
Indeed, the developers’ claim that they can use decades’ worth of iconic and extremely valuable recordings for AI without bothering to ask or pay the rightsholders is so far-fetched that former Stability AI developer Ed Newton-Rex quit his job in November rather than be party to an extreme effort to rip off artists and misappropriate their work, explaining via X:
“Companies worth billions of dollars are, without permission, training generative AI models on creators’ works, which are then being used to create new content that in many cases can compete with the original works. I don’t see how this can be acceptable[.]”
It’s not.
This is why transparency is essential. AI developers must keep accurate records of the copyrighted works used by their models and make them available to rights holders seeking to enforce their rights. We need rules requiring that developers maintain adequately detailed records and share this information — or bear the consequences if they fail to produce it. We were pleased to see that the European Union enshrined this as a core principle in its landmark AI Act.
AI policy must also establish clear rules protecting every performer’s right to their own voice, image, name and likeness — the most fundamental cornerstones of individual identity. AI fakes that mine an artist’s body of work to create artificial replicas and voice clones, fashion phony endorsements, or depict individuals in ways they haven’t consented to represent the worst kind of personal invasion. Congress needs to put an end to wrongful appropriation of the most central components of individual human identity.
These are the challenges of 2024.
We either work to continue a strong and sustainable foundation for music in the era of generative AI that moves both art and technology forward together, or generative AI devolves into just another “move fast and break things” novelty that fails to deliver anything of value while eroding our culture.
These are the choices policymakers will face this coming year. Let’s work to help them forge the right path.
Mitch Glazier is chairman/CEO of the Recording Industry Association of America.
A songwriter recently posed a distressing question with me: Do the songs he writes for the church that are classified as “Christian Music” get treated differently by the performing rights societies (PROs)?
The inference that a song is penalized in some way by an organization collecting royalties is not correct, but the songwriter was onto something. Songwriters who write music categorized as Christian often do feel they earn less than their secular counterparts. There needs to be an explanation as to why the perception exists and what can be done to change it.
The explanation goes back to how performance royalties are collected. They flow from three key segments of the market:
Digital service providers (DSPs), such as Spotify and Apple Music
General licensing from bars, nightclubs, restaurants, and live venues
Broadcast media including terrestrial radio and television stations
All genres are treated equally on digital services, in terms of tracking, but Christian music is not your typical soundtrack at most bars, nightclubs and restaurants. And venues for Christian music concerts tend to be small community locations, such as churches. Promoters at these venues are unaware (either genuinely or deliberately) that licensing is required, even though they are holding a commercial concert with ticket sales.
That leaves television and terrestrial radio, and this is where I believe the system is fundamentally broken. The Copyright Royalty Board (CRB) allows “educational” radio stations, typically small nonprofit community stations, to operate with a significantly lower rate structure that is not set on a percentage of revenue such as commercial stations, but rather a fixed fee structure based on the population of the community where the station is located.
For example, here in New York City the station WPLJ 95.5FM broadcasts Christian music to more than 8 million people, and in 2023 will pay a capped amount of performance licensing fees to ASCAP, BMI and SESAC, a total of $15,029, combined. These fees will not vary, no matter how much revenue is generated by the station.
WPLJ is part of the Educational Media Foundation, a 501(c)(3) nonprofit organization that runs a network of almost 500 terrestrial radio stations that broadcast Christian music. They claim the lower non-commercial rate under Section 118 of the Copyright Act and the related CRB rules because it is a nonprofit. When you look at the network’s publicly available information and the CRB rate sheet, you can see that they are paying an estimated combined total of around $1 million dollars in performance license fees.
It may seem reasonable for a non-profit to pay such limited amounts to perform music. But here is where the current regulatory regime is broken. The publicly available 2022 financials show the nonprofit collected $238 million in revenue, primarily through donations and sponsorships to the Christian content focused broadcast network. The network now has over $1 billion in assets, adding $50 million to those assets in 2022. Additionally, the salaries of the executive team for 2022 totaled $5.4 million. This is a far cry from the small volunteer-run community stations the CRB rates are meant to protect. How can it be that executives earn more than five times the total amount the network pays the entire song writer and music publisher community that create the songs upon which its network depends?
It must be said very clearly this network and others like it have done nothing wrong and they are a great resource to the wider community. However, just because it’s not wrong doesn’t make it right. I believe that it’s inherently unfair for these networks to exploit the CRB rate structure that’s available to educational radio stations given their financial profiles and the significant amount of money they raise using music to build a large audience. No matter how much money large non-commercial networks collect, and in this case primarily using Christian music to generate those revenues, the CRB license fee structure is capped. Commercial radio pays rates that are generally set as a percentage of revenue and not capped. Many high-earning Christian stations are paying as low as 10% of what commercial stations earning the same revenue would pay.
