guest column
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Lincoln said, “A house divided against itself cannot stand.” It was true then and it’s true today — on great issues like politics and governance and, closer to home, for America’s music community.
We know the costs of division and mistrust. During the Napster era, we lost nearly half the revenue from recorded music. Working together over the last 10 years, we’ve built a robust and thriving streaming economy well on its way to recovering what was lost. But we still have a long way to go.
From powerful platforms that undervalue music to short-sighted attacks on creators’ rights around the world to abuses of new technologies that attack the very idea of human authorship — it’s more important than ever that we unite to face new challenges in 2023 and beyond.
And we know how to do it.
In recent years, the music industry has joined together over and over again to accomplish great things and move music forward.
In 2018, we enacted “once-in-a-generation” Music Modernization Act legislation here in the U.S. to update streaming rights for songwriters and ensure legacy artists are finally paid. We are now working together to protect artists’ free expression through bills like California’s Decriminalizing Artistic Expression Act and the federal RAP Act.
In 2021, we saw a landmark Copyright Directive in the European Union to strengthen music markets and fair pay for artists on all platforms.
Earlier this year, all three major record labels decided to voluntarily disregard unrecouped balances owed by certain legacy performers ensuring these great artists could immediately share in streaming royalties.
And of course, we supported one another through a devastating pandemic, working to sustain small venues and develop public policies and relief programs to reach working artists and songwriters.
Those were all major steps, but new challenges keep coming — including some designed to stoke division and turn our community against itself. Fortunately, we know from our many recent achievements that the music community — and music itself — does best when we stick together in the face of common challenges. Especially at a time when American music is already thriving — across formats, styles, and all around the world with competition, creativity and choice all stronger than ever.
Artists continued to find new ways to reach more fans than ever with do-it-yourself recording and distribution, while independent labels have become the fastest-growing sector of the market. In a shrinking online world where language and geography are no longer barriers, an artist’s potential audience has become almost limitless.
In this dynamic new music business, success is more broadly shared than ever, with growing opportunities and revenues for indie artists and the very top acts taking a smaller share of revenues today than during the CD era. Globally, out of a $10 per month streaming subscription, artists receive roughly $1.35 while labels net $0.55 once the cost of spending to drive artists’ success is accounted for. Meanwhile, the share of revenues going to publishers and songwriters has nearly doubled in the streaming era.
It’s a powerful testament to what all of us who make up the music community have built together.
It is success borne first from the blood, sweat and tears of America’s creators — artists, songwriters, session players and the legions of those who support and distribute music — producers, publishers, road crews and venue operators, tour support, managers, digital services and more.
It is also the product of round-the-clock drive and commitment by the people working at record labels– music lovers who wake up every day fighting for the artists they work with and helping them achieve their creative dreams and commercial goals. From marketing and promotion to brand and design to social media campaigns to wellness and health to business and back office services, labels today do more than ever to support artists and position them to break new ground and thrive.
The labels that make up the RIAA are committed to a future of continued shared growth. We are determined to keep pushing for even more positive change. And we will work every day in this new year to unite our music community with forward-looking policies and goals that benefit artists, songwriters and fans as well as rightsholders and music services.
That means standing together and ensuring creators get full value for their work on every platform, service, game, fitness app and anywhere else it is used — from AM/FM radio to the metaverse. It also means building on shared commitments to diversity, wellness, and equality — both inside and outside the recording studio and across our entire community.
Additionally, it means presenting a united front when tackling the next generation of challenges, including artificial intelligence, where artists, songwriters, labels and publishers have an immense and shared interest in establishing responsible rules of the road that value human authorship and creativity. Also important is fighting against new forms of music piracy and other efforts to undermine the creative economy, from stream ripping to stream manipulation to pre-release leaks that suck the economic value out of the most seminal times in an artist’s career.
All of us who make up this community are bound together by a shared love of music — and a shared commitment to the people who create, distribute, and listen to it.
In 2023, let’s work — together — to turn those values into concrete action that builds a rich and lasting music future for us all.
Mitch Glazier is the Chairman and CEO of the Recording Industry Association of America (RIAA), the trade organization that supports and promotes the creative and financial vitality of the recorded major music companies.
Whenever I tell someone that recording artists aren’t paid when their songs are played on AM/FM radio, they are surprised. Yet, it’s true: not a single performer has ever been paid a performance royalty by American broadcasters for analog radio.
Unfortunately, that’s only half the story. When U.S. broadcasters, including iHeartMedia, Audacy, Cumulus Media, and others, refuse to pay for AM/FM radio plays, it is a double whammy. First, it denies thousands of hard-working Americans the full ability to make a living from their craft.
Second, this denial is used as an excuse by many countries around the world to withhold payments to U.S. artists when their music is played overseas. European countries typically pay royalties to foreign artists, but some use U.S. broadcasters’ refusal to pay for AM/FM radio plays as an excuse for denying those royalties to American artists. Given that American music is the most popular in the world, this amounts to hundreds of millions of dollars in lost income for American creators – every year.
