State Champ Radio Royalties
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Songwriters and publishers will see a royalty bump in the new year for physical sales (including vinyl, cassettes and CDs) and digital downloads. According to a new document, published in the Federal Registrar on Tuesday (Dec. 12), the Copyright Royalty Board (CRB) upped the U.S. statutory mechanical royalty rate from the current rate of 12 cents to 12.40 cents if the song has a run time of five minutes or less. (If over five minutes, the rate is 2.39 cents per minute.)
This rate change is based on the Consumer Price Index for All Urban Consumers (U.S. City Average, all times) that was published by the Secretary of Labor.
This form of publishing royalty is paid to songwriters and publishers by record labels, which license their compositions for sound recordings that are then made into digital downloads or physical copies. This system is unlike that for U.S. mechanical royalties for streaming, which are paid to publishers and songwriters by streaming platforms like Spotify, Apple Music and Amazon Music.
Consistent Cost of Living Adjustments (COLA) have been an important (but controversial) part of the conversation around U.S. mechanical royalty rates in recent years. Prior to January 2023, the minimum statutory mechanical rate in the United States had been stuck at 9.1 cents since 2006, losing value each year as inflation climbed. January 2023âs raise represented a 32% rate increase.
In May 2022, when the 2023 adjustment was announced, BMG made a statement criticizing the majors, saying in part, âThe entire songwriter community owes a huge debt of thanks to those who fought for this increase in the face of the opposition of major record companies and indifference of music publishers. ⌠Without their belief and commitment, the [Recording Industry Association of America] RIAA (representing record companies) and the [National Music Publishersâ Association] NMPA (representing music publishers) would not have been forced back to the negotiating table.â This is a sentiment also held by independent songwriter George Johnson, who has consistently led the fight for a COLA adjustment through his participation in the Copyright Royalty Board proceedings.
For years, the NMPA didnât push for the rate to be raised beyond 9.1 cents, while all sides weighed how to first establish streaming models and what rates should be paid for the fast-growing income stream of the music publishing business. While dealing with those larger issues, the NMPA and the labels continued the cycle of a 9.1 cent settlement for every five-year term from 2008 through 2022, and they were ready to do so again for the 2023-2027 term, as indicated in their initial settlement.
When Johnson, followed by other songwriter advocates like the Songwriters Guild of America and Music Creators of North America, pushed against the initial settlement rate of 9.1 cents for that term, the NMPA noted that litigation is costly, running into the tens of millions of dollars â which is why the organization initially focused on adjudicating streaming rates rather than the penny rate for physical and downloads. To litigate for both streaming and the penny rate would be even more costly than the millions the NMPA was already spending.
Moreover, it was argued that spending money fighting for the rate change for digital downloads and physical sales could be a wash for publishers when weighing the legal costs against how much additional revenue a possible rate increase could achieve. While physical and downloads back in 2021 accounted for 15% of market share for labels, for publishers it was a 5% market share. Some in the publishing business were also afraid that if they pushed for a higher penny rate, they would lose the support of the major labels in their quest for better streaming rates.
The CRB judges ultimately tossed out the 9.1 cent settlement for 2023-2027, and then the publishers and major labels came together to put together a second settlement for that term featuring a 12 cent penny rate and a COLA adjustment.
In a Dec. 7 statement about the upcoming adjustment from 12 cents to 12.4 cents for 2024, NMPA president/CEO David Israelite, said: âWe are pleased that the Copyright Office has approved a Consumer Price Index (CPI) increase for physical products like vinyl records and digital downloads. Last year NMPA, the Nashville Songwriters Association International (NSAI) and others worked to raise these mechanical royalties from 9.1 cents to 12 cents â a 32% increase with the added insurance of including a mandated Cost of Living Adjustment (COLA) lift each year. While these forms of consumption are not top revenue streams in the current market they still represent a meaningful piece of the music industry and it is important that they continue to grow.â
True to its title, Brenda Leeâs âRockinâ Around the Christmas Treeâ â which just notched its second straight week at No. 1 on the Billboard Hot 100 â brings in some serious green over the holiday season.
Billboard estimates that in 2022, the enduring holiday hit racked up $2.7 million in master recording revenue for Lee and her label, Universal Music Group, and $1.274 million in publishing revenue, totaling nearly $4 million, on the strength of 464 million on-demand streams and 25,000 track downloads.
