Atlas Music Publishing CEO: Solutions to Streaming Rate Debate 'Staring Right at Us' (Guest Op-Ed)
For too many years whether as an NMPA Board member, Recording Academy Trustee, or CEO of Atlas, I've been part of digital rate discussions that simply go in circles and avoid the elephant in the room. Today, speaking as just the guy who wants to see all creators paid fairly and for the business to stop wasting time and money, I want to discuss this elephant.
First, without question songwriters deserve a raise and the idea that there is an appeal against the raise we were just granted is disturbing. To be honest, songwriters deserve a raise and then some! The elephant we need to address is that we on the content side need to fairly share these royalties between us after allowing for a reasonable distribution fee for the DSPs. We all need a healthy business environment. So, for example, if it is deemed that a reasonable fee for Spotify is 25%, the remaining 75% would be split 37.5% writer (publisher) side and 37.5% recording artist (label) side. Legislation isn't going to get us there. Compromise will.
The logic is undeniable. Nobody can answer the question who is more important to the song, the writer or performer - Sammy or Frank so to speak. The answer is that both sides are equally as important. This is why, in the only open market licensing structure, synchronization, writer-side and performer-side are paid equally. All of our revenue streams should work in a similar fashion, and they can.
Right now, both sides suffer from legislation that is not in step with today's music marketplace. Here are the two big issues: 1) Publishers must provide a mechanical license to DSPs at a rate determined by a panel of three judges, 2) Labels get zero for performance on terrestrial radio. I've fought for "Fair Play Fair Pay" that attempted to alleviate the latter, but let's face it, the radio lobby is too strong and despite it being the absolute right thing, we're losing this fight. Only when this element of the then "omnibus" bill was dropped did all the years of lobbying by myself and industry colleagues pay off with the passing of the MMA.
So what can we do as an industry to hopefully pull the government out of our negotiations and get to a fair place? Each side of the business needs to look at what it has and can offer to the other side that will result in fair rates for all creators. Publishers receive terrestrial radio royalties and labels do not. Both parties should go to radio and negotiate an economically sound and fair overall raise and then split that royalty equally. If offered a reasonable increase, I believe radio would consider this versus years more of expensive lobbying against labels on this point and potentially losing with a risk of paying double what they pay now. Similarly, the parties should approach the DSPs and negotiate a fair royalty raise, which, as outlined above, should be split in half. It's a long-term win-win for all parties.
About seven years ago, when I was on the NMPA Board I suggested this very thing. An olive branch of sorts for to the labels at a time when they really needed one. Understandably, the then Board was very hesitant. After all, it would be a radical shift and the immediate result would be less publishing royalties. Unless one had the experience on the digital side and/or foresight that this was the future, it may have sounded silly. I used Netflix as a comparable noting that at that time Netflix was putting a lot of investment into their digital strategy at the expense of their physical strategy. It was pointed out to me that their stock was tanking, which it was, and the discussion faded away as there was plenty of other pressing matters at hand.
Fast forward to today. We need the progressive thinkers of both the publisher and record community to come together and make some deals. I'm encouraged by some of the newer NMPA board members, who clearly lean towards where we are going, not where we've been. I also believe the NMPA have an all-star staff who can make this a reality. I'm calling on them and the members of the record community to ensure this idea receives the attention it deserves. Let's stop wasting time and money trying to fit today's business into yesterday's rules. I think being a Recording Academy Trustee and also having worked for a DSP many moons ago allows me to see the wider picture from all points of view. Sometimes, when we get to in the trenches wearing just our publisher or label hat, we fail to see the solution that is staring right at us.
Richard Stumpf is the founder and CEO of Atlas Music Publishing. He was formerly president of Imagem Music U.S., and before that senior vp of creative services and marketing for Cherry Lane