Royalties
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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 theyâre 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 countryâs social fabric.
Buma/Stemra, one of the worldâs 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 Netherlandsâ 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.
âIn the Netherlands, we have such a wide range of successful DJs with worldwide success,â says Juliette Tetteroo, accounts manager of dance events at Buma/Stemra. âAs Buma/Stemra, thatâs also why we find it really important to be at the front of developments like fingerprinting technology.â
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 â a database of roughly 100Â million songs submitted to DJ Monitor by global performance rights organizations (PROs) â and creating set lists for any given set with 93% accuracy, the company reports. (Billboardâs 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 Pioneerâs 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/Stemraâs 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/Stemraâs 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.
âOur goal is to work towards one-on-one collection and distribution,â says Tetteroo. âIt 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.â
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 â given that roughly that amount of music from any given event is recognized as something already in the Buma/Stemra database.
The percentage thatâs 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 arenât recognized, hundreds of hours of unclaimed music aggregates over the year because, says Buma/Stemraâs music processing manager Rob van den Reek, âwe have a real lot of festivals here in the Netherlands.â
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 whatâs called a âreference repertoireâ â or a Buma/Stemra-compiled sample of common songs played at festivals. Introduced four years ago, this claiming system adds another layer of transparency â and more opportunity for creators to get the money theyâre owed.
âTransparency is one of the benefits that stands out the most from the way we work,â says Buma/Stemra marketing manager Annabel Heijen. âThatâs where weâve made the most progress.â
There is one fault with the Buma/Stemra system thatâs in the process of being addressed. Currently Buma/Stemra pays out based on the length of a full song thatâs registered â 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 Raittâs touching ballad âJust Like Thatâ won the Grammy for song of the year, the singer-songwriter seemed just as shocked as the crowd. âI am just totally humbled,â 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, Raittâs âJust Like Thatâ was the least commercially successful song up for the category this year by a long shot. Despite not cracking the Hot 100 chart, âJust Like Thatâ 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 (âAs it Wasâ by Harry Styles and âAbout Damn Timeâ by Lizzo). Many see Raittâs 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, â[doesnât] write a lot of songs,â but she did write âJust Like Thatâ singlehandedly.
So how much did âJust Like Thatâ 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, âJust Like Thatâ 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 âJust Like Thatâ by herself, the vast majority of the money she earns from the song will end up in Raittâs pocket, with deductions likely only made to pay Bluewater Music administration fees and whatever cut her manager makes.
Overall, since the release of âJust Like That,â 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 â also called Just Like That â 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 songâs 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, âJust Like Thatâ 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, âJust Like Thatâ 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 âJust Like Thatâ doesnât appear to be boosting sales and streaming activity for Raittâs 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 â up from the weekly average of over 3,000 copies before the show â 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 âno lawful rights to monetize or otherwise control.âÂ
Teran and his business partner, Webster Batista Fernandez, operated their scam under the business name âMediaMuvâ 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.Â
Teranâs plea agreement echoes much of Batistaâs. Both pleas say that the MediaMuv founders âdiscovered there were songs of musicians and bands on the internet that were not being monetized.â 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. âWe falsely claimed that MediaMuv owned over 50,000 songs and further sought access to YouTubeâs CMS in order to obtain royalty payments for these songs,â Teran said in his plea. In addition, the duo entered a contract with AdRev, a rights management company owned by Downtown Music Holdings, âto assist in administering the music [they] fraudulently claimed to own.â
Billboardâs investigation uncovered that YouTube royalty-claiming scams like MediaMuvâs are more common than is generally believed, but Teran and Batistaâs 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 âpurportedlyâ managed artists to AdRev and YouTube âfor the purpose of deceiving [them] into allowing [MediaMuv] to continue [its] fraudulent operationâ in July 2017. According to Teranâs plea deal, these three forged management contracts were provided to support MediaMuvâs assertion that it controlled a vast Latin music catalog.Â
The plea deals also say the duo did not act alone. Both mention that they hired âover five co-conspiratorsâ to help them find new music to fraudulently claim and, in return, those co-conspirators were paid âa portion of [MediaMuvâs] royalties.â 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 Batistaâs scheme, including Batistaâs 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.Â
The house she purchased, along with six bank accounts, a Tesla, a BMW and a plot of land, are all listed in Teran and Batistasâ plea deals as items they agree to forfeit.Â
Though the duo is ordered to âmake restitution to any victimâ of their crimes, one of the businessmen who represented multiple MediaMuv victims told Billboard in August he doesnât âexpect to get it all back. Iâm sure they spent a lot of it on cars and travel and stuff.â
In a statement to Billboard, a spokesman for Downtown Music Holdings says the company is âpleased 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.â
Representatives for Teran and YouTube did not respond to Billboardâs request for comment.
