CMU Insights Seminar: Digital Dollars & Song RoyaltiesDIGITAL LICENSING: SONG RIGHTS Once the labels...
Transcript of CMU Insights Seminar: Digital Dollars & Song RoyaltiesDIGITAL LICENSING: SONG RIGHTS Once the labels...
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FOUNDER MD+ CMU>
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FOUNDER MD+ CMU>NAVIGATE UNDERSTAND THE MUSICBUSINESS
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MEDIA TRAINING
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MEDIA TRAINING
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CMUINSIGHTS
DIGITAL DOLLARS & SONG ROYALTIES
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THE DIGITALMARKET
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THE SHIFT TO STREAMS
STREAMS(subscription & ad-funded)
CD DOWNLOAD(a la carte)
This shift from CD to download to stream is still ongoing…
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THE SHIFT TO STREAMS: RECORD INDUSTRY REVENUES
This shift from CD to download to stream is still ongoing…
•2018 IFPI FIGURES
PHYSICAL DIGITAL
STREAMCD
3.6%vinyl
21.4%CD
12%download
47%streaming
14%broadcast& public
peformance
2%sync
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THE SHIFT TO STREAMS
STREAMS(subscription & ad-funded)
CD DOWNLOAD(a la carte)
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THE SHIFT TO STREAMS
£§ The streaming boom has
resulted in the record industry going back into growth following fifteen years of steep decline.
§ Premium streaming is behind most of the growth.
§ This boom means streaming income is increasingly important to songwriters and publishers as well.
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THE GLOBAL STREAMING SERVICES
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THE KEY REGIONAL STREAMING SERVICES
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DISSECTING THE DIGITAL DOLLAR
The way the streaming services are licensed and digital royalties calculated each month is complex.
For five years now Music Managers Forum UK and CMU Insights have been helping artists, songwriters and their managers navigate and understand the streaming business through a series of Dissecting The Digital Dollar reports and guides.
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DIGITALLICENSING
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DIGITAL LICENSING
The streaming services are obviously streaming recordings of songs – so they are exploiting both recording rights and song rights.
Copyright law generally doesn’t specifically define a ‘stream’ – but it has been decided that a stream exploits both ‘mechanical rights’ and ‘performing rights’ at the same time.
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DIGITAL LICENSING
With physical product, the label would acquire a licence covering all rights in all the songs featured on each record – usually relying on a collecting society or compulsory licence.
In digital, it has generally been agreed that it is the digital platform’s responsibility to license all song rights – labels do not get involved.
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DIGITAL LICENSING: RECORDING RIGHTS
This means streaming services need to do two sets of deals – recording deals and song deals.
On the recordings side these deals are done by record labels and music distributors.
Once each deal is done, the label or distributor will upload their recordings to the service.
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THE MAJORS + THEIR DISTRIBUTORS
LABEL
DIGITAL DEALS: RECORDING RIGHTS
ARTIST
STREAMING SERVICE
ARTISTS VIADISTRIBUTORS
INDIES VIA MERLIN
LABEL
INDIES VIADISTRIBUTORS
LABEL
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DIGITAL LICENSING: SONG RIGHTS
Once the labels and distributors start uploading their recordings, the digital service is nowalso streaming a lot of songs.
The digital service actually doesn’t know which specific songs it is streaming let alone who owns those songs in each country – so ideally it needs to license ALL songs to ensure it is covered.
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DIGITAL LICENSING: SONG RIGHTS
The easiest way for this to be achieved would be if the songs industry offered the digital services a blanket licence via each country’s collecting society – as it does with radio etc.
Each society would then license both its own members’ repertoire and the repertoire of all the other societies it has reciprocal deals with,but only in its home country. .
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DIGITAL LICENSING: SONG RIGHTS
1. In some countries there are separate societies for mechanical and performing rights.
2. In some countries there is no conventionalsociety administrating mechanical rights.
3. The big publishers decided they wanted to license Anglo-American repertoire through direct deals.
However there are issues with this approach:
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DIGITAL LICENSING: SONG RIGHTS
4. Unlike most traditional licensees many digital services aspire to be global operations.
5. Services want to do as few deals as possible,territory by territory licensing is unattractive.
6. European societies came under pressure from regulators to offer multi-territory licences.
However there are issues with this approach:
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DIGITAL LICENSING: SONG RIGHTS
7. There are inefficiencies with allowing other societies to administer your rights.
8. Processing streaming income is complex and not all societies are necessarily up to the job.
9. Artists and writers are demanding faster payments and more transparency.
However there are issues with this approach:
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DIGITAL LICENSING: SONG RIGHTS
As a result, there is now a mixed approach…
• Some direct licensing by publishers.
• Some multi-territory licensing by societies.
• Some reciprocal licensing by societies.
• Sometimes MR and PR licensed separately.
• Some societies collaborate via copyright hubs.
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DIGITAL LICENSING: SONG RIGHTS
But the service still needs to cover all songs,so must complete a licensing jigsaw.
