Todo Mundo - Licensed!

Last week, Billboard magazine asked for my opinion on some music licensing-related issues for an article they have just published. Due to space consideration, my long answers were trimmed for their piece. If you want to read the whole thing, here it is:

Congress is taking a hard look at music licensing this year. What would you say to Congress about the state of music and creativity in 2014? What can Congress do to help artists? 

I think that artists in general can be given more agency regarding what happens to their work. I don't own my old recordings, which is a similar situation to that of many artists, which means I have no say whether they are licensed to YouTube, Spotify, Beats, Apple—you name it—and for what percentage and for how long. If that's where music consumption is going, that leaves much of it completely out of my control. I do at least control a lot of my publishing (which not every artist does), so that gives me a foot in the door. Other kinds of licensing decisions—films, TV, etc—are up to me.

Philosophically, I think the issue is: Do we always do what is best for the consumer in the short run or do we think more long-term about our culture and quality of life? This is a much, much bigger question than musicians and songwriters. Are the giant corporations that underprice everyone else—and therefore seduce the consumers by the boatload—necessarily the best plan for our future? Not just the future of creatives, but for of all of us? In France, for example, there are regulations regarding the kind of corporate price undercutting that has an aim to protect small bookstores and publishers. As a result, the consumer is more or less forced to pay a base price for a book (they can’t find it cheaper at Walmart or Amazon, for example), but as a result, there is still a culture of bookstores and small publishers. The consumer might have to pay more than they would (for a while anyway) from the rapacious behemoth, but as a result there can be more diversity and survival of small and medium-sized companies and vendors. The culture as a whole is richer. It's a trade-off. In musical terms, I think it comes down to this: Do we want to continue to support the top handful of recording musicians or do we want to have our lives surrounded by creativity of all sorts.

How has the decline in recorded music affected you? Do you spend more time on touring and other projects because recordings don't pay what they used to? 

I've always been budget-conscious, but even more so now. I'm lucky; I came up and got somewhat established when record companies still spent money on marketing and all of the rest for medium-sized artists—a lot of those budgets have dried up for artists coming up now. I tour regularly, yes, but no more than I use to. I make money touring; I try not to go out unless the budget looks good. It is a source of income, more than sales of recordings, but I also feel that the concertgoer deserves his or her money's worth. Tickets aren't cheap. So we artists have an obligation more than ever to give as much as we can and balance that against ticket costs.

I recently spent a lot of time on a musical (which is still rolling out in other markets) and though it hasn't been a big source of income for me, I could see that, for creative folks, these other avenues could be a way to survive.

Profit is difficult in digital music. The rates paid by Pandora, which are set by a board of judges, are believed by many artists to be too low. Pandora is not profitable, although it has successfully raised money through public stock offerings.

The Pandora model, and that of many other internet companies, is, IMO, like the Amazon model: hang in there for years making no serious profit, undercut existing businesses who do have to make a profit, and continue to seduce investors with the numbers of customers who are seduced by low prices and convenience. Again, it's super convenient for the consumer, who is happy to be kept in the walled garden... for the time being, at least.

Spotify negotiates rates with record labels. It's a privately owned company that is probably not profitable yet.

See above: It's not hard to undercut your competition when you don't have to make a profit! (Well, I’m sure getting venture capital money isn’t easy, but still.) Yes, the streaming companies "negotiate" with labels—but the (big) labels are investors in these same companies (which is clearly a conflict of interest)! If and when Spotify goes public, these labels stand to make a lot of cash—possibly way more than they'd ever make from the minuscule percentages derived from streaming. They don’t have to share ANY of that cash with their artists. The labels therefore have no incentive to get tough with the streaming companies—very, very clever. It does seem like short-range thinking; streaming income is not sustainable except for the top .01% of musicians... and other forms of income (CDs, downloads) from recordings are shrinking daily.

How should the needs of the artistic community be balanced with the needs of digital services?

