Royalties
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BMI enjoyed a double win Tuesday (March 28) in a federal rate court decision that will increase the royalties the performance rights organizations’ songwriters earn at live events.
The federally adjudicated decision in BMI’s rate case against Live Nation, AEG and the North American Concert Promoters Association (NACPA) awarded a 138% increase in rate to 0.5% of the event’s revenue. It also expands that revenue base to include the full price of concert hall VIP packages and box suites, tickets sold directly to the secondary market and servicing fees received by the promoters.
Previously, the revenue definition only reflected earnings directly from the face value of primary market ticket sales.
The rate and expanded revenue base applies to the period of mid-2018 through Dec. 31, 2022.
On the flipside, Southern District of New York Judge Louis Stanton, who handed down the rate court decision, rejected BMI’s attempt to ditch the historical 10% discount fee that the trade group and its promoters get for helping to administer the license on behalf of BMI. As well, BMI’s effort to expand the revenue base to also include sponsorship and advertising revenue was also rejected.
“This is a massive victory for BMI and the songwriters, composers and publishers we represent,” BMI president Mike O’Neill said in a statement. “It will have a significant and long-term positive impact on the royalties they receive for the live concert category. We are gratified the Court agreed with BMI’s position that the music created by songwriters and composers is the backbone of the live concert industry and should be valued accordingly. Today’s decision also underscores BMI’s continued mission to fight on behalf of our affiliates, no matter how long it takes, to ensure they receive fair value for their creative work.”
“We advocated on behalf of artists to keep their costs down, and managed to hold the increase to less than 1/3 of BMI’s proposed increase,” said a Live Nation spokesperson in a statement. “This will cost the performers we work with approximately $15 million a year spread out over thousands of artists, and cost increases for Live Nation directly are not material.”
Prior to this decision, BMI and the live concert industry have been operating under a license negotiated in 1998 that was renewed twice through June 30, 2013. That agreement called for promoters to pay a performance licensing rate of 0.3% of revenue for concert venues with under 10,000 seats, and 0.15% of revenue for venues with over 10,000 seats. That rate, and the revenue definition that only covered primary market ticket sales, also served as the interim rate until this decision came down today.
AEG did not respond to immediate requests for comment. The NACPA could not be reached for comment.
French streaming service Deezer and Universal Music Group announced this month that they are partnering to develop and test new potential payment models that would more fairly reward artists, similar to a partnership UMG launched in January with Tidal.
While the streaming services and labels are still a long way off from implementing new streaming royalty payment models, Deezer’s chief executive Jeronimo Folgueira spoke with Billboard about some of the ideas being explored and the economic imperatives that are driving his company to push for a new way to pay rights holders.
Deezer has long advocated for changing payment systems. How have the company’s views evolved?
We were, I believe, the first to really embrace the concept of user-centric, which means that the artist gets a share of the payments that the user that listens to them pays, instead of a global pool. We could never do it unilaterally [because] we have not been able to get the majority of labels to agree to an initiative so far. To do it right, you really need a consensus from the industry and obviously, there are so many players involved that it’s difficult to get that. I do believe [an artist-centric] system is much better than the current system we have, but no system is absolutely perfect. There were some flaws, and that’s why there was so far resistance from some labels. I believe that there are a lot of elements in the artist-centric initiative that Universal is pursuing that make sense and could make something like [user-centric payment systems] even better.
You often mention the importance of “growing the pie.” What do you mean?
When the discussion is about sharing the same pie there are always winners and losers and it’s very difficult to get consensus. That’s why if you focus on growing the pie then you can have a discussion also about the distribution of that pie because some will win and some will win double. One of the things that I’m really excited about in this discussion is … also figuring out ways of monetizing fandom better. If we can find ways to increase the [average revenue per user] on the way, that would be a win for the artist, for the labels and for the platforms like us.
How does that fit into Deezer’s overall growth strategy?
Basically, today 100% of our revenues come from selling access to the catalog. So you pay $10.99 and you get access to the full catalog. But we don’t let users pay for anything else on the platform. We know that we have a lot of fans of artists on Deezer but we cannot monetize them in any other way. And the artist is struggling to monetize them in other ways because they don’t have direct access to the fans. We believe that working together with the label and the artists to figure out ways of helping the artist directly access their fanbase and monetize that fandom would benefit us and them as well.
What’s in it for you?
If we only change the compensation model there is nothing in it for Deezer except that we will be a platform where artists are remunerated better. It will give us a bit of differentiation but economically it will not really change anything.
If we find ways of monetizing better, let’s say, if we would allow fans to subscribe directly to artists, we would have an additional revenue source that we would share with labels and the artists, which will improve our growth and profitability profile. It is important to be more fair in terms of payout but to have a financial impact, we also care a lot about growing the pie. I fully share [Warner Music Group CEO Robert Kyncl‘s] view. Music is extremely undervalued. We are very keen on working with Universal, but we are also keen on working with all the other labels like Warner, Sony, Believe and all the indies to make the industry better by monetizing better and then sharing that pie in more fair ways.
Do you have to “grow the pie” in order to pay artists more?
There’s not enough money right now for us all. First of all, music is undervalued. We’re giving too much for too little. Second, with the current monetization model, there is really not enough money for everyone. The platforms like Deezer or Spotify, we’re not making enough profits. And many artists are struggling to make a living. So for the system to be viable we need to grow the pie. That has to be the number one focus.
At the risk of asking a naïve question, what if the share of the pie that has historically gone to the labels shrank? Is that just impossible?
So basically the artists get more, and the DSPs get more and the labels get less? The thing is that it is a fragile ecosystem with a lot of negotiation power in the hands of the labels. You [the DSPs] do need a full catalog. The labels are not going to hand their money to us or to the artists. Instead of having that fight — which is what we’ve been doing basically for the last 10 years — it is a far healthier discussion to be had working together to grow the pie especially because music now is extremely undervalued. The piracy days are long gone. This is the right time to have the discussion. One of the things that doesn’t help is that a lot of the distribution is in the hands of companies that don’t have music as a core business.
Who are you referring to?
I’m talking to the tech giants. Three key players here are tech giants, and their core business is not really music. Then you have two independents, one that is very big — Spotify — and then Deezer. We are truly music; it is our duty and necessity to work together with the labels to make the whole ecosystem better and bring the value of the music to where it should be.