So back to the songwriter who felt his work was penalized. The answer is yes, he’s partially right; he is indeed paid less, but not due to prejudice on the part of PROs. The lower earnings are due to the lower royalty fees collected across the broader market that uses Christian music.
If we and the Christian songwriter and publisher communities believe that Christian songwriters should be paid on par with other writers, then the PROs as well as the Church Music Publishers Association (CMPA), should work together to create a dialogue with these high- earning broadcasters and ask that they opt out of the CRB rate structure and negotiate fair license fees for the Christian songwriter community. Or alternately, advocate for a revision of section 118 of the Copyright Act that would exclude wealthy “educational” broadcasters. This, along with financial transparency regarding the revenue collected and music licensing fees paid by anyone who gets a US Government-approved discount, should help level the playing field for all songwriters, regardless of what kind of songs they compose.
Malcolm Hawker serves as chief operating officer for SESAC Music Group, where he is charged with overseeing the operations of all the organization’s portfolio companies. Prior to joining SESAC, Hawker served as the president and CEO of CCLI (Christian Copyright Licensing International), a global rights licensing and resource company.
Most conversations around AI in music are focused on music creation, protecting artists and rightsholders, and differentiating human-made music from machine-made works. And there is still discourse to be had as AI has some hidden superpowers waiting to be explored. One use for the technology that has immense potential to positively impact artists is music marketing.
As generative and complementary AI is becoming a larger part of creative works in music, marketing will play a larger role than ever before. Music marketing isn’t just about reaching new and existing fans and promoting upcoming singles. Today, music marketing must establish an artist’s ownership of their work and ensure that the human creatives involved are known, recognized, and appreciated. We’re about to see the golden age of automation for artists who want to make these connections and gain this appreciation.
While marketing is a prerequisite to a creator’s success, it takes a lot of time, energy, and resources. Creating engaging content takes time. According to Linktree’s 2023 Creator Report, 48% of creators who make $100-500k per year spend more than 10 hours on content creation every week. On top of that, three out of four creators want to diversify what they create but feel pressure to keep making what is rewarded by the algorithm. Rather than fighting the impossible battle of constantly evolving and cranking out more content to match what the algorithm is boosting this week, creatives can have a much greater impact by focusing on their brand and making high-quality content for their audience.
For indie artists without support from labels and dedicated promotion teams, the constant pressure to push their new single on TikTok, post on Instagram, and engage with fans while finding the time to make new music is overwhelming. The pressure is only building, thanks to changes in streaming payouts. Indie artists need to reach escape velocity faster.
Megh Vakharia
AI-powered music marketing can lighten that lift–generating campaign templates and delivering to artists the data they need to reach their intended audience. AI can take the data that artists and creators generate and put it to work in a meaningful way, automatically extracting insights from the information and analytics to build marketing campaigns and map out tactics that get results.
AI-driven campaigns can give creators back the time they need to do what they do best: create. While artificial intelligence saves artists time and generates actionable solutions for music promotion, it is still highly dependent on the artist’s input and human touch. Just as a flight captain has to set route information and parameters before switching on autopilot, an artist enters their content, ideas, intended audience, and hopeful outcome of the marketing campaign. Then, using this information, the AI-powered marketing platform can provide all of the data and suggestions necessary to produce the targeted results.
Rather than taking over the creative process, AI should be used to assist and empower artists to be more creative. It can help put the joy back into what can be a truly fun process — finding, reaching, and engaging with fans.
A large portion of artists who have tapped into AI marketing have never spent money on marketing before, but with the help of these emerging tools, planning and executing effective campaigns is more approachable and intuitive. As the music industry learns more about artificial intelligence and debates its ethical implications in music creation, equal thought must be given to the opportunities that it unlocks for artists to grow their fanbases, fuel more sustainable careers, and promote their human-made work.
Megh Vakharia is the co-founder and CEO of SymphonyOS, the AI-powered marketing platform empowering creatives to build successful marketing campaigns that generate fan growth using its suite of smart, automated marketing tools.
By now, you’ve heard the news that BMI is selling its interests to a shareholder group assembled by the private equity firm, New Mountain Capital. The sale has come with questions and consternation from songwriter advocacy groups — including the Music Artist Coalition, where I am a board member — and U.S. music attorneys. These songwriter advocates asked for (1) transparency about the sale and (2) a window of time after the sale that would allow unhappy songwriters to leave.
Most questions remain unanswered, and BMI has not opened a window for songwriters to leave. But the sale seems to be proceeding anyway, subject to “regulatory approval.” Given that, here’s what you should watch out for as a songwriter, a songwriter representative or someone who benefits from administration or co-ownership of a songwriter’s songs.
