It’s no secret that the advent of digital technology has caused massive upheaval in the music business. Initially, at the turn of the century, due to Napster and file “sharing” services, revenue shrunk dramatically and for all of the players in the industry — record labels, artists, publishers and songwriters alike — it’s hard to compete with free.
More recently, things have begun looking up. With the arrival of digital streaming, a new paradigm for how people consume music is evolving and revenue has begun to climb again. Record companies are posting record quarterly profits. Indeed, things have been looking up — for everyone, that is, except songwriters. For example, of every dollar Spotify paid out to creators in 2017, approximately 81 percent went to labels and artists… only 19 percent to writers and publishers, according to Billboard estimates. This is inequitable and unsustainable.
Fortunately, there is legislation currently moving through Congress that seeks to address the systemic problems facing songwriters whether independent or signed to publishers. It’s part of the Music Modernization Act (or MMA) and we at Songwriters of North America (SONA) believe that if it passes, it will significantly improve our ability to collect our fair share of revenue in the digital marketplace going forward.
Here’s the case for the MMA:
1. First and perhaps most importantly, the legislation enshrines into law the fact that a stream is both a performance and a mechanical. This is not a small thing and the critics often dismiss its importance. The digital services have fought this concept for a long time and to get it passed into a statute is a victory for songwriters.
2. Currently, our performance rates are determined by two individual judges, one for ASCAP and one for BMI. These judges are appointed for life and one of them has often not ruled favorably for writers. The MMA allows for a rotating “wheel” of judges, creating a more well-rounded viewpoint from those who set our rates.
3. These judges are currently legally prohibited from considering the rates earned by record labels and artists from the same stream when determining the rates paid to writers. The MMA changes this, allowing the judges to determine our rates based on what is happening in the current marketplace. This is huge.
4. The MMA will end the notorious Notice of Intent loophole that the digital services employ in order to avoid paying writers. Not just independent unknown writers either. I think we can all agree that Spotify employees could find Sting if they really wanted to. Now they will no longer be able to hide behind the excuse that they don’t have the data. They will have to pay.
All of this will lead to significant revenue increases for anyone who makes their living composing music.
In recent weeks a number of songwriter/advocates have voiced criticisms of the MMA. We at SONA understand and respect the views of our fellow advocates, and in a perfect world might agree with many of them, but we believe that in this instance they are missing the forest for the trees.
There’s an old adage that says: politics is the art of the possible. And the MMA is certainly no exception. All of the stakeholders who participated in crafting the legislation had to make compromises and they did. Songwriter groups like SONA and Nashville Songwriters Association International had to bargain with entities that, like it or not, have more resources and clout than we do. Make no mistake, without a major push by the National Music Publishers Association (NMPA) and the performance rights organizations, digital music services would not be at the table trying to make a deal with songwriters. And leaders like Doug Collins, Robert Goodlatte, Jerrold Nadler and Hakeem Jeffries in the House and Orrin Hatch and Sheldon Whitehouse in the Senate would not be working so hard to move the legislation through.
With that in mind, let’s have a look at a few other features of the proposed legislation.
Having for the first time codified the existence of a mechanical royalty in a stream, the MMA sets up an entity to collect these mechanical royalties from the digital services and distribute them to writers and publishers. Think Sound Exchange, which performs a similar function for artists, both signed and independent. Writers, whether self-published or signed with publishers, will have to register their works with the collective and monitor the information to make sure it is correct. We will have three years to do this and if we do, we will get paid.
Several compromises were reached in the way the MMA proposes to do this:
1. The MMA sets up a board that will supervise the establishment of the collective and oversee it going forward. This board would be composed of 14 members: a representative from each of the four major publishers, six representing independent publishers and four self-published writers. Significantly, the representation writers have on this board would be more than writers have had when it comes to the governance of mechanical royalty distribution and is a result of a compromise with publishers who have historically governed this income stream without any input from songwriters at all. Furthermore, independent publishers in many cases may have more in common with songwriters than they do with the major publishers. It’s not hard to envision situations in which a coalition of writers and Indies would outvote the majors on the board.
2. The collective sets up a “black box” for unclaimed funds. This is money that hasn’t been matched with writers and publishers in the collective’s database. To be clear, if you are a self-published writer and you have made sure your works are registered in the database, none of your money will be in this black box. You will have already received your money according to how many times your works were streamed. After three years, the money in the black box will be distributed to publishers and writers according to usage, with no less than 50 percent of this money going to writers (through their publishers). We at SONA think that songwriters are not babies. In the modern era, we need to take some responsibility for our business affairs. Register your works and monitor the database to insure that all your information is correct. We don’t think this is too much to ask and we would suggest that all writer groups engage in an information blitz to the writer community to inform independent writers of the need to take care of their affairs. Further, we would recommend that the collective allocate some of the money in the initial black box be allocated to a similar PR effort to get out the word to all writers and publishers. Ideally, after a successful campaign, there will be less and less unclaimed money as the future unfolds.
A final point on this black box issue is that if you are self-published and your works are registered, you will receive a pro-rata share of the black box money, allocated according to market share and usage. If you have three songs in the database that have been streamed a few times each, you will receive a tiny sliver. If you have 3 million songs in the database but none of them have streamed much, you will also receive a tiny sliver. But if you have three songs registered and one of them was a gigantic hit, you will receive a bigger slice. This seems fair to us.
3. The mechanism by which the Board members will be selected, particularly the songwriter members, has been deliberately left out of the legislation, so that the initial board itself will decide how best to set up the process going forward. At SONA, our view of this is that you have to start somewhere. It doesn’t make sense to codify election procedures in the overall legislation. We have been actively negotiating with the NMPA and the other stakeholders to move the MMA forward and we believe that a fair procedure for the selection of the writers on the board will be found and that it will be deemed acceptable by most if not all writer groups. We also believe that this procedure will be decided upon in consultation with all writer groups, whether they are represented on the initial board or not.
SONA and other groups representing writers continue to advocate on behalf of all songwriters and composers, seeking the best deal we can for our community, while recognizing that compromise is a necessary element in all politics. The MMA is not perfect, but it is a massive move in the right direction. Importantly, we have recently been to Washington and our read is that the bill has a decent chance of passing. Years of work by the House Judiciary Committee have gone into this moment and Chairman Goodlatte is keen to see these efforts through to a successful conclusion. Senator Hatch (a songwriter himself) is also pushing hard for passage.
The last point to be made is that it has taken painstaking negotiation between the digital service providers, the NMPA, BMI and ASCAP, those writer groups who have chosen to participate in the process and Congress to craft the MMA. A delicate balance has been achieved and there is no other train coming down the track. What happens if the MMA doesn’t pass? Can writers afford to wait another decade while streaming becomes the main form of music consumption in the land and we continue to receive the paltry, inequitable share of revenue that it pays us in the current marketplace? Songwriters should support the MMA and push for its passage.
Adam Gorgoni is a songwriter and founding member of Songwriters of North America (SONA). His op-ed is written on his own behalf, as well as the SONA Executive Committee.