Where does the initiative with UMG currently stand?
There is nothing that we are testing yet, and we don’t have a deadline. But we are starting to work on different models of compensation that we could eventually test that would solve a lot of the issues we see today.
During a recent earnings call, Universal Music Group chairman and CEO Lucian Grainge said he wanted a new model where “artists are rewarded for the fans they bring in [to subscribe to streaming services] and the engagement they drive [on those platforms].” How can you determine which artists drive subscriptions?
That is very difficult to know and quantify. This is one of the areas where we are working with Universal to figure out if there is a way to measure, quantify it and use it for payment or not. That’s part of the exercise. That is one of the most tricky ones. There are other areas [such as] if a user goes and searches for an artist and song, that has more value than if they just go and listen to that stream in a lean-back experience. A stream that is heard as part of a playlist is not as valuable as when you go proactively to a platform, look for a song and play that song. You as a fan care about that song more. We agree with that as a concept but the question is how do you apply that in a model that is easy to implement and explain? There needs to be transparency [so] everyone understands how things get calculated and how people get remunerated. It’s easier said than done. This is why we need to work with Universal but also with other labels to do that exercise. First, we have to agree with the principles. And then you have to find a pragmatic way of actually doing it.
Could you walk me through the different models you are exploring?
I cannot go into that level of detail right now because we are in a very exploratory phrase. We are looking at what is feasible, what impact does it have and, based on that, we will have a proposal to test. But it’s too early to explain these models.
Have you seen any examples of streaming services that have done a good job of encouraging active fan experience?
Video and music are very different so you cannot really draw comparisons between the two. I don’t think anybody has cracked it, and that’s why Universal is working with us. We would love to be the first ones to figure out the new model that makes sense. SoundCloud made an announcement with Warner Music around user-centric, but they haven’t disclosed anything. Since they are a private company, we do not know how that has worked or played out.
Where are the majority of Deezer’s users based? Could the results of the Deezer and UMG experiment be applied on a global scale, or would differences in listening behavior in different markets limit the wider applicability of the study?
We are a global company with a presence in 180 countries. We have a large user base in France — less than half of our subscribers — then we have a lot of subscribers … in Brazil and then a bit everywhere else. Our model will have a big impact on the French market because there we are a massive player, but the learnings can be applicable anywhere in the world.
However, Lucian has mentioned that he sees different models for different platforms at different stages of their development in different countries. I think there is some merit in that. Our Brazilian business is very different from our French business and American business. You might need different models as you go through different stages in a market. Right now, it’s one model that came up really quickly, built 15 years ago on the back of piracy, and that model fits all. I think in the future we need more flexibility.
Is there anything I didn’t ask that you wanted to highlight?
Something that is really important is that we are working really closely with UMG because they are the largest label in the world. And they are a very important player and you cannot change the system without having Universal on board. I’m really excited that Lucian is leading this discussion and trying to make the industry better for everyone.
But I want to make sure it is well understood, as well, that this should benefit all real artists, whether they are from Universal, any other label or independent. We want to reward real artists that create real music. This is not to benefit Universal alone in any way. This is not a Universal-centric payments system. We’re working together to make the industry better for everyone who creates high-quality content.
You said a better system will reward “real artists” and “high-quality content.” What is the opposite of that? And should it not be rewarded in this new system?
There is a whole discussion on what are we going to do when machine-generated music comes because it is going to happen. There is not that much yet, but I think it’s a matter of months before we start getting flooded by machine-generated content, and we need to think about how we’re going to handle it. The other thing is it’s not the same that an artist creates new music and creates a fan — is a real artist in a way — compared to, for example, people that do a cover…. Those streams are not as valuable to us as the original song from the original band. The same thing with sounds that get uploaded, for example, the sound of the washing machine for people who need that to sleep. The sound of rain is not as valuable as a proper album created by an artist recorded in a studio. The fact that the recording of rain gets more streams than Lady Gaga, I find that astounding. We have to do something about it. It is hurting the user experience. We cannot flood the catalog with poor-quality stuff.
What should be done, and is this part of artist-centric royalties or another initiative?
We are trying to address that problem as part of the artist-centric discussion. We believe there are things we can do with the artist-centric model that will create the right incentives and will solve part of that problem. Yes, there are other areas where we might be stricter about the rules of what can be uploaded to the platform or not. We will explore all the different options. Obviously taking a big part of the economic incentive [away] is a big part of the job.
In 2022, about 57,000 artists earned more than $10,000 in royalties from Spotify, the company disclosed Wednesday (March 8) in the latest report published to Loud & Clear, a microsite that provides transparency into the amounts Spotify pays to creators on its platform.
That works out to just 0.6% of artists on Spotify making at least $10,000 in royalties. But using Spotify’s narrow definition of “professional or professionally aspiring” artists, more than a quarter of that group earned more than $10,000 on the platform in 2022.
How did Spotify get to that figure? Of the 9 million artists who have uploaded music to Spotify, 3.4 million have published 10 or more songs. From that group, only 213,000 artists average at least 10,000 monthly listeners, an amount Spotify calls “the beginning of an audience.” For context, newcomer Peyton Parrish, the No. 99 artist on Billboard’s Artist 100 chart, has 1.26 million monthly listeners on Spotify. There were 57,000 artists with at least 120,000 monthly listeners in 2022, according to Loud & Clear.
A similar data point came from Spotify’s integration with Songkick, Ticketmaster and other ticketing platforms: In 2022, 189,000 artists had at least one ticketed concert or event. Spotify says that “demonstrat[es] professional activity outside streaming.”
The number of artists making at least $10,000 on Spotify increased 144%, up from 23,400 in 2017. The upper echelon of Spotify payouts grew at about the same rate: 1,060 artists made more than $1 million in royalties in 2022, a 130% increase from 460 in 2017.
But the growth in the number of artists hitting these mile markers hasn’t kept pace with the overall growth of the platform. From 2017 to 2022, Spotify’s subscriber base grew 189% to 205 million, the number of ad-supported monthly active users rose 217% to 295 million and total revenues (which now includes some podcast advertising) increased 187% to 11.72 billion euros ($12.4 billion).