So far this year, Billboard estimates the master recording has garnered $1.6 million in revenue and about $700,000 in publishing revenue, or $2.3 million total, on the strength of 301 million on-demand global streams and 16,000 track downloads.
In the United States last year, âRockinâ Around The Christmas Treeâ generated nearly 1.75 million song consumption units (track downloads and on-demand streaming), while it has so far accumulated 967,000 song consumption units (and, within that, 301 million on-demand streams) in 2023.
But thereâs still plenty of holiday season left â and when you compare the 49-week period that has elapsed so far this year with the same period in 2022, itâs clear that âRockin’â is on track to surpass last yearâs total. The songâs 967,000 song consumption units to date in 2023 is far ahead of last yearâs 807,000 song consumption units (and 195 million streams) at the same point. (Luminate doesnât compile global song consumption units).
âRockinâ Around the Christmas Treeâ was solely written by the late Johnny Marks, whose publishing company, St. Nicholas Music, would get the publishing revenue. Marks wrote a number of other holiday favorites including âRudolph the Red-Nosed Reindeer,â âA Holly Jolly Christmas,â âSilver and Goldâ and âI Heard the Bells on Christmas Day.â
The above estimates donât include whatever royalties come in from licensing the song to Christmas compilation albums; while the publishing total doesnât include whatever revenue is generated from cover versions.
The Mechanical Licensing Collective (The MLC) has announced its new Supplemental Matching Network, which consists of five companies that specialize in data matching. This is aimed to help The MLC continue to up its match rate, which is currently at 90%. (According to The MLC, the match rate is defined as the percentage of total royalties processed that were able to match to a registered work in its database.)
The first five companies included in the Supplemental Matching Network are Blokur, Jaxsta, Pex, Salt and SX Works (a SoundExchange company). The list of companies that are part of the network may grow in the future to continue to bolster The MLCâs matching process. The MLC conducted qualitative evaluations of these vendors before choosing to partner with them, including testing the products through pilot programs as well as a âRequest for Information.â This is the same process that The MLC has used for other strategic vendors.
While these five vendors will all provide key data to The MLC, the companies do not specifically address the most difficult songs to match: those created by DIY, unsigned songwriters, many of whom are still unaware of The MLC.
âWe conducted an extensive due diligence process to select the initial set of vendors for our Supplemental Matching Network,â says Andrew Mitchell, head of analytics & automation at The MLC. âThese vendors bring complementary technologies and capabilities that can be effectively leveraged to serve our members. This network reflects our ongoing commitment to evolve in innovative ways to best achieve The MLCâs mission.â
The MLC is a non-profit organization based in Nashville. It was formed as part of the Music Modernization Act (MMA), a landmark law that created a new blanket license for musical work mechanical royalties that greatly simplified the music licensing process for digital services like Spotify, Apple Music and more. It passed in 2018.
Previously, the industry operated on a piecemeal licensing system that was complicated for the services and also the music business, leading to a pool of over $400 million in unallocated streaming royalties because the compositionsâ owners couldnât be found. (This is colloquially known in the business as âblack boxâ money, although The MLC uses the term âhistorical unmatched royalties.â) The MLC was tasked to implement and administer this new blanket license and distribute the money in this stagnant royalty pool. It officially opened its doors on Jan. 1, 2021.
Learn more about the five new vendors below:
Blokur
A music data and licensing platform that works with music rights owners and online platforms to connect music and companies providing online experiences. It is built on data matching and rights identification technology to ensure accurate payment.
Jaxsta
Jaxsta is a database for music credits, sourced from the official owners of that data. This includes record labels, distributors, publishers and industry associations. It provides recording matching services for PROs, MROs, CMOs and publishers, helping identify recordings to their underlying musical works. They assist in collecting payment for mechanical, performance and synch royalties.
Pex
Pex specializes in content identification and UGC data powering copyright compliance. Pexâs music recognition technology (MRT) is designed to identify works at scale, including modified audio, live versions and cover versions, so rightsholders can capitalize on all of the content they own.
Salt
Salt is a digital royalty collection platform that helps music societies streamline their disjointed music rights and royalty systems into one global network. Salt processes usage, matches ownership and calculates distributions, providing societies with matching and royaltyâprocessing infrastructure
SX Works Global Publisher Services
SX Works Global Publisher Services, a SoundExchange company, provides administration solutions to music publishers, self-published songwriters and organizations who own, represent and/or engage with music to manage their repertoire across the music ecosystem. SX Worksâ team and technology provides partners with access to metadata designed to ensure that musical works can be accurately licensed, identified and paid for their usage.