Think that’s bad? It gets even worse. Some countries (such as France) do collect royalties on behalf of Americans, but that money never gets to the rightful recipients in the United States. Instead, they divert it towards their local artists or to fund local “cultural” programs. SoundExchange and others are currently in French courts trying to remedy this egregious practice.
Fortunately, some progress is being made. In 2020, the European Court of Justice (ECJ) ruled that all artists, regardless of nationality, should be paid when their music is played in Europe. They cite a principle called “National Treatment,” in which a country must treat foreigners with the same laws they treat their own citizens. It’s an important principle: imagine if the United States denied a foreign national the right to a fair trial simply because their home country doesn’t provide those protections.
In reaction to the ECJ decision, France and others are seeking to limit its impact so they can keep diverting royalties away from American artists for their own cultural funds. The Fair Trade of Music coalition is fighting to ensure that Europe does the right thing and treats artists equally, regardless of nationality.
This battle to protect American interests in Europe has been fought for a while, but the problem could be solved instantly if Congress passed the American Music Fairness Act, legislation to finally grant recording artists a performance right for AM/FM. The notion of paying artists for radio play already exists in the rest of the world and also exists in the U.S. for streaming services (such as Spotify or Sirius XM). The fact that the House Judiciary Committee is expected to consider the legislation on Wednesday is a sign that it’s gaining momentum as Congress completes its work. The legislation lays out a fair approach: it requires billion-dollar corporations to pay their fair share for music. It also protects small broadcasters and college radio stations that would have to pay (at most) only $500 a year (less than $2 per day). The smallest of broadcasters are capped at $10 a year.
Corporate broadcasters argue that a “mutually beneficial relationship” exists between AM/FM radio and music creators. Yet their actions belie that claim, as they spend millions to fight this legislation and avoid sharing the billions of dollars they make in advertising from music. In the past year, the NAB and iHeartMedia have spent over $11 million in lobbying alone. Broadcasters are even using their own federally-granted airwaves to run ads opposing the legislation while ignoring calls to give artists equal time to run their own ads. I guess it’s too dangerous for listeners to hear both sides of the story.
It’s important for Congress to act now. The House Judiciary Committee is considering the bill this week. With the passage of the American Music Fairness Act, artists would finally get paid for their music being played on AM/FM radio in the U.S., and it would remove the excuse for other countries to withhold their royalties from Americans. By recognizing the value of their work here at home, the United States can unlock hundreds of millions of overseas dollars for artists.
Most importantly, it’s simply the right thing to do.
Michael Huppe is president and CEO of SoundExchange.
Roblox is the most active platform for music in the metaverse, showcasing interactive and immersive virtual performances from artists ranging from Lil Nas X and Zara Larsson to KSI, 24KGoldn and Charli XCX. Given the current success, it is hard to believe that just three years ago, when I started working with Roblox, there was little awareness of the creative and commercial potential for artists in the metaverse. In fact, other than a few execs who knew their kids were on there playing and asking for some Robux, most music industry stakeholders hadn’t heard of Roblox at all.
When they heard the platform had over 100 million users, they were excited by the size of the audience. Roblox was also appealing as — compared to other major consumer platforms with anywhere near the same reach — it was and still is less crowded and free from traditional interruptive advertising. And yet, a few mavericks like Scott Cohen from Warner Music aside, none had yet thought about Roblox from an artist marketing or monetization perspective.
From those initial conversations in 2019, fast forward to 2022 and many artists from different genres have been able to express themselves in new, creative ways by building fun, immersive virtual concerts that have generated tens of millions of net new revenue for all parties. Major music brands like Spotify and consumer brands like Samsung and Deutsche Telekom have now also created their own persistent music worlds.
How did we get here? What are the long-term implications for the music industry? How will fans continue to deepen their engagement with their favorite artists?
How Lil Nas X Became a Lighthouse
Any time there is a new medium like the internet, then mobile, social and now the metaverse, the Music Industry initially treads lightly. Understandably so, as the whole industry is primarily based on the exploitation of rights, which are inherently complicated. So even when interest in metaverse experiences picked up speed, there were still roadblocks to overcome.
Even with the help and expertise of first movers at Sony and Adam Leber from REBEL management in launching the Lil Nas X virtual concert, it’s always hard doing things that haven’t been done before. In particular, new virtual deal structures for the industry to adopt needed to be created from scratch. There was also no “metaverse production studio” to tap to produce the virtual concert. So, with the help of Rafael Brown and Duane Stinnett, we basically had to spin up an entirely new production entity on the fly in order to get the experience built, working with many Roblox colleagues led by Morgan Tucker (now head of product), and Philippe Clavel (senior director of engineering), who managed the platform’s internal social experiences group.
The concert was a creative, technological, and commercial success that reached nearly 40 million people, but there were many points along the way where we weren’t sure we were going to land the plane: It really took a village to make it happen. It was worth the risk, as the Lil Nas X concert began to act as a lighthouse for the other labels and artists to follow. Now, music events have reached, delighted and engaged well over 100 million global fans on Roblox.