On Feb. 21, The Mechanical Licensing Collective (The MLC) announced to its members that it had hit an important new milestone roughly two years after launching — distributing $1 billion in royalties to music rights holders with a current match rate of over 89% for streaming data to a musical work in the MLC database for 2022.
The MLC is a Nashville-based non-profit which was established by the Music Modernization Act (2018) as the designated organization to collect and distribute mechanical royalties under a blanket license for streaming services. At the time, the industry was fraught with a growing pool of royalties from streaming services that were sitting unallocated because the composition’s owners could not be found. The creation of the MLC was designed in hopes of alleviating this issue.
The organization officially opened its doors Jan. 1, 2021 and since then, it has been tasked with not only collecting and distributing current mechanical royalties currently coming in but also trying to match that pool of $427 million in royalties from before its inception that never made it to its proper owners. So far, it has matched over $300 million of that $427 million pool. While some in the industry have nicknamed this pool of money “black box” royalties, The MLC prefers to use the term “historical unmatched royalties.”
To explain how The MLC reached its $1 billion milestone and to answer questions about how the Copyright Royalty Board’s Phonorecords III ruling will affect The MLC and when unmatched royalties will be divvied to rights holders based on market share, CEO Kris Ahrend gave an exclusive interview to Billboard.
The MLC has paid out $1 billion to rights holders thus far. Why does this first billion feels so significant to you and your team?
It’s a massive amount of money and to know that we have built a process that has allowed us to make connections that that have generated that much revenue is incredibly rewarding for us but more importantly for rights holders. That’s a billion dollars that has gotten to rights holders that will allow them to continue to create. With the rates going up for Phono IV, I think we’ll reach our second billion much quicker than we reached our first, so we’re excited and looking forward to see how much more we can pay out this year alone.
What are some of the initiatives that the MLC has taken on that has helped you achieve this 90% match rate per month?
By establishing this central place for rights holders to go to register works and to see the results of their work, whether it be the public search of our database or within our member portal, we have increased visibility that has led to an enormous influx of data on our part. We’ve received and processed well over 18 million registrations for songs since we began full operations a couple of years ago. The simple formula for us is data drives dollars. The significant amount of data we’ve received has been a big factor in helping us drive up match rates.
This is a lot of data to handle and a quick influx of info over just a few years. Have you scaled up your staff to make sure that the data is being monitored properly?
We’ve been growing from the beginning. From the time I joined a little over three years ago until today, we now have a team of more than 110 people working at the MLC. For the first two years our largest team was our support team. We recognized that the big initial challenge was helping people understand how the MLC works. In the last year, the group that eclipsed our support team is our matching team. These people try to make the connections between the sound recording data they receive and the song data in our database. They’re reviewing millions of lines of data every month to try to make more connections every month to impact overall match rates.
We are waiting on the Copyright Royalty Board to fully finalize Phono III rates. This could happen any day now, and whenever that happens, streaming services and the music business will have to come together to go back in time and make sure payments from 2018-2022 are in alignment with the new headline rate. How will the MLC handle this recalibration?
As for Phono III, we will certainly be ready when the Phono III rates are finalized. The DSPs [digital service providers] will have some time after the rates are finalized to redeliver all of their data and likely to make some incremental payments, but when that happens, we’ll be able to hit the ground running. There are three different areas of royalties that will be impacted when this happens. Two of these involve the MLC, one does not.
The one that doesn’t is all the royalties that DSPs paid out in 2018, 2019 and 2020 before the MLC’s blanket license began. The DSPs have to correct the royalty payments that they made. That’s not something we can be involved in.
But the second and third pieces we will be involved in. The second part is correcting the unpaid royalty data that the DSPs transferred to us. We will need to correct that. For all the historical unmatched royalties that we received that relate to the Phono III period, the DSPs will have to redeliver all of their data for 2018, 2019, and 2020. Potentially in incremental payments. Once we have that new data, the payments will begin processing and paying out within a matter of months.
The third piece is the 2021 and 2022 blanket royalties that we paid out under guidance from the Copyright Office. We’ve paid out royalties thus far at the Phono II rates so we know those will have to be corrected. Again, the DSPs will have to redeliver their data for 2021 and 2022 to us and then we have to calculate how much each stream is owed under the new rates and process the adjustment.
This is a process that will begin within a matter of months after we get the data from the DSPs and that process will play out probably throughout next year.
Is there a more specific timeline you are trying to follow with reconciling these 2021 and 2022 royalties?
Right now we are hopeful we can process a year of adjustments over six months. That’s across all DSPs. We would look to process the adjustments for 2021 in the first half of 2024 and then the 2022 adjustments in the second half of 2024.
Do you have staff members that are aiding this process specifically?
We’ve been building the technology that we need to do all of this for several years now. It’s something we’ve been preparing for from the beginning because the rates for Phono III weren’t finalized when we launched. There’s no extra people, it’s the same teams that are dealing with our technology and DSP relations that are managing that transition.
NMPA chief David Israelite has recently spoken about his hope to reform the CRB and increase the likelihood of timely settlements between publishers and streaming services to avoid something like Phono III happening again. What is the MLC’s stance on CRB reform?
We aren’t active participants in the CRB process, but the headline message that you’re hearing is the one that we would echo: It’s imperative that rates be set ahead of time so that we can manage our process with the right rates from the outset. Anytime we introduce additional complexities into a process that is already quite complex, we have to redo work.
There are more DIY creators than ever. What are some ways The MLC is trying to help meet these creators where they are at, tell them about the MLC and help them collect the money they are owed?
There are three different ways.
First, education. We recognize that administration is very complicated and that very few creators get into the business of creating with an interest in administration. We’re trying to put out materials that explain in really simple terms how digital administration works.
Second, tools. We also now have a suite of member tools that are as effective for the smallest creator as they are for large publishers and administrators. We have tools that allow members to register works individually or in bulk. We have a claiming tool that allows members to search all works for which not all of the shares have been claimed. And our matching tool now allows rights holders to search all of the unmatched data that came in under the blanket license with the exception of a few last files for one DSP, Spotify, that we’re still working through all the historical data from. This tool is not only a really helpful tool for rights holders, but it’s also illuminating the black box for the first time, which is a huge step toward eliminating it.