In 2023, Taylor Swift has towered above her musical peers on multiple fronts. And earlier this week, she racked up another major achievement when she was named Spotifyâs top-streamed artist of 2023.
As part of its annual year-end Wrapped rundown on Wednesday (Nov. 29), Spotify announced that Swift had racked up 26.1 billion streams globally on the service since Jan. 1, topping the likes of three-time champ Bad Bunny as well as The Weeknd, Drake and Peso Pluma. This didnât exactly come as a surprise considering the ongoing success of her late-2022 album, Midnights, as well as two chart-topping re-recordings: Speak Now (Taylorâs Version) and 1989 (Taylorâs Version), the latter of which racked up a whopping 375.49 million on-demand official streams in its first week.
Swiftâs year on Spotify tops any artist ever on the platform, which â now 15 years since launching â keeps expanding its user base annually. For comparison, when Bad Bunny was announced as the top Wrapped artist in the prior three years, he had 18.5 billion streams in 2022, 9.1 billion in 2021 and 8.3 billion streams in 2020.
According to Billboardâs royalty calculator, Swiftâs 26.1 billion streams amount to about $97 million in recorded music royalties. And the yearâs not even done yet. When estimating her total streams through December, that number would swell to 27.2 billion, amounting to recorded music royalties of $101 million through the end of the year from Spotify alone. Add in publishing revenue, and Swiftâs music will have earned about $131 million on Spotify by the end of the year.
Of course, that only accounts for Swiftâs performance on Spotify, which remains the streaming market leader. When tallying on-demand streams across all platforms â including such heavy-hitters as Apple Music, YouTube Music and Amazon Music â Billboard estimates that her catalog racked up a total of 38.3 billion streams through the end of the year, amounting to a total of about $160 million in recorded royalties, by Billboardâs estimates. With publishing, Swiftâs total on-demand streaming revenue gets close to $200 million.
Itâs worth noting that Swift likely takes the lionâs share of this money. In her contract with Universal Music Group and Republic Records, signed in 2018, she retained master rights to all of her music going forward. That includes all four of her re-recorded Taylorâs Version albums so far: Fearless, Red, Speak Now and 1989. That re-recording project â which she famously embarked upon after her previous label, Big Machine Records, was acquired by Scooterâs Braunâs Ithaca Holdings in 2019, much to Swiftâs chagrin â has performed beyond likely even Swiftâs wildest dreams. And itâs proven a lucrative gambit for the superstar, whose Taylorâs Versions have consistently outperformed the originals on streaming since their respective releases.
Not bad for someone who famously pulled her catalog from Spotify less than a decade ago, calling it a âgrand experiment.â
Additional reporting from Glenn Peoples.
A coalition of artist and label groups is calling on legislators to urgently address a 2020 court ruling that risks seeing European musicians lose out on millions of euros in royalties each year to U.S. acts.Â
For decades, American musicians have been denied royalties for the use of their music on broadcast radio or when itâs played in cafes, shops and bars in many overseas countries due to the lack of equivalent terrestrial radio performance and public performance rights in the United States. This practice is based on a principle known as material reciprocity, which means that broadcast and performance revenues are only paid out to countries that apply the same rights. Â Â
The longstanding practice of reciprocal treatment was, however, suspended in the European Union (EU) by a 2020 ruling from the European Court of Justice (ECJ). In that decision, the ECJ decreed that all recording artists are entitled to an equal share of the royalties generated when their music is played on radio or in public premises in the EU, regardless of their nationality â or the absence of radio and performance rights in an artistâs home country.Â
Brussels-based independent labels trade body IMPALA says the ECJ ruling will result in European artists and labels losing out on around 125 million euros ($137 million) in royalty income each year, with the equivalent sum instead going to U.S. musicians. Previously, these broadcast and performance royalties were mostly divided up between local labels according to their market share.
