For the Record is a Billboard column from deputy editorial director Robert Levine analyzing news and trends in the music industry.
Last week at the annual Music Biz conference in Nashville, I heard about a company that has developed technology to instantly pay multiple creators split royalties, in either traditional money or cryptocurrency. At last, artists will be able to receive their royalties right away. That is, assuming they can agree on how to divide credits and find a company that wants to pay them instantly.
Technology is a wonderful thing, and this company seems to be able to provide the kind of infrastructure that the music business could use. At the moment, though, few creators get paid in the time it takes to mail a check. The reasons why have little to do with delays in sending money. Streaming data needs to be untangled and combed over for fraud. Creators sometimes disagree on how to split credits and royalties. In the U.S., the government-set mechanical royalty rate is being appealed by streaming services, leading to the frightening prospect that such services will claw money back from publishers, which in turn might try to get some back from songwriters. As for cryptocurrency, call me old-fashioned — #fiatfan – but I always prefer to get paid in money that’s going to be worth what it was when I earned it.
Music Biz was full of these kinds of companies, selling services that might loosely be called calculators – tools to track the usage of copyrighted works and enable rights holders to claim royalties they’re owed and collect them. Many of them are impressive – and the music business can’t work properly without them.
Sometimes, though, the music business also needs what you might call hammers – tools that can make services that use music pay creators and other rights holders. The ability to track and collect royalties from YouTube is fantastic, but creators can’t collect anything from Twitter, because the company doesn’t pay for music. (It operates under the Digital Millennium Copyright Act in the U.S., where in some music may also qualify as fair use.) For that matter, it might be impossible to collect money from YouTube in the first place – or Facebook or TikTok – if major rights holders hadn’t used as much leverage as the law gives them. (It’s hard to know for sure, and it’s worth noting that YouTube pays creators of all sizes, but it’s hard to imagine that this didn’t help.) The biggest hammer of all, at least in the U.S., is statutory damages, which gives rights holders some leverage – although in some cases that’s counterbalanced by the DMCA.
This isn’t an either-or situation, of course – hammers can’t get anyone paid accurately. But calculators alone won’t work, either – they often can’t get anyone paid at all. What worries me is that, at least at Music Biz, all the attention went to calculators because so many companies are developing them. At a panel about EU copyright law, for example, Jim Griffin spoke about Pex, a registry that lets rights holders set the terms under which their work can be used and collect royalties; at a panel about “fair pay for every play,” Utopia COO Roberto Neri talked about his company. The emphasis was on “every,” though. As my colleague Glenn Peoples points out, the music business has gone from talking about fairness to discussing accuracy.
Fairness often requires a hammer – in the form of leverage to negotiate a market rate. (This often leads to complaints on both sides – platforms say they pay too much for music, while rights holders say they pay too little – but griping is often just negotiation by other means.) And that hammer is often supplied by the policy world, in the form of either legislation, legal precedents, or public pressure. This doesn’t get as much attention because it’s not something start-ups tend to do. In fact, it’s something start-ups tend to sneer at – who needs laws when we have code! But any startup that tracks the use of works will benefit from the European Union copyright directive – which is presumably why Pex wanted to showcase its system on a panel about it.
Companies like this would also get a boost from the SMART (Strengthening Measures to Advance Rights Technologies) Copyright Act of 2022, which would allow the Librarian of Congress to run a rule-making process that would designate certain technical measures that platforms would have to follow to maintain their safe harbor from copyright liability – like YouTube’s Content ID filter for example. (Why the Librarian of Congress? Because since its founding the Copyright Office has always been part of the Library of Congress.) Although technology companies tend to frame any kind of copyright enforcement as a barrier to innovation, this law would actually spur it by providing an incentive to better track the use of works online.
It’s important to know exactly how much creators need to collect – and from whom. But the music business still needs hammers, since there are still some online platforms that don’t pay at all – Twitter still isn’t paying for its use of music, Snapchat was recently sued by SUISA Digital for not paying for uses of certain music in Europe. After years of holding out, Twitch is finally paying for music. It will take some sophisticated calculator tools to divide up the revenue it pays out. But those tools alone wouldn’t have been able to make it pay anything at all.