Lastly, we have our Distributor Unmatched Royalties Portal (DURP) which has allowed any distributor of sound recordings to access the data for unmatched uses of songs that we can identify as originating from their distribution platform. Those indie distributors are often serving people who both wrote and performed the recordings that are being distributed. They can literally see which of their customers might be missing out on mechanicals for the digital uses of their sound recordings and songs. Our hope is that those distributors will now use that data to engage with their customers directly,
Is there a distinction between what that The MLC considers to be an “unmatched” royalty or a “black box” royalty?
We don’t use the term “black box” anymore because we have largely illuminated the black box, which is to say our members have full visibility into the unmatched sound recording data that we receive and can search through it and propose matches to songs they have registered. The data is no longer in the dark – that’s a huge step toward helping people find their share of money that may have been missing.
We break down the royalties pending distribution into three buckets, two of which are most relevant for this conversation. Those two are “unmatched” and “unclaimed,” so an unmatched royalty dollar is a royalty dollar that we have not been able to associate with a song in our database. Unclaimed royalties or those royalties that we have been able to match to a song, but we can’t pay out because not all of the rights holders with shares of that song have claimed their shares. That’s a really important distinction because it’s not about our inability to make the connection to the song. It’s the fact that the writer or the administrator hasn’t claimed their share.
It’s hard to argue offering a transparent user portal isn’t a good thing, but still, allowing so many people the access to see what songs and royalties have and have not been claimed can leave them up for incorrect or fraudulent claiming. Why does The MLC believe this fully transparent outlook is the best system despite the risks it poses?
It is one of the stated objectives of the Music Modernization Act to bring greater transparency to this part of the market. I firmly believe that transparency is always a good thing, even where there may be bad actors. The more transparent the data, the more likely it is that rights holders can see evidence of those bad actors in order to address it. We certainly spend an enormous amount of time and effort looking for any evidence of bad actors. What we are hoping to create is a large group of knowledgeable empowered creators who are actively managing their rights, and as long as they are actively managing their rights, that diminishes significantly any opportunity that anyone else might have to to do anything inappropriate.
As generative AI tools become more and more popular for music makers to use, many anticipate a deluge of new songs into the market, even more than what we have now. It will likely also mean more DIY, unsigned creators than ever. Do you believe this could cause any challenge or strain to the MLC to try to reach this fast-growing cohort of new musicians?
The tools are always going to evolve. I think as long as AI powered tools enable real people to create meaningful and impactful music, they’re a good thing. If the tools make it easier for people to create, then that will increase the number of songs in the market. That will also increase the amount of data that we have to process, so it will be a challenge for the MLC. But we’re already talking about a market with well over 100 million sound recordings and we already have 30 million musical works in our database. [A number of these 30 million musical works have multiple recordings available, explaining most the discrepancy in the two figures.] So I’m not sure how much additional growth itself is going to change the challenge in front of us. We’re already managing an incredible amount of data.
The MLC is charged by the MMA to divide up whatever remaining unmatched historical money you have and distribute it out to rights holders based on market share after two years. Critics say this will provide a financial windfall to the major publishers. Since the MLC is about two years in, I wanted to check in and see if this distribution is in progress?
One of the misnomers about that mechanism is that it would only result in distributions to the majors or for the large companies. In reality, what the market share mechanism means is that we will distribute any remaining royalties on a pro-rata basis to anyone we’ve paid. Self-administered songwriters who collected from us in 2021 will be eligible to receive a pro-rata portion of any remaining royalties from 2021 that we are not able to distribute. So everyone who gets paid will essentially get paid a little bit more for each stream that they were paid on.
In terms of the timeline, the law said the historical activity had a two years window from the time the blanket licenses began, but the blanket license royalties is set to a three year period. We have not yet reached that three year period for the blanket royalties, and for all royalties — blanket or historical — we have not yet taken any steps toward eventual distribution on that basis.
In the case of the majority of historical unmatched monies, we still don’t have the final rates or the final amounts that we will have to distribute [because of the delay of Phono III.] We are not going to proceed with any market share distribution for the historical money until we’ve gotten all of the Phono III rates finalized and have attempted to match and pay out that money.
Again, for the blanket money, we haven’t yet hit that minimum period, but also we would not rush to that outcome. We’re going to let the data tell us whether there is still benefit to trying to match and pay out, or if we reached a point where we’re no longer seeing new progress. The whole point of that market share payout mechanism was to ensure that the MLC did not sit on pools of unpaid money indefinitely.
The intent behind that provision was to ultimately get that money back to rights holders and to make sure we don’t sit idle with it for years or decades. Given this was the intent of Congress, we will honor that intent. For right now, though, we are focused squarely on getting the data in and paying out as much as possible.
Will you be announcing when this market share payout process begins?
The MMA requires us to publicize when we do eventually move to a market share distribution for any period. So that is not something that’s going to happen as a surprise. Again, we’ve no plans to do any market share distributions this year at all. Probably not next year either.
The process of collecting public performance royalties from DJ sets has long been a tricky one in the United States, with uneven data collection processes often obscuring what songs are played at dance festivals. That makes it difficult for artists with the rights to the music to get paid what they’re due.
But one music market with a firm grasp on the performance royalties collection and distribution process as it relates to the dance world is The Netherlands, where electronic music is deeply woven into the country’s social fabric.
Buma/Stemra, one of the world’s most progressive collective management organizations (CMOs) for electronic music producers, operates within a live music market that generated 34 million euros ($36 million) in public performance royalties in 2022. Of this revenue, 7.2 million euros ($7.6 million) came from dance festivals, with roughly 1 million euros ($1.1 million) from clubs, making dance music comprises a quarter of the Netherlands’ total performance royalties
Since dance music incorporates so much different music from different artists in a set, that leaves a lot of rights holders to be identified. For this, Buma/Stemra uses audio fingerprinting technology that monitors and identifies songs played during sets.
“In the Netherlands, we have such a wide range of successful DJs with worldwide success,” says Juliette Tetteroo, accounts manager of dance events at Buma/Stemra. “As Buma/Stemra, that’s also why we find it really important to be at the front of developments like fingerprinting technology.”