European countries that currently withhold public performance and broadcast royalty payments to U.S. artists and labels include the United Kingdom, France, Belgium, Denmark and Ireland. (Outside of Europe, three countries âJapan, Argentina and Australia â also deny royalties to U.S. musicians because of a lack of reciprocal rights).Â
In 2019, prior to the court ruling, SoundExchange, which issues licenses to online and satellite radio services, estimated that recording artists and rights holders in the United States lost out on an estimated $350 million in royalty payments due to what it called the âunfair treatment of music creators.âÂ
So far, the Netherlands is the only EU country to change its legislation in line with the ECJ ruling, which has become widely known as the âRAAPâ case in reference to Irish collection society Recorded Artists Actors Performers (RAAP), which initiated the reforms by taking legal action against Phonographic Performance Ireland (PPI) in 2020. In that case, RAAP challenged PPI in the Irish High Court after it reduced royalty payments to performers from a 50-50 split with labels to around 20%. The case was then referred up to the ECJ, which made the now-controversial ruling in September of that year.
U.S. repertoire represents around 40% of all public performance and broadcast income collected annually in the Netherlands, according to Dutch collecting society SENA. Until recently, this income was neither collected nor distributed. Since the change in practice, SENA has increased its tariffs on public performance royalties from 12.5% to 26%.
Will Maas, chair of the Netherlandsâ musiciansâ union, said in a statement that the rise in rates is not enough to make up for the additional U.S. repertoire now being collected, resulting in a âclear and substantial dropâ in revenue going to Dutch and European performers. âThis is what awaits other countries if nothing is done to address this,â he added.Â
In response, IMPALA executive chair Helen Smith wants the European courts to reverse its 2020 ruling and restore the principle of material reciprocity.Â
âIt is the EUâs responsibility to prevent European artists and producers losing millions every year to the USA, which has chosen not to protect these rights,â said Smith in a statement. She added that the lack of terrestrial radio performance rights and public performance rights in the United States costs the world music economy âhundreds of millions, if not billions a year.âÂ
IMPALA also supports a flexible solution that would enable EU countries to pay U.S. artists if they already did so before the ECJ judgment.
Other music groups and CMOs backing IMPALAâs call for action include Adami in France, the Swedish Musiciansâ Union, Belgiumâs PlayRight and the German Federation of Musicians. They argue that reciprocal treatment forces countries to raise their own levels of protection for musicians by not allowing nations to benefit from other countriesâ rules unless they follow the same standards.
Not everyone in the music business is against the ECJ ruling and the push for so-called national treatment â whereby foreign recording artists and labels receive the same types of royalties as the nationals of a given country â to be standardized across the global music business. Executives who back national treatment say that any fall in label income would likely be offset by the increased set of rights and royalty collections elsewhere in Europe resulting from the ECJ decision.
That, however, is not a view shared by IMPALA or its members.Â
âHundreds of thousands of artists count on the EU to do the right thing,â said Dutch musician Matthijs van Duijvenbode in a statement, âand to do it fast.â    Â
Universal Music Group (UMG) has won the dismissal of a closely-watched class action that challenged the fairness of its 2008 purchase of shares in Spotify â a case that accused the company of taking lower-than-market royalty rates in return for a chunk of equity thatâs now worth hundreds of millions.
The lawsuit, filed last year by the members of the â90s hip-hop duo Black Sheep, claimed that UMG had secured its now-lucrative stake in the then-nascent streamer by signing an âundisclosed, sweetheart dealâ that left artists underpaid to the tune of $750 million. UMG has called the claims âpatently false.â
In a decision Monday (Nov. 20), U.S. District Judge Jennifer L. Rochon ruled that even if UMG had taken below-market royalty rates from Spotify in return for equity, doing so would not have breached its contracts with artists â which give the music giant âunfettered discretionâ to license its recordings as it sees fit.
âPlaintiffs argue that UMG exceeded the bounds of its discretion under the contract by making an undisclosed licensing deal in exchange for Spotify stock, for which UMG is withholding artistsâ rightful share ⌠of the proceeds UMG reaped,â the judge wrote. âBut they do not square that conclusion with UMGâs unlimited right to license their work.â
Black Sheep members Andres âDresâ Titus and William âMista Lawngeâ McLean sued in January, claiming Universal acted in âbad faithâ when it secretly acquired a 5% stake in the âfledgling streaming serviceâ in 2008 for just a few thousand dollars. The real payment to Spotify, the lawsuit claimed, had been UMGâs willingness to accept âsubstantially lower royalty paymentsâ â an arrangement that benefited UMG and Spotify but âshortchanged artistsâ and âdeprivedâ them of fair royalties.
