Want Better Music? Don't Stiff the Songwriters
Eliot Van Buskirk Email 02.04.08 | 12:00 AM

As Hollywood writers strike for a piece of digital profits, a similar battle is brewing over royalties paid to songwriters and music publishers. The Copyright Royalty Board began hearings last Monday to determine publishing royalties for CDs, downloads and -- for the first time -- subscription music services, ringtones and interactive webcasts.

The hearings will consist of a fair amount of policy wonkery that only an insider could possibly appreciate, but music fans have a horse in this race, too. The seemingly arcane mechanical royalty rate, to be set by early October, could affect everything from the price of music to its overall quality.

"If you're a music fan, the worst thing in the world that could happen is if great songwriters stop writing music because they can't make a living," said David Israelite, president and CEO of the National Music Publishers' Association, which is pushing for a higher royalty rate.

On the other side of the argument, record labels and webcasters -- who squared off during last year's battle over performance royalties -- have teamed up this time around, saying songwriters and publishers are making too much money and stunting the music industry's growth.

"We are seeking to have royalties be in line with what the record industry historically has paid," said Jon Potter, executive director of the Digital Media Association, or DiMA. "Royalties today are disproportionately high for publishers in the context of overall sound recording pricing.... They've gone from 7 cents, to 8 cents, to 9 cents (per song), while record prices have dropped dramatically."

While songwriters want an increase from 9.1 cents to 12.5 cents per song sold -- saying distribution costs are dropping during the transition to digital -- the Recording Industry Association of America, or RIAA, wants songwriting royalties to be set at 8 percent of the wholesale price. DiMA proposes 4.1 percent of the retail price, and has asked the Copyright Royalty Board to decide whether webcasters need to pay mechanical royalties at all, since streaming isn't designed to leave the consumer with a copy of the song.

But once everybody's devices are connected, downloading music could be considered a waste of disk space. Songwriters and publishers could be out of luck should this stream-centric future come to pass: Under DiMA's proposal, they would be paid for interactive streams and on-demand playback services at royalty rates designed for radio, rather than for music sales, despite the fact that on-demand streaming could basically replace sales. The result: significantly lower royalty checks.

"That's a scenario you could see; it could be all interactive and all ad-supported," NPD analyst Russ Cruspin said. "If that's the way a segment of the population is enjoying, collecting and doing all of the things they would have done with a CD, (that scenario) is different from radio."

Record labels also think songwriters and publishers are getting too much of the pie.

"Sales of physical CDs have declined precipitously, and the industry has laid off thousands of employees," according to a document circulated by the RIAA. "All of this has led to a mechanical royalty rate structure that is out of whack with historical rates in the United States and current rates around the world."

Having secured their own flat performance royalty rates for online radio, labels want songwriters and publishers to accept a percentage rate. Songwriters and publishers hate that idea, because record labels could lower prices and try to make up the shortfall by grabbing a piece of artists' merchandise sales and touring revenue.

Webcasters and online music stores could employ the same strategy. "Take a very large internet service like Yahoo," National Music Publishers' Association's Israelite said. "Yahoo might be willing to lose money on their music service if they can get eyeballs on their website ... (and) everybody knows Apple is much more concerned with selling iPods than they are with selling music on iTunes."

Songwriters and publishers could be cut out of these new revenue streams, which is one reason the first witness called in the hearings -- Rick Carnes, president of the Songwriters Guild of America -- said, "Our opponents have to recognize that this rate-setting is not a matter of gamesmanship for songwriters, but rather one of survival."

Why should you care? Because music is bad enough already. Cutting songwriters out of the equation not only means that manufactured bands that rely on them will sound worse. It also means bands that do their own songwriting will have a tougher time surviving.

"Many artists who are also songwriters make their livings off their publishing rather than their record sales," Israelite said. "If they've written their songs, they have another source of income, which allows many bands to stay above water."

