Universal Music Publishing Group's Jody Gerson on Songwriter Streaming Royalties: 'The Fees Are Not Where We Want Them To Be'

Universal Music Publishing Group chairman/CEO Jody Gerson has spoken out about the difficulties facing songwriters in the digital age, and how tech platforms, legislators and publishers alike can step in to help. In an interview with the Wall Street Journal published on Sunday (Aug. 12), Gerson discussed how the increasingly global exposure that streaming platforms offer songwriters is not coming with more equitable royalty checks.

While “having music so accessible to so many people is going to be a good thing… the fees are not where we want them to be,” said the CEO. “We get paid much less than the labels. The overall pie needs to grow with the success and the increase in subscriptions [to services such as Spotify].”

According to analysis from Manatt, Phelps & Phillips LLP, only six cents of every dollar of Spotify's revenue ends up going to publishers and songwriters via mechanical royalties. These extremely low margins imply that only those who can achieve massive mainstream scale can generate any meaningful income from streaming alone.

“When I first came into the industry, you could write a cut on a big album, like for Whitney Houston, and it would sell a lot of records, and you could make a lot of money as a songwriter," said Gerson. "But unless you’re writing hit singles or you have pieces of songs on enormous numbers of streamed product, it is very difficult right now."

It also doesn’t help that the average top-100 hit song from 2017 credits nearly five songwriters, a number that has been steadily increasing over the past few years, according to analysis from Music Week. Some songs, such as Camila Cabello’s “Havana” and Liam Payne’s “Strip That Down” (ft. Quavo), credit as many as 10 or 15 songwriters, respectively.

The trend of hit songwriting requiring an ever-expanding village of collaborators “is going to hurt the economics of being a songwriter” even further given the already-paltry royalty rates for publishers, Gerson argued in her WSJ interview.

This echoes similar complaints from other industry veterans in recent months: for instance, in an interview with Music Business Worldwide, artist manager Merck Mercuriadis (former clients include Beyoncé and Guns N’ Roses) claimed that “the song and the songwriter is clearly the most important component of today’s music industry, but they’re not being recognized properly.” Mercuriadis' music IP investment company Hipgnosis Songs raised $260 million in an IPO on the London Stock Exchange in June 2018 to fund the acquisition of hit songs and copyrights, an achievement that Mercuriadis intends to leverage in high-level negotiations for better royalty rates for songwriters and publishers.

In her WSJ interview, Gerson also voiced her support for the Music Modernization Act, emphasizing how it would ease the process of licensing music to an ever-sprawling ecosystem of digital services. “My hope is that there’s one entity that makes it easier for digital platforms to license,” she said, adding that "every single time somebody streams a song, that song has the potential to earn."?

While not referencing any company by name, Gerson also voiced her skepticism about the ability of a streaming platform alone to break an artist or songwriter without additional marketing support from labels, publishers and other similar rights holders. Spotify in particular is under growing scrutiny from industry incumbents, with artist development programs like RISE as well as its recent venture into direct licensing deals with artists.

”I would like you to show me one streaming platform that has broken an artist, made a major investment in breaking an artist. It is not easy,” said Gerson. “Just because a song is on a digital platform doesn’t mean you’re breaking that artist. The companies that put the most into the development of artists are still record companies. The investment in breaking artists still is something that we can’t underestimate, and platforms do not do that.”

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