Creating Scale and Choice
Since the days of those early Roblox experiences, more and more platforms have emerged that only serve to give the music industry more choice when they want to activate music experiences and reach their fans in the metaverse. If Lil Nas X was a lighthouse, his beacon soon hit a prism that brought to light new formats. From launch parties with video driven performances to listening parties, with artists like Poppy, which were activated in existing Roblox experiences, the richness and diversity of musical experiences exploded.
The scale of the opportunity created a whole new market for metaverse studios to partner with labels, artists and brands to keep pushing the limits of creativity for these metaverse experiences. The process is now there to maintain the end quality but reduce time to market and cost of production. All parts of the music industry are now focused on innovating old ways of doing things to capitalise on the opportunities presented by the metaverse and Web3. Dubit, for example, created metaverse awards show parties for the BRITs and Grammys this year on Roblox, which were the first of their kind in the metaverse. Then, perhaps most notably, the MTV VMAs announced the inaugural best metaverse performance award, bringing virtual concerts into mainstream pop culture. Nominees included Charli XCX for her Samsung Roblox gig, Twenty One Pilots, and K-pop stars BTS for their performance in Minecraft, with BLACKPINK winning for their performance in PUBG.
Collectively, we as an industry are all building a better platform for artists to express themselves and connect with their fans, unlocking new creative and commercial opportunities that will significantly grow the overall business in the next three to five years.
Authenticity, Interactivity and Value for Players
What does all this mean for users? I mentioned earlier that metaverse platforms are relatively free of traditional interruptive advertising that has plagued mobile games, web-based content, and linear television. Will we be able to say the same after the next five years of growth? I’m optimistic. Top of mind with all activations and experiences should be authenticity to the nature of the platform; and providing interactive fun and value to players. The Logitech activation with Lizzo and Gayle was a great example of branded entertainment done right. The experience was super fun for players, featured top artists and was also able to meet the brand’s marketing objectives with close to 7 million people attending the event and engaging with Logitech products like flying “Logitech mouse” cars.
Moving forward there is going to have to be continued focus on ensuring that experiences really need to exist and are not just done to check off a metaverse activation to-do list for a brand or media company. As more professional brands and ad agencies start getting involved in metaverse projects and the builder economy around them grows, I expect the level of creativity to go up. There will also be a lot of discussion about whether an artist or brand needs a persistent experience or whether they should just build an ephemeral experience that coincides with their campaign windows. Generally, I think it will be more of the latter once the market matures.
The more we can all focus our time and energy on building a sustainable ecosystem for artists, platforms, developer studios and builders, brands, labels and publishers that provides values for all parties the more likely that the market will be able to grow and reach its full creative and commercial potential.
Exploring Web3 Connections
The metaverse represents a new platform shift that started with web to mobile and then mobile to social. The brands and media companies are paying attention to where their customers are spending time. Over the coming years, billions of dollars will move to the metaverse which is a more interactive, more immersive platform where hundreds of millions of young people are spending hours of each day hanging out and playing with their friends.
In the medium term, the size of platforms like Roblox, Fortnite, Minecraft and Meta will be hugely appealing to the music industry. As they evolve and all parties continue to creatively collaborate, the music industry will need to see not only marketing exposure from metaverse platforms but also get access to their fans and see new, repeatable revenue streams that justify their focus and investment. Many brands and artists are also already looking towards Web3 — the next iteration of the internet built on blockchain technology.
Whether it’s exploring the possibility of selling tracks as NFTs with perpetual royalties, NFT powered artist fan clubs, new streaming services that can be owned by users and artists directly, or blockchain powered contracts; Web3 offers the potential to bring major innovation to an industry that hasn’t materially changed since the birth of digital music some 20 years ago. It will hopefully create a more equitable market for artists to earn a living by directly connecting with their fans. For example, a universal blockchain wallet would be an incredibly powerful way for brands and artists to connect with their most loyal fans directly by adding value to their lives with exclusive digital rewards. Concert goers will be able to get rewarded for attending events by getting collectable NFTs that could in turn unlock virtual after party events in metaspaces powered by platforms like Vatom. We are at the very beginning of the birth of one of the most exciting and transformative marketing eras since the birth of the Internet.
Where Next?
Three years on from Lil Nas X, we are still at the beginning of building the future of music in the metaverse, and there is still massive upside ahead. For it to keep growing and realise its full market potential, platforms will need to help their music partners protect their IP, market directly to their fans, easily create compelling multimedia experiences, create sustainable new revenue streams, and have their experiences discovered by the right users.
Even more importantly, anyone building a music experience in the metaverse needs to ensure that their primary focus is always on delighting the fans. Music in the metaverse represents a fundamental shift in the way fans engage with music. Music is becoming a far more interactive, immersive and hyper social experience that also allows the fan to participate in the creative process along with their favorite artists. If a music experience isn’t authentic, fun, immersive and social, it doesn’t belong in the metaverse.
Jon Vlassopulos is an advisory board member at Dubit and the chief executive officer at Napster.