For its fingerprinting, Buma/Stemra primarily uses Amsterdam-based DJ Monitor, an electronic music monitoring technology. DJ Monitor functions much like Apple-owned audio-recognition mobile app Shazam, identifying tracks within its library — a database of roughly 100 million songs submitted to DJ Monitor by global performance rights organizations (PROs) — and creating set lists for any given set with 93% accuracy, the company reports. (Billboard‘s recently published lists of the top 50 tracks and the top 50 artists played at Dutch dance festivals in 2022 was made with data collected by DJ Monitor.)
DJ Monitor is one of a number of music recognition technologies, including Pioneer’s KUVO, that can make the monitoring and reporting of DJ sets easier and more accurate. Buma/Stemra says that DJ Monitor has the highest identifying rates of all audio fingerprinting technology.
DJ Monitor is currently employed by CMOs in France, Germany, Finland, Belgium, Australia, New Zealand, the U.K. and The Netherlands, where it fingerprints 70% of all festivals. (Another fingerprinting company, Soundware, is also used by some Dutch events.)
Buma/Stemra’s work collecting performance royalties from a given event begins well before any tracks are even played. The CMO begins by determining licensing fees for any given event; for festivals with revenue lower than 110,000 euros ($116,000), the festival organizer pays the standard 7% licensing rate for events. This percentage is based on the assumption that more than two-thirds of songs played during the course of a given event are in Buma/Stemra’s repertoire. (If the event organizer provides a setlist showing that less than two-thirds of the music played was Buma/Stemra repertoire, the licensing fee drops to between 3% and 5%.)
For festivals with revenue higher than 110,000 euros, the event organizer provides Buma/Stemra with audio from the events to be fingerprinted. The festival can submit the audio manually, or upload it to the Buma/Stemra server, where it is then fingerprinted by DJ Monitor. The festival can also let DJ Monitor monitor audio during live performances, in which case DJ Monitor tech is implemented at every stage at the festival.
For bigger events, Buma/Stemra pays for fingerprinting costs, as, they say, it serves their goal of paying royalties on every song played at a given event.
“Our goal is to work towards one-on-one collection and distribution,” says Tetteroo. “It is all about the quality of what we do. [Paying for fingerprinting costs] also helps in encouraging organizers to pay, because they know that the money they pay goes to the composers and their publishers of the songs that have been paid. This is why we happily invest in technology that points in this direction.”
Buma/Stemra receives hundreds of songs from any given festival, given that most events host multiple stages and often run for three days. DJ Monitor typically identifies between 80% to 90% of this music (more than 80% if monitoring electronic music; 90% if monitoring open format/pop music) and sends formatted lists of the data to Buma/Stemra. Buma/Stemra imports this data, 60% to 70% of which is typically imported automatically — given that roughly that amount of music from any given event is recognized as something already in the Buma/Stemra database.
The percentage that’s not automatically recognized goes to an outsourced supplier in India that works to manually identify it. Money collected from a festival is then divided and paid out based on a system that assigns points to songs.
Given that a certain percentage of songs aren’t recognized, hundreds of hours of unclaimed music aggregates over the year because, says Buma/Stemra’s music processing manager Rob van den Reek, “we have a real lot of festivals here in the Netherlands.”
Buma/Stemra publishes this unclaimed music on their website, where artists can find and claim their songs. Artists are able to make a claim for up to three years after the song is posted online. If no one has claimed it after three years, the money owed to all unclaimed music is divided between rightsholders included in what’s called a “reference repertoire” — or a Buma/Stemra-compiled sample of common songs played at festivals. Introduced four years ago, this claiming system adds another layer of transparency — and more opportunity for creators to get the money they’re owed.
“Transparency is one of the benefits that stands out the most from the way we work,” says Buma/Stemra marketing manager Annabel Heijen. “That’s where we’ve made the most progress.”
There is one fault with the Buma/Stemra system that’s in the process of being addressed. Currently Buma/Stemra pays out based on the length of a full song that’s registered — not how much of it was actually played in a DJ set. If a song was registered at a length of three minutes, but only played for two minutes, Buma/Stemra pays based on that full, original timestamp. Buma/Stemra is currently building a new system that will pay out against the real timestamp identified during DJ sets that the organization expects to release by the end of 2023 or early 2024.
When Bonnie Raitt‘s touching ballad “Just Like That” won the Grammy for song of the year, the singer-songwriter seemed just as shocked as the crowd. “I am just totally humbled,” she said while accepting the award.
Though she is a decorated and critically acclaimed musician, with 11 Grammys and five top 40 hits on the Hot 100 to her name, Raitt’s “Just Like That” was the least commercially successful song up for the category this year by a long shot. Despite not cracking the Hot 100 chart, “Just Like That” managed to beat out the nine other nominated songs, each of which ranked in the top 20 of the Hot 100 this year, including two No. 1 tracks (“As it Was” by Harry Styles and “About Damn Time” by Lizzo). Many see Raitt’s win as proof that the top Grammy awards do not necessarily always go to those with the most commercial or widespread success.
This particular award win is surprising for Raitt in more ways than one. Song of the year is one of four top awards given out each year by the Recording Academy, along with record of the year, album of the year and best new artist, and it is the only one of the big four that honors the craft of songwriting specifically. Raitt, as she admitted in her acceptance speech, “[doesn’t] write a lot of songs,” but she did write “Just Like That” singlehandedly.
So how much did “Just Like That” earn in publishing royalties for Raitt as its only songwriter, and how much did the Grammy win help the song commercially?
Billboard estimates that before the Grammys, “Just Like That” had earned Raitt over $6,000 in publishing royalties from its release date (April 22, 2022) to the week of the Grammys, which aired on Feb. 5, 2023, for her work as a songwriter from U.S. streaming, sales and airplay combined. In the two weeks following the show, those formats earned her another nearly $6,000. In other words, Raitt earned almost as much from the song in just two weeks as she did in the more than nine months prior to the broadcast.
Raitt owns her publishing, and she houses her songwriting catalog under two entities, Kokomo Music and Open Secret Music. In 2018, she entered an arrangement with indie publishing house Bluewater Music to administer her publishing catalog worldwide. Because she owns her publishing and wrote “Just Like That” by herself, the vast majority of the money she earns from the song will end up in Raitt’s pocket, with deductions likely only made to pay Bluewater Music administration fees and whatever cut her manager makes.
