Performing rights organizations turned 170 years old on Feb. 28 this year. I forgot to get them something, but they pocket billions of dollars of songwriters' royalties each year, so let's call it even.
Their jobs used to be difficult and local: they had to do things like go door-to-door collecting fees from cafes and crash weddings to monitor for unlicensed performances. Today, more than 98% of repertoire usage is reported digitally. Streaming has catapulted the industry into handling trillions of micro-transactions, and while the onset of digitization imposed obvious technology costs, songwriters should have long ago started benefiting from its improved efficiency. Yet, collection fees have continued to rise in terms of actual dollars and we’ve completely forfeited the potential benefits of globalization due to legacy back scratching.
What should be a more straight-forward process in the digital era is far from it. Every step along the way, money is getting diverted and no one will ever say how much or where it went. Some of the expenses paid for with songwriter royalties are glaring: there are collection societies with 22 offices to cover a country the size of California; most hold multiple conferences and awards shows, have foundations and hefty lobbying funds; and offer non-recoupable advances. To make matters worse, none of the U.S. collection societies are collecting both the mechanical and performance royalties. This means that if one person hits play one time on one song, the publishing royalty still gets split into two and incurs duplicate infrastructure costs. If that person hits play abroad, the royalty was collected locally first, meaning admin fees get compounded (for added fun feel free to rage-Google "Cultural & Societal Deductions").
Complexity like this is always a tax on artists and songwriters.
The MLC finding $424 million in U.S. "black box" mechanical royalties under the mattress is absolutely cause for celebration; it’s also a sign of systemic failure. These were always supposed to get paid to rights holders.
We have accepted the premise that it's okay for digital streaming services and distributors (including labels) to license and distribute music first, and try to figure out who should get paid second. The most recent U.K. Streaming Inquiry has been helpful in fueling the conversation around royalties, but still by and large assumes the systems put in place for a CD-based ecosystem are unchangeable.
This antiquated business model leaves us with redundant efforts around the globe that are relics of how each country’s copyright infrastructure has failed to evolve. While consumption has gone digital and global, collection societies have stubbornly clung to their notions of fractional and regional expertise and songwriters are stuck footing an increasingly massive bill in the name of bureaucratic self-preservation.
Considering the evolution of the industry from the regional sales model to the global streaming model, it’s about time the music industry takes a step back, grabs a white sheet of paper and builds the infrastructure we need for the ecosystem we actually have rather than protect agencies who were established to track fees on player pianos. We don’t need to figure out how to optimize the current publishing infrastructure; we need a new one for the world we live in now.
- Use one agency instead of 232 around the globe. You could return billions in collection fees to the songwriters who generated them as royalties per year.
- In the U.S., handle performance and mechanicals together, like they do in every other country.
- Collect globally to prevent compounded international fees and black box communication losses between territories.
- Doing this would also make publishing administration deals obsolete, returning billions of dollars in royalties to songwriters annually.
- Attach publishing at the point of distribution to remove the need for matching.
- Simplify licensing for new entrants while increasing leverage to protect copyright value.
The technical requirements have gone from nearly impossible to nearly off-the-shelf and regional complexities are far less daunting now that revenue sources are global and digital. So perhaps it's time auld acquaintance be forgot (it’s in the public domain, I checked).
Travis Rosenblatt is a former record label A&R turned software developer & entrepreneur. He is the founder of A&R Software as a Service Meddling and direct publishing royalty collection platform Signal as well as advisor to The Music Acquisition Company.