Thoughts From 51 Hours In SF: @iTunes, @Google and Angry Little Clouds
Thoughts From 51 Hours In SF: @iTunes, @Google and Angry Little Clouds

While most of the music industry basked in the Monday afterglow of a raucous Grammy Awards, a panel discussion with BMI, SoundExchange, TuneCore and others turned fiery Monday afternoon at the SF MusicTech Summit, over the heated issue of just how artists get paid.

TuneCore president Jeff Price took a blowtorch to the existing music licensing industry for shady accounting, layers upon layers of administration fees, and sometimes up to two and half year-waits for artists to get paid.

Music Reports' Ron Gertz said the international licensing swamp is making artists circumvent it to do direct international deals with companies like Starbucks.

Meanwhile SoundExchange disclosed rapid growth in royalty revenue from streaming, with much more to come, panelists said.

It was easily the hottest panel at the day-long San Francisco music technology conference, which unites hundreds of execs from both spheres for technical discussion and hopefully, deals.

David Lowery, member of the band Cracker, offered a prelude to the licensing panel in the form of a rant called "Meet the new boss, worse than the old boss." Lowery said "even under the bad, old record label system, the labels shared more revenue with the artist. It sucks."

He said file-sharing, streaming on places like Spotify, and things like the iTunes store have made things worse for artists, who are losing money on recording, and cannot recoup such losses with live performances. Lowery advocated for more artist unions, and lawsuits against file-sharing services.

Price immediately rebutted his argument, noting that the vast majority of music is now created, recorded, distributed and enjoyed outside the major label scheme. TuneCore alone distributed a million newly recorded tracks in 2011, versus 4,000 newly recorded tracks by all major labels combined.

"Our customers sold half a billion units outside of the traditional system in the last three years and earned a quarter billion dollars," he said.

TuneCore's publishing-administration service collects royalties across the world for artists who affiliate with them and takes ten percent. He claims it's a more transparent, efficient and simple system for artists, noting that it can take two and half years for existing rights groups to pay an artist for, say, a YouTube play in Japan.

"How fucking hard is it to give them their money?" he said. "We should be in favor of anything that makes it easier, quicker and more transparent for artists to get paid."

Ron Gertz of Music Reports echoed the sentiment, saying more and more artists are directly licensing to avoid the hassle of hundreds of rights collection organizations.

"You don't need as many collecting societies. The new outsource deal is you, the copyright owners, doing deals direct with the digital music services themselves. You eliminate multiple layers of administration fees, you get the money faster and somewhere there's a server counting every bit of activity."

"We're going to see the floodgates of direct licensing opening up."

Brad Prendergast with SoundExchange explained the digital radio royalties disbursed by the company and said the streaming space is exploding. In 2011, SoundExchange distributed $290 million to artists and labels, up from $150 million in 2009 and $20 million in 2005.

Price also praised a nascent income stream for artists: royalties from Apple's iTunes Music Match. The service costs $25 to easily upload a personal music collection to the cloud, organize it and stream it on-demand to any of the user's Apple devices.

"I find it absolutely cool and exciting. Every single time somebody listens to a song they already own, the copyright holders are getting paid."

In the first month Music Match paid just $1,000 to artists off 45,000 users, but the second month saw $9,000 go to artists off of 50,000 users, Price said.

Digital revenue is growing rapidly but still smaller than other royalties, BMI's Michael Drexler explained. BMI represents a half a million writers, composers and publishers. Few other groups have the resources to go to "restaurants, bars, health clubs, radio, and television, knock on doors and make people do the right thing. You need leverage."

Drexler said BMI wants to move from quarterly to monthly accounting to hasten payments to rightsholders.