Overall, since the release of “Just Like That,” Billboard estimates that Raitt has earned a total of about $12,000 in publishing royalties from streams and sales of the song. The majority of that came from both physical sales of the album on which the song appears — also called Just Like That — and U.S. on-demand audio streams, according to Luminate. In the two-week period after the Grammys, song downloads and streaming were the biggest source of royalties by far.
In terms of streaming alone, Raitt earned only about $975 worth of publishing royalties from U.S. on-demand audio streams in the almost 10 months that elapsed between the song’s release and the week of the Grammys. But in just the two weeks since her song of the year win, she has earned a little over $2,000 in publishing royalties for U.S. on-demand audio streams.
The week before the Grammys, dated Jan. 27-Feb. 2, “Just Like That” was racked up 44,000 on-demand audio streams in the U.S. The week after the Grammys, dated Feb. 3-9, on-demand U.S. audio streams increased by 3,028% to 1.377 million, according to Luminate. The massive spike, however, did not hold steady in the following week, dated Feb. 10-16, when the number of U.S. on-demand audio streams fell to just over 410,000.
On the physical sales side, Raitt earned over $4,000 in publishing royalties from selling copies of her albums through to the night of the Grammys. In the two weeks after the awards show, Raitt earned about $700.
Along with increased consumption in the sales and streaming categories, “Just Like That” has also sparked interest at radio. The week before the Grammys, it was played just a handful of times, but in the two weeks after her win, she received a total of 144 radio spins, according to Luminate. While still not significant enough to push her to the top of any charts, airplay could contribute solidly toward her future publishing earnings if it continues to gain traction.
So far, the big Grammy win for “Just Like That” doesn’t appear to be boosting sales and streaming activity for Raitt’s overall catalog in the U.S. While weekly catalog album consumption activity jumped to over 9,000 copies on average in each of the two weeks after the show — up from the weekly average of over 3,000 copies before the show — all of that gain is coming from the Just Like That album.
Just before the start of his previously scheduled trial, Jose Teran, who was accused of running a YouTube scam with a partner, has accepted a plea deal in which he has admitted to counts of conspiracy, wire fraud and transactional money laundering for his role in one of the largest royalty scams in history. In his plea, Teran admits to stealing over $23 million in royalties from Latin artists that he admits now he had “no lawful rights to monetize or otherwise control.”
Teran and his business partner, Webster Batista Fernandez, operated their scam under the business name “MediaMuv” and were originally indicted by a federal grand jury in Arizona on Nov. 16, 2021, on 30 counts of conspiracy, wire fraud, money laundering and aggravated identity theft. The scam was the subject of a Billboard investigation. Batista took a plea deal on April 21, 2022, in which he admitted to one count of conspiracy and one count of wire fraud. Batista now awaits sentencing, which is currently scheduled for March.
Teran’s plea agreement echoes much of Batista’s. Both pleas say that the MediaMuv founders “discovered there were songs of musicians and bands on the internet that were not being monetized.” So they began uploading the recordings to YouTube as MP3 files, claiming to own or control the rights. Between 2016 and 2021, Teran and Batista falsely claimed royalties from songwriters and artists ranging from independent creators to songs recorded by global stars like Daddy Yankee, Don Omar, Prince Royce, Julio Iglesias and Anuel AA.
Under the name MediaMuv, Teran and Batista signed a contract with YouTube to use its content management system (CMS), which rights holders use to claim copyright ownership and the ensuing royalties. “We falsely claimed that MediaMuv owned over 50,000 songs and further sought access to YouTube’s CMS in order to obtain royalty payments for these songs,” Teran said in his plea. In addition, the duo entered a contract with AdRev, a rights management company owned by Downtown Music Holdings, “to assist in administering the music [they] fraudulently claimed to own.”
Billboard’s investigation uncovered that YouTube royalty-claiming scams like MediaMuv’s are more common than is generally believed, but Teran and Batista’s scheme was particularly brazen in terms of both scale and style.
Sources who work closely with the platform say YouTube scammers typically just claim small fractions of songs they suspect have not been claimed properly and might go unnoticed. This is especially common on the publishing side, where some compositions have so many songwriters that ownership and royalties are far more complicated than they are for recordings. But MediaMuv often claimed 100% of royalties for master recordings or compositions.
Both Batista and Teran admitted in their pleas that they sent three falsified contracts with companies that “purportedly” managed artists to AdRev and YouTube “for the purpose of deceiving [them] into allowing [MediaMuv] to continue [its] fraudulent operation” in July 2017. According to Teran’s plea deal, these three forged management contracts were provided to support MediaMuv’s assertion that it controlled a vast Latin music catalog.
The plea deals also say the duo did not act alone. Both mention that they hired “over five co-conspirators” to help them find new music to fraudulently claim and, in return, those co-conspirators were paid “a portion of [MediaMuv’s] royalties.” Names are not revealed in these documents, but other court documents tied MediaMuv to a network of people who seem to have benefited financially from Teran and Batista’s scheme, including Batista’s then-wife, who purchased a house in Phoenix in cash with money from a MediaMuv-associated bank account, according to a court document filed by prosecutors.
The house she purchased, along with six bank accounts, a Tesla, a BMW and a plot of land, are all listed in Teran and Batistas’ plea deals as items they agree to forfeit.
Though the duo is ordered to “make restitution to any victim” of their crimes, one of the businessmen who represented multiple MediaMuv victims told Billboard in August he doesn’t “expect to get it all back. I’m sure they spent a lot of it on cars and travel and stuff.”
In a statement to Billboard, a spokesman for Downtown Music Holdings says the company is “pleased by the latest developments in the MediaMuv criminal case, as both defendants have now pleaded guilty and admitted their role in this complex fraud scheme. This case sends a strong message to other potential bad actors that this kind of fraudulent activity in our industry will be investigated and prosecuted to the full extent of the law.”
Representatives for Teran and YouTube did not respond to Billboard’s request for comment.
Teran’s sentencing is set for April 17, 2023.
The music business, historically speaking, has not been great at consensus. But there does seem to be growing agreement from many quarters now that the existing payment structure for streaming royalties isn’t working for everyone and that a different approach is required.