Teranâs 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 isnât working for everyone and that a different approach is required.
This isnât a new idea, but itâs one thatâs quickly gathering steam in the wake of Universal Music Group chairman/CEO Lucian Graingeâs internal staff memo/open letter to the industry earlier this month, in which he called for an âupdated modelâ for the music industry â one that will be âan innovative, âartist-centricâ model that values all subscribers and rewards the music they love.â
It wasnât clear what, exactly, Grainge meant in the letter. And on Tuesday (Jan. 31), it became a little bit clearer that, as of yet, there isnât much clarity on what it will mean â though UMG is hoping to find it. To that end, Universal has announced a partnership with TIDAL to âresearch how, by harnessing fan engagement, digital music services and platforms can generate greater commercial value for every type of artist,â 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 UMGâs executive vp/chief digital officer Michael Nash said in a statement accompanying the release. âAs the digital landscape continues to evolve, itâs become increasingly clear that music streamingâs economic model needs innovation to ensure a vibrant and sustainable future,â he said. âTidalâs embrace of this transformational opportunity is especially exciting because the music ecosystem can work better â for every type of artist and fan â 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.â
This is not TIDALâs 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 â with the additional element that 10% of each userâs subscription fee would go directly to their most-streamed artist.
That, in itself, is a twist on the âfan-powered royaltiesâ 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 itâs 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 â for many, effectively just a few euros per year â 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 earnersâ revenue â 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 todayâs 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. âWe are setting aside our current fan-centered royalties investigation to focus on this opportunity for more impact,â TIDALâs Jesse Dorogusker said in a statement. âThis partnership will enable us to rethink how we can sustainably improve royaltiesâ distribution for the breadth of artists on our platform.â
What theyâre saying is, essentially, itâs 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. âAt 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,â TIDALâs global head of communications Sade Ayodele tells Billboard. âMany of the alternative models explored, however well intended that they are, unfortunately create a new set of winners and losers. With this partnership, weâre 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.â
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 Tuesdayâs announcement is, letâs go try some things and see what works, and let everyone else know what weâre doing so that maybe they can try to find an innovative answer, too.
Consensus is a hard thing to come by. There likely wonât 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 thereâs any consensus at all, itâs 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 Marsâ smash hit âUptown Funkâ 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 âUptown Funkâ incorporated elements of the Gap Bandâs 1979 song âI Donât Believe You Want to Get Up and Dance (Oops Upside Your Head).â
âDespite 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 plaintiffsâ repeated demands,â 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 âworking for yearsâ to receive credit for their contributions to âUptown Funkâ and had been âleft with no choice but to pursue litigation to protect their rights.â
As reported by Billboard at the time, the songwriting credits to âUptown Funkâ were suddenly amended in 2015, months after the song was released. After the owners of âOops Upside Your Headâ filed a claim against the song on YouTube â and in the cautious aftermath of a blockbuster infringement verdict over Robin Thickeâs âBlurred Linesâ â 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 membersâ 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 âyet another chapter in a long-running series of disputesâ over the hit song, which spent 14 weeks atop the Hot 100 and 56 total weeks on the chart.