âUniversal concealed from artists that it acquired Spotify stock and that royalty payments were depressed as a result,â lawyers for the duo wrote in their complaint. âOver time, the value of the Spotify stock that Universal improperly withheld from artists has ballooned to hundreds of millions of dollars.â
When the case was filed, Universal called the claims âpatently false and absurd.â In later court filings, the company flatly denied the core allegation: âUMG disputes that the equity stock acquired in 2008 was part of the consideration that Spotify provided for a license to UMGâs music catalog.â
Reps for both UMG and Black Sheep did not return requests for comment on Tuesday.
The major music companies all acquired equity in Spotify during the streamerâs early days. According to a 2018 report by Music Business Worldwide, the then-Big Four music companies (Universal, Warner, Sony and EMI) plus Merlin paid just âŹ8,804 total for a combined 18% of the streamer divvied up between them. The role that royalty rates played in that deal, and whether artists would eventually see some of the profit, was hotly debated for years.
After Spotify went public in 2018, it started to become clear just how valuable those stakes had become. Sony Music sold 50% of its shares for $768 million in April 2018, followed by Warner selling its entire stake for $504 million in August 2018. Both later made good on previous pledges to disburse some of the proceeds to artists, although reportedly with differing stipulations.
Universal has yet to sell its shares in Spotify, but it made a similar pledge in March 2018. Later that year, when Taylor Swift signed with the company, she reportedly required that UMG further promise to distribute the money to artists regardless of unrecouped balances â meaning artists will be paid regardless of whether they still owe the label money.
But in their lawsuit, Black Sheep argued that such promises were not good enough. They said Universal had already wronged many of its artists in one of two ways â simply by taking lower rates and thus reducing their royalty payments, or by failing to disburse the profits of their equity stakes as royalties.
In Mondayâs ruling dismissing the case, Judge Rochon said she did not even need to decide whether or not those allegations were true. Instead, she simply ruled that even if they were true, Universal would still not have violated its record deal with Black Sheep.
âThe contractâs plain language does not support plaintiffsâ theories,â the judge wrote about the allegedly reduced rates, noting that the deal gave UMG the âsole, exclusive and unlimited rightâ to license the recordings. âGiven this wide discretion, there is no basis upon which to find that UMG breached the contract by accepting a lower royalty from Spotify.â
Judge Rochon also rejected the argument that UMG should have accounted for the equity profits when paying artists, saying the contract only requires payment for revenue that is âsolely attributableâ to their specific songs.
âPlaintiffs cannot directly trace UMGâs alleged acquisition of Spotify stock to the use or exploitation of their work alone,â the judge wrote. âUMG did not breach the contract by failing to account for its value when paying Plaintiffs their royalties.â
Even beyond the merits of the lawsuit, the judge also said she would have dismissed most of it for a far simpler reason: That it had been filed far past the statute of limitations. If the case had moved forward, Rochon said it only would have applied to royalty payments made after January 2021, not those reaching back all the way to 2008.
Functional content â think rain noises, whale sounds, recordings of wind rustling the leaves and the like â will be significantly devalued under Spotifyâs new royalty system: Plays of this audio will generate one fifth of the royalties generated by a play of a musical track, according to a source with knowledge of the streaming serviceâs new policy.
In response to a request for comment, a Spotify spokesperson pointed Billboard to the streaming serviceâs blog post from Tuesday (Nov. 21). The blog notes that, âover the coming months,â Spotify will âwork with licensors to value noise streams at a fraction of the value of music streams.â The blog does not say what the fractional amount will be.Â
Spotifyâs decision to count functional content at 20% of the rate for music tracks is the culmination of nearly a yearâs worth of bad press for rain sounds and the like. While this type of audio is often used for the seemingly innocuous purpose of relaxing after a long and stressful day, Spotify wrote on its blog that the space is âsometimes exploited by bad actors who cut their tracks artificially short â with no artistic merit â in order to maximize royalty-bearing streams.â
This initiative, says Spotifyâs blog post, is intended to free up âextra money to go back into the royalty pool for honest, hard working artists.â
As a result, some of the most powerful executives in music have launched a sustained assault on rain and its various non-musical cousins over the course of 2023. âIt canât be that an Ed Sheeran stream is worth exactly the same as a stream of rain falling on the roof,â Warner Music Group CEO Robert Kyncl told analysts in May.Â
Two months later, Universal Music Group CEO Lucian Grainge told analysts that streaming services must ensure that âreal artists donât have their royalties diluted by noise and other content that has no meaningful engagement from music fans.â He later amped up the rhetoric by describing companies that upload this content as âmerchants of garbageâ that were âflooding the platform with content that has absolutely no engagement with fans, doesnât help churn, doesnât merchandise great music and professional artists.â
When UMG rolled out a new royalty system with Deezer in September, the streaming service said it would replace ânon-artist noise contentâ with its own functional music, while also excluding this audio from the royalty pool. âThe sound of rain or a washing machine is not as valuable as a song from your favorite artist streamed in HiFi,â Deezer CEO Jeronimo Folgueira said. Deezer said plays of rain, washing machines and other non-music noise content counts for roughly 2% of all streams.