This isn’t a new idea, but it’s one that’s quickly gathering steam in the wake of Universal Music Group chairman/CEO Lucian Grainge’s internal staff memo/open letter to the industry earlier this month, in which he called for an “updated model” for the music industry — one that will be “an innovative, ‘artist-centric’ model that values all subscribers and rewards the music they love.”
It wasn’t clear what, exactly, Grainge meant in the letter. And on Tuesday (Jan. 31), it became a little bit clearer that, as of yet, there isn’t much clarity on what it will mean — though UMG is hoping to find it. To that end, Universal has announced a partnership with TIDAL to “research how, by harnessing fan engagement, digital music services and platforms can generate greater commercial value for every type of artist,” according to a press release. Essentially, there are a lot of unknowns here other than that something needs to change.
That was more or less what UMG’s executive vp/chief digital officer Michael Nash said in a statement accompanying the release. “As the digital landscape continues to evolve, it’s become increasingly clear that music streaming’s economic model needs innovation to ensure a vibrant and sustainable future,” he said. “Tidal’s embrace of this transformational opportunity is especially exciting because the music ecosystem can work better — for every type of artist and fan — but only through dedicated, thoughtful collaboration. Built on deeply held, shared principles about the value of artistry and the importance of the artist-fan relationship, this strategic initiative will explore how to enhance and advance the model in keeping with our collective objectives.”
This is not TIDAL’s first attempt at stepping out of the traditional streaming royalties model, in which streaming income is collected and divvied up among rights holders according to their share of total streams. In November 2021, the streamer announced a new three-tier membership structure and a step into a user-centric royalty model for its premium tier, which endeavored to pay rights holders based on the streaming activity of each individual user — with the additional element that 10% of each user’s subscription fee would go directly to their most-streamed artist.
That, in itself, is a twist on the “fan-powered royalties” that SoundCloud first rolled out in March 2021, which allocated streaming revenue to artists based on which acts a given user listened to, and which Warner Music Group opted into last year. (Deezer has also publicly supported a user-centric model.) SoundCloud says that artists using FPR generate 60% more streaming revenue than those who use the more traditional model, though it’s currently only being offered to indie artists and WMG artists on the SoundCloud platform; a MiDiA study said that 56% of artists were better off with FPR. Access to the data on who the fans are who are streaming that music the most, SoundCloud has said, is the true game-changer for the model.
There has, however, been some hesitance around that user-centric idea, mainly due to studies conducted in the last few years surrounding who would benefit, and at the expense of whom, by the switch. One study found that for 99.4% of artists, the switch would equate to less than a 5% bump in royalties — for many, effectively just a few euros per year — which could be offset by the administrative costs of the switch itself for the platform. That could disproportionately affect R&B/hip-hop artists, given that the genres have thrived in the streaming era, to the benefit of other, smaller or more niche genres. And it would definitely take away from top earners’ revenue — i.e., artists who wield an outsized voice in the business. A general view became that the switch would equate to moving money from one bucket to another, without really moving the needle for most artists at all.
TIDAL, in today’s announcement, effectively conceded the point and said they are stepping away from the user-centric model they were pursuing in order to take a step back and join in this new research project with UMG. “We are setting aside our current fan-centered royalties investigation to focus on this opportunity for more impact,” TIDAL’s Jesse Dorogusker said in a statement. “This partnership will enable us to rethink how we can sustainably improve royalties’ distribution for the breadth of artists on our platform.”
What they’re saying is, essentially, it’s time for a new study to see if there are better, perhaps more nuanced, ways to change up a model that pretty much everyone is beginning to agree is no longer functioning the way it was originally intended. “At TIDAL, we learned from [fan-centered royalties] there is an opportunity to build a royalties distribution model that could be better at compensating the breadth of genres and artists that contribute to streaming catalogs,” TIDAL’s global head of communications Sade Ayodele tells Billboard. “Many of the alternative models explored, however well intended that they are, unfortunately create a new set of winners and losers. With this partnership, we’re hoping to find a fairer and more equitable distribution approach that benefits a broader set of genres and artists contributing to the culture of music.”
Which brings us, again, to the original question: What will that look like? The answer could be varied, and it could be different for each streaming service. There have been some conversations in some sectors of the industry about weighting music streams higher than background sounds, for instance, or more heavily weighting intentional listening (searching for or clicking on a song or artist) over background listening (a playlist, or an algorithmically-chosen next song). There are already different models around ad-supported vs. paid subscription payouts, and there is a conversation to be had about how fan engagement should or could influence where money is directed. What UMG and TIDAL are trying to say with Tuesday’s announcement is, let’s go try some things and see what works, and let everyone else know what we’re doing so that maybe they can try to find an innovative answer, too.
Consensus is a hard thing to come by. There likely won’t be a consensus around what the end solution is, and several options could eventually emerge. But streaming has been around for more than a decade now, and if there’s any consensus at all, it’s that something needs to change.
BMG Rights Management is facing a new lawsuit claiming the publisher has failed to pay royalties from Mark Ronson and Bruno Mars‘ smash hit “Uptown Funk” to the families of late members of the Gap Band who are credited as co-writers on the song.
In a complaint filed Thursday in Manhattan federal court, the heirs of Robert and Ronnie Wilson claim that BMG breached a 2015 deal that was inked because “Uptown Funk” incorporated elements of the Gap Band’s 1979 song “I Don’t Believe You Want to Get Up and Dance (Oops Upside Your Head).”
“Despite its obligations to account for and pay to plaintiffs their share of all income received from the Uptown Funk musical composition, BMG has refused and failed to provide either the funds due to plaintiffs or an accounting despite plaintiffs’ repeated demands,” the lawsuit says.
A rep for BMG did not immediately return a request for comment on the allegations on Friday. Mars and Ronson are not accused of any wrongdoing and are not named in the lawsuit.
In a statement, Wilson family attorney Michael Steger told Billboard that his clients had been “working for years” to receive credit for their contributions to “Uptown Funk” and had been “left with no choice but to pursue litigation to protect their rights.”