They arenât wrong. In the years after âUptown Funkâ was released, at least three lawsuits were filed claiming Ronson and Mars stole elements from earlier songs. One case involved the 1983 song âYoung Girlsâ by the band Collage; another centered on the 1980 funk song âMore Bounce to the Ounceâ by the band Zapp; the third alleged they copied material from the 1979 classic âFunk You Upâ 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 âmusic creators must not be deprived of the rights afforded to them by copyright law.â
âWe stand together in support of USCOâs 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,â the signatories wrote to the Copyright Office.
âIt is simple, a songwriter who validly terminates a prior grant is the correct recipient of royalties,â the group wrote. âA publisher whose grant was terminated â and has received the benefit of the songwriterâs work for decades â is not the proper or intended recipient of these royalties.â
To fully understand the legal complexities of the Copyright Officeâs proposed rule and what it might mean for songwriters, read this explainer.
Thursdayâs 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 âcomment period,â in which outside groups could submit their opinion on the Copyright Officeâs 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.
âToo often, music artists are quietly stripped of their rights,â Azoff said in a statement to Billboard announcing the letter. âBut, today, the industry stood up to say âNot on our watch!â We applaud the Copyright Office for its proposed rule. This rule should pass unamended and without delay.â
The Copyright Office introduced its new rule in October, saying the MLCâs policy had been based on an âerroneousâ 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 âimmediately repeal its policy in full,â the new proposal would make clear that when a songwriter takes back their music, they should obviously start getting the royalties, too.Â
In a message to members ahead of Thursdayâs 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 2018âs 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 groupâs call to action â and the letter that came from it â was an example of how songwriters have become better mobilized after years of being âkept in the darkâ on complicated policy matters that could have adverse effects.
âThis 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,â Genco said.
âWe tried to paint a very clear picture for them,â added Jordan Bromley, a prominent music attorney and another key member of MAC, in the same interview. âOh you think youâre getting your streaming mechanicals back through termination? Think again.â
In addition to advocating for the new rule, Thursdayâs letter also came with something of a warning. The final sentence, separated into its own paragraph, read: âAny view opposing the USCOâs rule is a vote against songwriters.â
While not outright oppositional, the Copyright Office has received pushback on the proposed changes from the National Music Publishersâ Association. In a Dec. 1 submission, the group said it supported the overall goal of the new rule, but warned that the agencyâs proposed approach âmay have far-reaching and unintended consequencesâ and would likely lead to litigation in other spheres. Among other issues, the group said the rule must not apply retroactively.
âThe breadth of the USCOâs legal reasoning in the [proposed rule] seems likely to increase legal uncertainty and questions,â the NMPA wrote. âThis 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.â
The NMPA instead advocated for âa consensus-based legislative solutionâ that would be passed by Congress, which it said could be narrower and more âcarefully craftedâ to avoid the problems the group has with the Copyright Officeâs legal analysis.
In a statement to Billboard, NMPA president David Israelite stressed the industry group was aligned with songwriters on the ultimate policy goal.
âWe 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,â Israelite said. âWhile not a concrete legislative remedy, our comments reflect our support for the Copyright Officeâs proposed rule and offer ways to make that rule even more robust and less susceptible to legal challenges.â
The text of the Copyright Officeâs proposed rule is available in its entirety on the agencyâs 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:
Downtown Music Holdings has acquired Curve Royalty Systems, a company that specializes in royalty processing for digital income, it was announced Thursday (Jan. 5). Curve will now be a part of Downtown Music, a division that focuses on servicing the professional music industry.
In recent years, Downtown has pivoted away from its previous role as a traditional publisher and rights holder by selling off its 145,000-song catalog and putting its efforts into building a service-focused music company to tap into the growing cohort of DIY artists and professionals. The company has quickly amassed a suite of service tools via acquisitions including Curve, FUGA, CD Baby, Soundrop, AdRev and more. Downtown is also an active investor in companies like Beatbread and Vampr.
Though Downtown is integrating Curve into its suite of offerings for distribution and monetization, the royalty processing firm â which can distill multiple royalty statements into one cohesive report â will continue to serve its existing client base of over 1,000 labels and publishers worldwide. This includes Warp Records, Ingrooves, Mad Decent, MRC, Royalty Solutions Corp, Domino Recording Company, Hospital Records/Songs in the Key of Knife, Cal Financial and Alta Financial. Since its inception in January 2019 by co-founders Tom Allen, Richard Leach and Ray Bush, the company says it has processed nearly $4 billion in revenue.
Downtown Music president Pieter van Rijn said of the deal, âIn Downtown Music, weâve combined innovative technology and industry-leading services to create an offering that empowers music businesses and their creators. Curve perfectly complements our mission to be the leading music industry platform and their past work speaks to their high standards and pioneering technology.â
Downtown CEO Andrew Bergman added, âFor some time, we have been admirers of the technology and service quality that Tom and Richard have been building at Curve. As we got to know them and their team, it became ever more obvious that their dedication and forward-thinking vision were a great fit for Downtown. Accuracy, precision, timeliness, and innovation in royalty services are core to Downtownâs mission of supporting creators and the businesses that serve them. Welcoming the Curve team to Downtown is another important step in furtherance of our mission.â
A prominent â90s hip-hop duo is suing Universal Music Group for withholding royalties tied to what theyâre alleging is a âsweetheartâ deal the label reached with Spotify in the late 2000s.
Filed Wednesday (Jan. 4) in U.S. district court in New York by attorneys representing Andres Titus (Dres) and William McLean (Mista Lawnge), members of the hip-hop duo Black Sheep, the lawsuit claims UMG owes its artists approximately $750 million in royalties deriving from the companyâs stock in Spotify. Under a licensing deal they claim UMG and the streaming giant reached in 2008, the label agreed to receive lower royalty payments in exchange for equity in the then-nascent streaming company. But Titus and McLean say the label breached their contract with Black Sheep and other artists by withholding what they argue is the artistsâ rightful 50% share of UMGâs now-lucrative Spotify stock â and otherwise failing to compensate them for the lower royalty payments they received as a result of the alleged deal.
âRather than distribute to artists their 50% of Spotify stock or pay artists their true and accurate royalty payments, for years Universal shortchanged artists and deprived Plaintiffs and Class Members of the full royalty payments they were owed under Universalâs contract,â the complaint reads. Titus and McLean further claim that Universal deliberately omitted from royalty statements both the companyâs ownership of Spotify stock and the lower streaming royalty payments that resulted from its alleged deal with the streaming service.
âOver time, the value of the Spotify stock that Universal improperly withheld from artists has ballooned to hundreds of millions of dollars,â the complaint continues. âThese and the other wrongful conduct detailed herein resulted in the Companyâs breaching its contracts with artists, violating the covenant of good faith and fair dealing that is implicit in those contracts, and unjust enrichment at the expense of its artists.â
In a statement sent to Billboard, a UMG spokesperson denied Titus and McLeanâs claims: âUniversal Music Groupâs innovative leadership has led to the renewed growth of the music ecosystem to the benefit of recording artists, songwriters and creators around the world. UMG has a well-established track record of fighting for artist compensation and the claim that it would take equity at the expense of artist compensation is patently false and absurd. Given that this is pending litigation, we cannot comment on all aspects of the complaint.â
According to the lawsuit, Titus and McLean signed a record contract with Polygram in July 1990 (later amended and revised in July 1991) as Black Sheep â the duo best known for the hit rap single âThe Choice Is Yours (Revisited)â from their RIAA Gold-selling 1991 album A Wolf in Sheepâs Clothing. Black Sheepâs record contract was then assumed by UMG after the company merged with Polygram in 1998.
UMG acquired just over 5% of Spotify shares âin or around the summer of 2008â in a licensing agreement in exchange for lower royalty payments, the complaint adds, citing a 2018 Music Business Worldwide report. It claims that Universal acquired additional Spotify shares through its 2011 purchase of EMI, which had acquired shares in the streaming company around the same time, the suit alleges. It then cites UMGâs own prospectus, released in September 2021, revealing that the label held roughly 6.49 million, or roughly 3.35%, of Spotify shares as of June 30, 2021, valued at 1.475 billion euros ($1.79 billion).