1. What Does This Mean?
In short, it means that BMI, which has been a not-for-profit organization since its founding in 1939, has turned into a for-profit organization and sold to a private equity company. Private equity companies acquire companies that they believe are undervalued in hopes of realizing a significant return on their investment in a relatively short period of time. This is called a “holding period.” While some private equity periods fall outside the average, in 2023 the average “holding period” for a private equity fund with a company it buys is just over seven years, which is the longest it has been in over two decades (in 2022 it was just under 6 years).
According to press reports citing sources, BMI in its first year as a for-profit entity has generated about $130 million in earnings before interest, taxes depreciation and amortization (EBITDA). In order for the shareholder group to be successful, it will need to continue to grow profits or EBITDA from where they are today. To do that, they have to increase revenue and/or decrease expenses. The concern underpinning the sale is that BMI has historically grown revenue in order to pass it on to songwriters and publishers. The only revenue BMI traditionally held back was to cover its overhead. Turning to a for-profit model with private equity owners means that BMI’s shareholders will expect to participate in the profits BMI generates (through distributions or leveraging BMI), which may mean that less of the revenue generated will be distributed to the writers and their publishers.
2. How Does This Compare With My Other Options?
That is one of the unanswered questions. BMI’s goal is that there will be no negative impact to writers and publishers. BMI says they have a “goal” (not a guarantee) not to withhold more than 15% of revenue for three years for profit and overhead, but this doesn’t apply to revenue from any new business lines the company now enters.
Without more specificity, it is hard to determine how this will be possible and whether songwriters will be negatively impacted. It would be great if BMI provided more details about how they will increase distributions and increase profits at the same time. Ideally, BMI would give their affiliates an audit right, so that songwriters and publishers can monitor whether BMI reaches its goal. Otherwise, it should continue to release its financials showing collections, distributions and EBITDA.
3. How Will I Know?
Unfortunately, transparency is an issue. BMI’s latest public filing contains very little information on the state of the company and its revenue. In fact, they provide far less financial information than they did just a few years ago. Larger market players (like music publishers) may be able to compare and contrast the revenue they receive from one PRO vs. another and compare it with general growth trends of the music business and growth in the particular market segments that pay for performance (radio, film/TV, streaming, bars/restaurants, etc.).
We hope that songwriter advocacy organizations, in conjunction with music publishers, will be able to create and provide some level of transparency in the future for all songwriters. As a board member of the Music Artists Coalition, we have determined to make this a priority. Information is power, and songwriters who signed up for BMI under the premise of it being a non-profit should work to get as much information as possible. Ultimately, what matters is what you make as a songwriter – so watch your statements.
4. Do BMI Writers Share in the Sale Proceeds?
A little. In response to pressure from advocacy groups, BMI said that $100 million will be shared with its affiliates. BMI, in its sole discretion, will determine who gets it and how much, but it has agreed to use prior payment principles to do so. Affiliates includes both songwriters and publishers, and how much of the $100 million will be distributed to each of those two groups has not been disclosed.
The rest of the estimated $1 billion goes to BMI’s shareholders, which are broadcasters. For some broadcasters, this is a rebate of the performance royalties they have paid over the last few decades. This may seem particularly gruesome to songwriters who are also recording artists in the United States, which is one of the only countries in the world where broadcasters do not pay performance revenue on recordings.
5. What Do I Do Next?
If you’re a BMI member, stay informed. Ask questions, read your statements, follow the news and watch for reports on distributions starting after the second half of 2024. Talk to your co-writers at other PROs and compare payments. It takes four and a half months from the end of a quarter until you receive your accounting.
Check your agreements to understand when you can terminate membership, and when you can withdraw your songs. If you are unhappy with the results of the sale, you have the right to leave, but it can be tricky. BMI (like ASCAP) has one window during which you can resign as a writer (often every two years), but a separate, often completely different window (often every five years) during which you can terminate your publishing entity. You have to watch your windows and send your notice in advance, adhering to the timeframes allowed for resignations and terminations. And don’t forget that your songs stay with BMI while they are subject to “licenses in effect,” meaning that even when a songwriter leaves, their catalog stays behind for the term of existing licenses.
6. What Does Google Have To Do With All This?
We aren’t really sure, other than the fact that CapitalG (Alphabet’s independent growth fund) is listed at the end of the press release announcing the sale. Google owns YouTube, which has a history of underpaying songwriters — at least for its ad-supported tier. We will be watching this one closely.
Jordan Bromley leads Manatt Entertainment, a legal and consulting firm providing services to the entertainment industry for over 45 years. He sits on the Board of Directors for the Music Artists Coalition, an artist first advocacy coalition established in 2019.