As reported by Billboard at the time, the songwriting credits to “Uptown Funk” were suddenly amended in 2015, months after the song was released. After the owners of “Oops Upside Your Head” filed a claim against the song on YouTube – and in the cautious aftermath of a blockbuster infringement verdict over Robin Thicke‘s “Blurred Lines” — the five co-writers of the Gap Band song were each given 3.4% stakes in the then-new track.
The new case was filed by Linda Wilson, the widow of Ronnie Wilson, and by Robin Lynn Wilson, LaTina Wilson and Robena Wilson, the heirs of Robert Wilson, over those two late band members’ respective 3.4% stakes. The other three members who received such stakes are not involved in the case.
In their complaint, the Wilson heirs called the new allegations of non-payment against BMG “yet another chapter in a long-running series of disputes” over the hit song, which spent 14 weeks atop the Hot 100 and 56 total weeks on the chart.
They aren’t wrong. In the years after “Uptown Funk” was released, at least three lawsuits were filed claiming Ronson and Mars stole elements from earlier songs. One case involved the 1983 song “Young Girls” by the band Collage; another centered on the 1980 funk song “More Bounce to the Ounce” by the band Zapp; the third alleged they copied material from the 1979 classic “Funk You Up” by The Sequence.
All three cases were later dropped or settled.
Read the entire new lawsuit against BMG here:
Don Henley, Sheryl Crow, Sting and a slew of other musicians are throwing their support behind a new federal copyright rule aimed at making sure that songwriters who regain control of their music actually start getting paid their streaming royalties after they do so.
As first reported by Billboard in October, the U.S. Copyright Office wants to overturn a policy adopted by the Mechanical Licensing Collective (which collects streaming royalties) that critics fear might lead to a bizarre outcome: Even after a writer uses their so-called termination right to take back control of their songs, royalties may continue to flow in perpetuity to the old publishers that no longer own them.
In a letter Thursday organized by the Music Artists Coalition, more than 350 artists, songwriters, managers and music lawyers urged the Copyright Office to grant final approval for the proposed rule, warning that “music creators must not be deprived of the rights afforded to them by copyright law.”
“We stand together in support of USCO’s rule and believe that anything contrary would undermine the clear Congressional intent to allow songwriters, after an extended period of time, to reap the benefit of the songs they create,” the signatories wrote to the Copyright Office.
“It is simple, a songwriter who validly terminates a prior grant is the correct recipient of royalties,” the group wrote. “A publisher whose grant was terminated – and has received the benefit of the songwriter’s work for decades – is not the proper or intended recipient of these royalties.”
To fully understand the legal complexities of the Copyright Office’s proposed rule and what it might mean for songwriters, read this explainer.
Thursday’s letter, also signed by Bob Seger, Maren Morris, John Mayer, Dave Matthews, members of the Black Keys and others, came on the final day of the so-called “comment period,” in which outside groups could submit their opinion on the Copyright Office’s proposed rule.
The letter was the product of a call for signatures by the Irving Azoff-led Music Artists Coalition, which, along with other groups like Songwriters of North America, the Black Music Action Coalition and the Nashville Songwriters Association International, helped raise the alarm about the issue and spurred the Copyright Office to take action last year.
“Too often, music artists are quietly stripped of their rights,” Azoff said in a statement to Billboard announcing the letter. “But, today, the industry stood up to say ‘Not on our watch!’ We applaud the Copyright Office for its proposed rule. This rule should pass unamended and without delay.”
The Copyright Office introduced its new rule in October, saying the MLC’s policy had been based on an “erroneous” understanding of the law that created ambiguity about who should be receiving streaming royalties after a songwriter invokes their termination right and regains ownership of their music. Ordering MLC to “immediately repeal its policy in full,” the new proposal would make clear that when a songwriter takes back their music, they should obviously start getting the royalties, too.
In a message to members ahead of Thursday’s letter, MAC offered a plain-English explainer of the complex legal mechanics at play in the situation. The group urged its members to help end what it believed amounted to a loophole in the system created by 2018’s Music Modernization Act, warning that it could defeat the very purpose of both the new law and termination.
In an interview with Billboard, Susan Genco, co-president of The Azoff Company and a leader at MAC, said the group’s call to action – and the letter that came from it — was an example of how songwriters have become better mobilized after years of being “kept in the dark” on complicated policy matters that could have adverse effects.
“This is a big part of our role, to figure out which issues impact music creators the most, prioritize them, and then explain them to the community,” Genco said.
“We tried to paint a very clear picture for them,” added Jordan Bromley, a prominent music attorney and another key member of MAC, in the same interview. “Oh you think you’re getting your streaming mechanicals back through termination? Think again.”
In addition to advocating for the new rule, Thursday’s letter also came with something of a warning. The final sentence, separated into its own paragraph, read: “Any view opposing the USCO’s rule is a vote against songwriters.”
While not outright oppositional, the Copyright Office has received pushback on the proposed changes from the National Music Publishers’ Association. In a Dec. 1 submission, the group said it supported the overall goal of the new rule, but warned that the agency’s proposed approach “may have far-reaching and unintended consequences” and would likely lead to litigation in other spheres. Among other issues, the group said the rule must not apply retroactively.
“The breadth of the USCO’s legal reasoning in the [proposed rule] seems likely to increase legal uncertainty and questions,” the NMPA wrote. “This uncertainty will almost definitely raise the likelihood of litigation … including litigation concerning past payments made in accordance with what was then industry custom and practice.”
The NMPA instead advocated for “a consensus-based legislative solution” that would be passed by Congress, which it said could be narrower and more “carefully crafted” to avoid the problems the group has with the Copyright Office’s legal analysis.
In a statement to Billboard, NMPA president David Israelite stressed the industry group was aligned with songwriters on the ultimate policy goal.
“We strongly support songwriters receiving all mechanical royalties after a termination and have been working towards crafting legislation to ensure that outcome for years alongside the major songwriter groups,” Israelite said. “While not a concrete legislative remedy, our comments reflect our support for the Copyright Office’s proposed rule and offer ways to make that rule even more robust and less susceptible to legal challenges.”
The text of the Copyright Office’s proposed rule is available in its entirety on the agency’s website. The public comment period ended on Thursday, but all submitted comments will be made public on a public docket. The agency will review all comments and issue a final rule in the months ahead.
Read the entire letter sent to the Copyright Office on Thursday here: