A2IM Head Bengloff Strikes Out at Majors, RIAA, Amazon and YouTube in Keynote

In his keynote address, A2IM president Rich Bengloff said that the trade group's board members cited the main issue their business is facing is how music licensing transactions were evolving and the concept of digital breakage.

"Breakage is an easy concept to understand -- check out the A2IM website -- and easy math," Bengloff said Thursday at the group's annual convention, according to a copy of his speech provided to Billboard. 

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"It’s getting paid for more music than you actually supply. You think you are going to earn $50 million in a year but ask for an advance or guaranteed payment of $75 million."

He claimed that the RIAA three main constituents, the three majors, extract compensation in excess of their true copyright ownership either through listener hour guarantees or via advances of market share and then don't attribute that income to specific artist tracks. (The comments echoed Bengloff's statements to Billboard earlier in this week.) "This structure also potentially results in less pay to their artists," he said.

He pointed out that Billboard calculated using Nielsen SoundScan data and that, while the Universal Music Group had 38.9 percent market share in 2013 based on distribution, it only directly owns 28.5 percentage points of that. Yet, he asserts the company uses the larger market share when negotiating digital deals.

He argued that the best way to stop those types of deals from occurring is for the definition of interactive services to be narrowed so more services can use the compulsory license, which results in the same payments to all parties and the only pay level differential is dependent on the streams popularity with listeners.

Bengloff also challenged the RIAA, saying that it mainly represents three companies, the three majors, yet "mis-represent their market share and influence."

The RIAA Website has “Representing Music” in the upper right hand corner, Bengloff noted. But he said that fellow creator organizations, especially artists organization, do not agree with that claim.

"The RIAA lists our members distributed by their distribution companies on their website to create a larger market impression that they represent over 85 percent of the industry, they do not," Bengloff said. "That has to stop; A2IM will soon call on all of you who are on that RIAA website to give A2IM authorization to instruct the RIAA have your name pulled off the RIAA website."

Bengloff added that he is not looking for the A2IM labels to fight with their distributors, just to help clarify the U.S. indie trade group's "rightful market place position in the music economy."

Bengloff added that, "I don’t mind [that] Cary Sherman and the RIAA aggressively try to improve the position of their three members. The A2IM board and A2IM staff are doing the same for you."

“We are very clear who are membership is and how we define it, as well the numerous benefits extended to members; G&P certification discounts, anti-piracy efforts, complimentary access to sales information, just to name a few," an RIAA spokesman said in a statement. "We don’t view this as an either-or exercise. Record labels of all sizes have far more in common than not and we’re all better served when we work together in collaborative fashion.”  

Moving over to the digital services, "Our current beefs right now are with Amazon and YouTube." On the latter service, Bengloff recently sent a letter to the U.S. Federal Trade Commission, asking them to investigate the service for threatening to de-monitize its members music in its ad-supported service, if they didn't agree to what indie labels consider onerous terms for its planned premium service.

"We advocate and are constantly in the press on every issue; our voice is heard -- lately on unfair treatment by YouTube and Amazon, in every medium thinkable," Bengloff said.

Other accomplishments Bengloff listed included noting that A2IM have filed nine regulatory commentaries with the U.S. Copyright Office, Federal Communications Commission, and Commerce department ranging on topics from Net Neutrality to Orphan Works and mass digitization of music. He further noted that a dozen A2IM members met with Register of Copyrights Maria Pallante to share our creator views In January; and that since 2012, three members, YepRoc/Redeye co-owner Tor Hansen; Beggars Banquet owner Martin Mills and Secretly Canadian executive Darius Van Arman, have either testified before Congress or about to; and that the organization had four more trade export missions.

Finally, through the efforts of some member labels, indies "had cracked the broadcast radio door three years ago, and now twice a year our members present at the Clear Channel programmers meetings," and added a presentation to CBS Radio this year.

"Our greatest achievement is serving as 'your extra employee' -- taking your calls every day on every topic imaginable and hopefully getting you an answer or sending you to a fellow member who has that answer -- as we collectively navigate the complex business world we all are encountering," Bengloff added.