Itâs worth noting that UMGâs stake in Spotify has become significantly less lucrative since June 30, 2021, however. As of Wednesdayâs closing price, UMGâs stake in Spotify is now worth just $560 million â the result of Spotify shares falling 70.5% over the past 18 months. Notably, Spotify isnât the only streaming service UMG has equity in; according to the same prospectus, it also owns 0.73% of Tencent Music Entertainment shares, a stake thatâs currently worth $112.5 million.
Included as an exhibit in the complaint is Black Sheepâs amended July 1991 contract with Polygram, which states that royalties paid to Titus and McLean ââshall be a sum equal to fifty percent (50%) of [Universalâs] net receipts with respect toâ the âexploitationâ for any âuse or exploitationâ of âMaster Recordingsâ created by Plaintiffs.â The plaintiffs claim they and other UMG artists are thereby entitled to 50% of the labelsâ Spotify stock but that UMG has failed to pay it. This demand stems from a couple of broad assumptions: that all artists in the class signed similar contracts and that they were similarly not compensated with a portion of UMGâs stock holdings in Spotify.
The plaintiffs are asking for compensatory damages, punitive damages and an injunction âor other appropriate equitable reliefâ requiring UMG âto refrain from engaging in deceptive practicesâ as outlined in the lawsuit.
UMG isnât alone among the major labels in acquiring Spotify stock â both Sony and Warner Music, as well as indie Merlin, also have or had stakes in the company. In May 2018, Sony sold half of its 5.707% stake in Spotify for an estimated $761 million, while that same month Merlin announced it sold its entire stake for an unknown amount and had shared the proceeds with its members. Warner followed suit in August 2018 when it sold its entire 2% stake in the streamer for $504 million, with the company announcing that around $126 million of the proceeds would be paid out to the companyâs artists.
UMG has yet to sell any of its stock in the streaming giant.
-Additional reporting by Glenn Peoples
You can read the full lawsuit below.
Exactly one decade ago, on Dec. 21, 2012, Psyâs âGangnam Styleâ made history as the first music video to reach 1 billion YouTube views. As a result, YouTubeâs Billion Views Club was born. A way to celebrate official videos that have achieved peak virality, the club is now home to over 300 music videos, including many of the most iconic hits from the past 10 years â from Adeleâs âHelloâ to Luis Fonsiâs âDespacitoâ feat. Daddy Yankee.
But how much do artists get paid for crossing the billion-view threshold for a music video on YouTube? The royalties are dependent on a few factors. Label affiliation, location and type of view affect these rates significantly. For example, artists signed to major labels â which represent the vast majority of members of the Billion Views Club â earn higher rates on the platform than those who are unsigned or affiliated with an indie label.
But location is possibly the biggest determining factor of all: in the U.S., rates are generally higher than in other countries. So while an official YouTube music video for a major-label artist could generate a blended average of $0.0038 per stream in the U.S., globally â which is how YouTube counts its views â Billboard estimates that rate at $0.0026 per stream. YouTube Premium video streams (views from customers who subscribe to YouTubeâs ad-free video-watching tier) are also higher than plays from users on the ad-supported tier, both in the U.S. and globally.
Consequently, for major-label artists, 1 billion video streams on an official music video would generate about $2.6 million globally. Thatâs, of course, before the label takes their cut of royalties, which varies widely based on each artistâs individual deal, and before the artist takes into account what, if anything, they owe to their featured artists or producers on the track.
For non-official videos that use music â like a user-generated video of someoneâs visit to the zoo, set to a song by a major-label artist â that global blended stream estimate would drop down to $0.0021, given lower payouts on UGC videos and the over-indexing of UGC viewership vs. that of official videos. So for a major-label song on YouTube that generates 1 billion views across all videos that use it, the label and artist would generate closer to $2.1 million.