Spotify did not provide a comparable number in its blog post. It is taking one other step to limit the impact of functional content on the royalty pool: To generate royalties, a functional audio track must be longer than two minutes.
âThese policies will right-size the revenue opportunity for noise uploaders,â Spotify wrote. âCurrently, the opportunity is so large that uploaders flood streaming services with undifferentiated noise recordings, hoping to attract enough search traffic to generate royalties.â
In the new year, Spotify plans to roll out a new royalties model that will drive more money to more popular artists, record labels and distributors, while clamping down on streaming fraud.
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The scheme is three-pronged, based on Billboardâs reporting, creating a new streaming threshold that tracks must reach in order to qualify for royalties, penalizing fraudulent activity and setting a minimum play-time length for non-music noise tracks to earn revenue on the platform. The details on each of these elements have trickled out in the press without a formal announcement, but Billboard can now report specifics on each, according to sources in streaming and distribution.
Hereâs a full rundown of Spotifyâs new royalties model:
Tracks that receive less than 1,000 streams within a 12-month period will not qualify for royalties. Those royalties, instead, will be redistributed into the greater royalty pool.
Labels and distributors will be charged 10 euros for any track that is found to have 90% or more of its streams deemed fraudulent.
Non-music noise tracks must now be at least two minutes long in order to qualify for royalties. As well, according to a source, there are conversations about implementing a rate reduction on these tracks that would value their streams below those for music.
As previously reported, Spotifyâs new royalty model will affect more than two-thirds of its song catalog but thatâs due to the magnitude of music thatâs uploaded to the platform, where the vast majority of songs donât get listened to with any frequency. While tens of millions of songs will fall below the 1,000 streams threshold, a source tells Billboard that policy will only shift about 0.5% of Spotifyâs royalty pool to more popular tracks. That was equal to about $46 million in royalties in 2022, out of $9.27 billion paid out in total.
The changes have been largely applauded by the music industry, although some in the independent distribution sector are concerned that the anti-fraud measures could disproportionately affect DIY distributors, even though major label acts sometimes engage in this activity too. These companies that have built hands-off, high-volume distribution businesses with small margins, charging a small fee per upload have huge batches of new music uploading daily, which means itâs hard to know who is doing the uploading.
DistroKid founder Philip Kaplan voiced his objection to the penalty system on a recent call with the Music Fraud Alliance, according to two sources who were also on the line.
One of those executives described the gist of Kaplanâs comments: âWe canât determine if a new client is going to hire a marketing service thatâs going to bot streams until theyâve done it. Itâs like you canât determine if your neighbor is going to commit a crime.â
Spotify is planning to roll out its new royalties model in early 2024, although no firm date has yet been announced. The changes will not affect songwriters for the time being.
The leaders in perhaps the largest known YouTube royalty scam in history, Jose âChenelâ Teran and Webster âYenddiâ Batista Fernandez, have been ordered to pay more than $3.3 million in restitution to their victims. The amount is just a fraction of the $23 million in total royalties the two fraudsters siphoned from mostly Latin music makers, including Don Omar, Julio Iglesias, Prince Royce and Anuel AA, from about 2016-2021.
In total, the duoâs company MediaMuv fraudulently claimed to be the rights holder of over 50,000 sound recording and composition copyrights. Proceeds from this scam were then used by Batista and Teran to fund their lavish lifestyles, including Lamborghinis, real estate, diamond-encrusted jewelry and other luxuries, until their indictment in November 2021. They were indicted on 30 counts of conspiracy, wire fraud, money laundering and aggravated identity theft.
The two will split the $3.3 million they are ordered to pay back to victims; one source explained that the money will be paid out slowly each month after their release from prison. Earlier this year, Teran was sentenced to nearly six years in prison and Batista was given four years.