Quality could be exactly what the music industry, which is so eager to pin its declining fortunes on technological developments, needs more than anything else right now. If Israelite is correct and the quality of music depends on keeping songwriters happy, music fans should hope the Copyright Royalty Board settles on a rate that keeps them solvent.

"It all starts with the content," NPD's Cruspin said. "(Music) is not a commodity. We're not talking about laundry detergent here."

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Eliot Van Buskirk has covered digital music since 1998, after seeing the world's first MP3 player sitting on a colleague's desk. He plays bass and rides a bicycle.

So, as it appears to me, the major labels (EMI, Sony/BMG, Universal and Warner) are in a pitched battle with the major publishers (EMI, Sony/BMG, Universal and Warner).

The fun never stops.

good article Leflaw !

actualy id rather see the writers and singers get realy screwed. have it go down from what it is now so they will drop the riaa in droves.

George posted the following at azoz:

http://azoz.com/newsarchive/2008dash02/crb.html

On Friday, the RIAA pitched their long-running sob story to the California State Legislature, voicing their concern for "the songwriters who pen the music and lyrics; the background musicians who perform it; the engineers who texture, layer and refine it; the artists who make it soar"? Meanwhile, on the East Coast, they are arguing that songwriters and publishers are ruining the music business.

I guess that's why they're so concerned. If anyone is going to steal from the songwriters and artists, it's going to be them. The record labels have a long history of deciding that there is a limit to the number of songs they will pay mechanical royalties for on any given CD/album. Or, especially for artists that write their own material, that they're simply going to pay you less than the legal rate.

Eliott von Buskirk over at Wired has today's version of the story. I'm only going to quote one sentence.

"If you're a music fan, the worst thing in the world that could happen is if great songwriters stop writing music because they can't make a living," said David Israelite, president and CEO of the National Music Publishers' Association, which is pushing for a higher royalty rate.

Buskirk sort of echoes that sentiment, which I understand. If you are going to pick sides in that fight, the RIAA is on the other side.

If you think it through, the logic behind that train of thought is ludicrous. The record labels fired or bored to death all of the great songwriters. The ones that are still signed to the majors are there because they have enough leverage to get what they want. Or their contracts just haven't run out. Whatever scheme is decided upon, they are going to rake in a pile of dough from this NEW REVENUE STREAM ("new" as in "never existed before") because the great music lives forever.

Ignoring all of that, my initial gut-level response is that the great songwriters stopped writing great music about 8 years ago. I haven't heard anything this century that qualifies as "great." There have been a few "very good" releases in the past year, but nothing that crosses into greatness has entered my pointy little ears.

So "the worst thing in the world that could happen" already did. If songwriters can't make a living, it's because the publishers allowed the RIAA to get performance royalties for the sound recording (which has never before been paid in the U.S.) and then waited another five years before asking for the songwriting/publishing royalties (which have always been the ONLY performance royalties paid in the U.S.).

The publishers have been big pals with the RIAA since Napster. The webcasters hated the RIAA, filed an antitrust suit against them. Now, the webcasters are teamed up with the RIAA to fight with the publishers.

All so interesting, all so action-packed, with the future of music at stake, as always. This is, like, an official hearing, dude. Don't look too close or you'll realize that the whole idea of this mock battle is to make everyone overlook the simple fact that EMI, Warner, Sony/BMG and Universal are also the world's largest music publishers.

No matter which side prevails at the copyright royalty board, the RIAA wins. At the end of the day, they still collect all the money and are trusted to dole it out to the appropriate parties, which they never do. It's a rigged game, which is the only game they play.

"It's a rigged game, which is the only game they play."

And, it is why we need true copyright reform. Let's just abolish mechanical and performance royalty structures for now and start over.

The songwriter should be the one who "gets something" for use of his song in a commercial fashion.

The artist & creative producer should be rewarded when their VERSION of the song is monetized.

But the rates should be reasonable.

And the rules governing how the money is distributed should largely ignore the middleman's interest in favor of the creator and fan (with a fair BALANCE.)