Of the more than 300 music videos on YouTube to hit 1 billion views, the fastest to reach the benchmark is âHelloâ by Adele, which took just 88 days from release to amass such a viewership. Next is a tie between âShape of Youâ by Ed Sheeran and âDespacito,â both of which took 97 days. The third and fourth places on the list are also both held by Spanish-language songs, with âMi Genteâ by J Balvin and Willy William earning the title in 103 days and âĂchame La Culpaâ by Luis Fonsi and Demi Lovato taking 111 days.
Additional Reporting by Ed Christman.
Preview
Songwriters have something to celebrate this holiday season. Though it seemed rulings on royalty rates for the period of 2018-2022 (Phonorecords III) and 2023-2027 (Phonorecords IV) would not receive final judgement by the Copyright Royalty Board in time for Christmas, there is finally clarity about at least one type of royalty. The board on Friday (Dec. 16) accepted a proposed settlement to hike the royalty rate for U.S. mechanicals for physical products (like vinyl records, CDs, cassettes), permanent downloads, ringtones and music bundles.
Taking effect on Jan. 1, 2023, as part of Phonorecords IV, songwriters will earn 12 cents per track or 2.31 cents per minute of playing time or fraction thereof, whichever amount is larger for physical products and permanent downloads. This will also include inflation-based adjustments for subsequent years of the rate period, a major change for composers who have historically been locked into stagnant penny rates for sales, despite the increasing cost of living. Ringtones will remain at the same rate as they were previously, and the money earned for each element of a music bundle will be decided according to the rates for that element.
The new ruling today approves what is known as âSettlement 2,â which was formed by the National Music Publishersâ Association (NMPA), Nashville Songwriters Association International (NSAI), as well as the major music companies: Universal Music Group, Sony Music Entertainment and Warner Music Group earlier this year.
As the name of the settlement implies, there was one that preceded it. In 2021, the same parties proposed âSettlement 1â which would have upheld the long-standing 9.1 cent penny rate for physical goods and permanent downloads. That proposed settlement was sent to the Copyright Royalty Board judges for approval last year, but it triggered backlash among some in the independent writer community.
The 9.1 cent rate has been in effect since 2006 and has not risen with inflation. George Johnson, an independent songwriter who often pushes back against settlements at the Copyright Royalty Board in favor of higher rates, and other interested parties objected to continuing this 9.1 cent rate for another five year period. They also noted other issues with Settlement 1, like the lack of adjustments for inflation, and questioned a memorandum of understanding (MOU) between the major labels and the NMPA, which could have provided waivers on late fees the U.S. Copyright law allows when payment deadlines are missed.
In response to concerns, The CRB judges concluded the proposed settlement did not provide a reasonable basis for setting statutory rates and terms as stated in proposed settlement 1.
For many years, the CRB rate proceedings have primarily focused on achieving fair compensation for streaming rates. In 2021, audio digital services paid out about $1.3 billion to publishers and songwriters, according to data from the Mechanical Licensing Collective.
While sales formats comprise roughly 15% of the recorded music market, the NMPA estimates those formats produce just 5% of U.S. publishing royalties. If streaming continues to grow at its current pace, some say that within three years these sales formats that are covered by the subpart B configurations might only account for 1% of publishing royalties.
The NMPA has also pointed out in the past that rate litigation is expensive â often in the tens of millions of dollars â as a reason why they have focused on fighting for high streaming rates rather than what formats are covered by subpart B, noting that the cost of litigation could end up equaling or outweighing whatever additional money a higher subpart B hike could achieve.
In Fridayâs ruling, however, the court notes that the royalties generated by vinyl, CDs, downloads and other formats covered in subpart B âshould not be treated as de minimis, or as a âthrow awayâ negotiating chip to encourage better terms for streaming configurations.â They also noted the improvements to Settlement 2 as âdistinguishableâ from the first proposed settlement.
The event marks the biggest rate increase for songwriters for physical goods and permanent downloads in almost two decades.
Now, just one final step remains: the register of copyrights has to check and make sure this is compliant with the copyright statute, and if approved â which is typical â this will go into effect at the top of the year. However, participating parties also have 30 days to file an appeal to the CRBâs determination.