Artists should have some say in what the deals are, where they are and for how long. And they should be transparent: Artists should have access to data on their streaming income—in a way that's comprehensible. Right now, it's mostly the labels who have this information, which is natural as they are the ones who own the recordings that are being licensed. I've gotten access to some of the data on my Warners-owned recordings and my manager and I have been trying to understand this data for years now. Warners—to their credit—are being very cooperative, AND treat the income as a license, but the form the numbers come in is baffling—maybe intentionally. No artist who can’t afford a team of business managers could possibly make sense of it.  

Record labels and performing artists are not paid for performances on terrestrial radio, with a few exceptions from direct deals between labels and broadcasters. Do you think Congress should create a performance right from radio? 

Absolutely—this one is a no-brainer. Every country in the world does this except North Korea, Iran, China, Vietnam and Rwanda. Those are the countries we are aligning ourselves with on this issue. There is movement to change this. Non-profit radio—college and public radio, for example—would be exempt.

There is a large disparity between royalties paid by digital services to record labels and music publishers. As a songwriter, do you feel the songwriting side of copyright should be worth more? 

Yeah, I do—but maybe not as much as the songwriting and publishing advocates think. But seeing as how the labels are partners with the streaming services, this is no surprise. This conflict of interest should be eliminated and then we'll see what happens.

From statutory royalty rates to ASCAP and BMI rate courts, royalty rates are often the result of judges' decisions. Do you think Washington D.C. should have a hand in setting royalty rates, or should buyers and sellers meet on an open market to determine what labels, publishers, recording artists and songwriters get paid? 

This is a tough one—I might not be prepared to weigh in here. Having to negotiate a million individual deals would seem to be a recipe for chaos—but given computerized accounting and bookkeeping, it's not impossible to manage the flow of varying percentages of income. I know this from my own publishing splits: they vary all over the place. I don't know enough on this issue to offer an opinion.

[I did a little more research on this issue after this interview. There was a law passed in the ‘40s (the ‘40s!) that is commonly known as the Consent Decree. It says that songs must be licensed to radio and some other outlets (but not for use in movies and ads) and that Performing Rights Organizations (PROs—mainly ASCAP and BMI in the U.S.) will collect the money from that revenue stream.

Here is what Wikipedia says:

In regard to litigation in performance rights organizations such as American Society of Composers, Authors and Publishers and Broadcast Music, Inc. in United States v. ASCAP, which began in 1941, the Department of Justice used consent decrees (which are amended according to the times and technology) to regulate how they issued blanket licenses to ensure that trade is not restrained and that the prices of licenses would not be competitive.

Everyone and every song is treated the same. In other words, consent means that the writer or publisher can’t withhold their song and ask for a different deal than everyone else. Arbitration, in case of disputes, is done by federal judges—there is one for ASCAP and one for BMI.

This is the way it has been for decades, but now some artists and publishers are feeling that with the growth of streaming services—both on-demand ones (like Beats and Spotify) and algorithm driven ones (like Pandora)—they might not want their music on those services at all or they may feel that the income from those services is insufficient or unfair. I can certainly see the point: to simply accept the streaming deals and to be compelled to accept them might rub quite a few of us the wrong way. Congress feels the same way, and the whole consent decree issue is coming up for debate.

However, some of the giant publishers (Sony, Universal, Irving Azoff, Warner/Chappell) have unilaterally opted out of the consent decree deal as well as deciding that they will make their own licensing deals to bypass the PROs entirely. Though they might get better deals—there is no guarantee—they will avoid paying whatever small percentage goes to the PROs. Many of these giant publishers are investors and partners with the streaming services, so there is a clear conflict of interest: their incentive is for the publisher to profit, but not necessarily the artist. There will be tiered income for publishers and writers—the advantage given to the big guys.

It would seem there are some additional consequences of these unilateral actions: the PROs will be left with the smaller and independent artists, which gives them much, much less negotiating power—as well as income. And, the PROs are non-profits—and are therefore completely transparent: any artists can see their money flow. With the giant publishers, this transparency disappears completely—all deals and money flow are secret….which makes many of us suspicious.

So, while it seems to me that the consent decree issue regarding digital technology needs to be revised, rethought and reconsidered. Abandoning the PROs altogether seems like a tact that mainly benefits big corporations (though it may benefit some of their writers—but for how long, there are no guarantees). That’s what I know so far.]