The court is ordering Teran and Batista to pay just a small sampling of the many songwriters and artists who are owed royalties as a result of the scam. It stipulates that Regalias Digitales â a rights management firm that represents a number of the victims â is owed nearly $1.4 million, the Recording Industry Association of America (RIAA) â which also represents many of the victims â is owed more than $1.2 million, Jose Luis Perales is owed $153,000, Los Caminantes is owed more than $149,000, Nancy Ramirez is owed more than $100,000, Vagon Chicano is owed $98,000, Grupo Mandingo is owed $67,000, Grupo Ladron is owed almost $56,000, SPARX is owed $49,000, Don Omar is owed nearly $21,000, El Ojo is owed $15,000, INAMU â Argentinaâs National Institute of Music â is owed $11,000 for its catalog of artists, Pappo is owed almost $2,000 and La Renga is owed over $700.
The latest court document reveals that Reggaeton superstar Bad Bunny was also a victim of Teran and Batistaâs false royalty claiming, which they conducted under the company name MediaMuv. The thieves stole $500 from the star, which they have been ordered to pay back.
Representatives for Regalias Digitales and the RIAA did not respond to Billboardâs requests for comment.
INAMU told Billboard it learned of Batista and Teranâs scam from its partners at AdRev, a digital rights management firm that is now part of Downtown Music. At the time, INAMU was working with AdRev to collect royalties on behalf of its catalog, and the organization subsequently got in touch with prosecutors. The Argentinian institute â which controls the rights to a recorded music catalog that includes Leon Giaco and Seru Giran â no longer works with AdRev.
AdRev was also a business partner of Teran and Batista. Over the course of the duoâs five-year scam, AdRev helped claim the duoâs royalties. To date, AdRev has not been accused of any wrongdoing by prosecutors, and Batista admitted to sending three falsified contracts with companies that âpurportedlyâ managed artists to AdRev âfor the purpose of deceiving [AdRev] into allowing [MediaMuv] to continue [its] fraudulent operation.â However, a previous Billboard investigation into the $23 million scam revealed that AdRev executives were warned of Teran and Batistaâs suspicious ownership claims on many occasions but continued to work with MediaMuv despite those emails.
The Warner Music Group has signed on to Deezerâs new royalty payment structure in France, which was developed in partnership with Universal Music Group and announced in September, the president of the major labelâs French operations confirmed today (Nov. 13). The move, which was first confirmed in a story with French outlet Les Echos, has been in place since Oct. 1, and only covers streams in France, where Deezer is based.
In September, Deezer and UMG announced their new model, which they referred to as an âartist-centricâ royalty model aimed at combatting fraud, reducing the royalty pool for so-called ânon-artist noiseâ like white noise and nature sounds, and boosting payouts for what the companies referred to as âprofessional artists,â or artists who were accumulating 1,000 streams per month from 500 unique listeners. The model replaces the existing pro-rata model, in which rights holders were paid by share of streams, regardless of their stature or content, which is still in place globally.
âWe are delighted to partner with Deezer on this artist-centric model which rewards engaging music and demonetizes non-artist noise,â Warner Music France president Alain Veille told the outlet. âOur new deal will benefit creative talent at all stages of their careers and support our ability to invest in the next generation.â
In opting in to Deezerâs new structure, WMG joins UMG and a handful of small indies, while the third major, Sony Music, has so far not signed on. The move comes amid a yearâs worth of conversation in the music industry about how to tweak the streaming royalty structure as the amount of tracks being uploaded each day to major services surpasses 100,000, and fraud on services is becoming an increasingly big topic. Universal also announced a royalty review with SoundCloud and TIDAL, while Spotify released its own tweaked model, which has far lower thresholds for artists than Deezerâs and is more narrowly aimed at fraud, rather than at determining the level of streams that constitutes an artistâs professional status.
When Deezer and UMG first announced the new model, it was met with pushback from several corners of the music business, particularly the indie sector, which was concerned about those seemingly-arbitrary levels to qualify as a âprofessionalâ and about the one-label study that led to its adoption. And while there is broad consensus in the industry that the model needs to change â including public statements from UMG chairman/CEO Lucian Grainge and WMG CEO Robert Kyncl â there is not universal agreement in how to do so, and there is a possibility that each digital service provider could adopt its own model moving forward.
In initially announcing the model in September, Deezer CEO Jeronimo Folgueira told Billboard that he expected more rights holders than UMG to sign on, and planned on rolling out the new structure globally in the coming year. For now, the model is limited to France.