LOCALCMO
PUBLISHER
PUBLISHER
PUBLISHER
PUBL
ISH
ER
CMO
CMO
CMO
CMO
HUB
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PRO
DIGITAL DEALS: SONG RIGHTS
SONGWRITER
PRO PRO PRO PRO PRO
STREAMING SERVICE
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PUBLISHERPUBLISHER
STREAMING SERVICE
DIGITAL DEALS: SONG RIGHTS
SONGWRITER
PUBLISHER PUBLISHER PUBLISHERPUBLISHER
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PUBLISHER PUBLISHER
STREAMING SERVICE
DIGITAL DEALS: SONG RIGHTS
SONGWRITER
PUBLISHER PUBLISHER PUBLISHER PUBLISHER
POLARIS ICE
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STREAMING SERVICE
COMPLICATIONS: SEPARATE SOCIETIES IN ONE TERRITORY
SONGWRITER
Though those separate CMOs may collaborate
PUBLISHER
And then you have the problem that is the USA
PUBLISHER
?
Separate CMOs for performing and mechanicals
PUBLISHER
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STREAMING SERVICE
COMPLICATIONS: SEPARATE SOCIETIES IN ONE TERRITORY
SONGWRITER
Though those separate CMOs may collaborate
PUBLISHER
The MMA should havesolved the issues in the US
PUBLISHER
Separate CMOs for performing and mechanicals
PUBLISHER
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STREAMING SERVICE
COMPLICATIONS: DIRECT DEALS
SONGWRITER
Publisher provides mechanical rights
for the songs in its Anglo-American catalogue- with co-writes only its % of the copyright
CMOs provide accompanying performing rights
via the reciprocal agreementsof the publisher’s partner CMO
Publisher forms JV with a CMO – called a SPV
Publisher negotiates deal – subject to approval of partner CMOs
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STREAMING SERVICE
LICENSING PUBLISHING RIGHTS TO DIGITAL
SONGWRITER
LOTS OF CMO DEALS
THE CMO HUBS
ALL THE OTHER CMOs
PERFORMING RIGHTS MECHANICAL RIGHTS
PUBLISHER
SOME DIRECT DEALS
CMOs
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THE DIGITALDEALS
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LABEL / MUSIC PUBLISHER / CMO
RevenueShare
Advance ???
Equity ???
Fees ???Minima
Guarantee
THE DEAL
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LABEL: revenue share of 50-60%
THE DEAL
§ Most important components of deal: Revenue Share + Minima
§ Every deal is different, and these rates usually secret.
§ Although, generally…
PUBLISHER/CMO: revenue share of 10-15%
§ Currently ‘revenue share based on service-wide consumption share’.
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HOW ROYALTIES ARE DISTRIBUTED EACH MONTH
TOTAL REVENUE
20% OF TOTAL CONSUMPTION
20% OF TOTAL REVENUE
PAYMENT
If a label’s catalogue accounted for 20% of total consumption, 20% of revenue is allocated to that catalogue.
That money is then split with the label,according to its revenue share agreement with the service.
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PROCESSINGTHE MONEY
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PROCESSING THE MONEY
§ Remember: the streaming services do not know what songs are being streamed or who owns those songs.
§ When they upload new content, the record companies only provide meta-data for the recording – ie the ISRC.
§ They may now provide some songwriter information,but no ISWC or ownership split information.
§ There is no global publicly accessible industry-widedatabase matching ISRCs to ISWCs.
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HOW STREAMING ROYALTIES ARE PROCESSED
CONTENT ROYALTIES DATA ROYALTIESINVOICE
RECORD LABEL/DISTRIBUTOR
STREAMING SERVICE
ARTIST
PUBLISHER/CMO
RECORDING RIGHTS PUBLISHING RIGHTS
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MATCHING WORKS
THE RECORDING
THE SONG
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MATCHING WORKS
ISRC
ISWC
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PROCESSING THE MONEY
§ Many publishers and societies outsource this work to…
§ So, as a rights owner you have to decide…
ANOTHERSOCIETY
A COPYRIGHTHUB
A SPECIALISTCOMPANY
WHO DOESTHE DEAL?
WHO CONTROLSTHE DATA?
WHO PROCESSESTHE ROYALTIES?
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INTRODUCING THEROYALTY CHAINS
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ROYALTY CHAINS
§ Once deals are done money is paid each month by the streaming services to all of its licensors.
§ That money will pass along a ‘royalty chain’ from the streaming services to the songwriter.
§ Because of the mixed approach to licensing, different income will pass down different royalty chains.
§ Depends on service, country and repertoire, and mechanical rights v performing rights.
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SOCIETY DEAL ROYALTY CHAINS
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PUBLISHER DEAL ROYALTY CHAINS
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EXTRA LINKS IN THE CHAIN
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MULTIPLE CHAINS FOR SINGLE STREAMS
MR
PR (P)
PR (W)
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MULTIPLE CHAINS FOR SINGLE STREAMS
MR
PR (P)
PR (W)
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WHAT IS HAPPENING AT THE FIRST LINK IN THE CHAIN?
MR
PR (P)
PR (W)
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MAPPING THE ROYALTY CHAINS
§ The flow of digital income on the song side is complex.
§ Songwriters are often in the dark about what royaltychains are being employed for their income.
§ Their income might actually flow down multiple chains,even for a single stream from a single service.
§ Inefficiencies can lead to delayed, reduced or lost income.
§ Songwriters and their teams need to understand what chains are being employed and check money is flowing.
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DIGITAL DOLLARDEBATES
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THE DIGITAL PIE DEBATE
*Artist and writer share dependent on label and publisher deals
RECORDING DSPSONG
LABEL ARTIST
PUBLISHER SONGWRITER
Are these splits fair? If not, how do you go about changing them?
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PERFORMING/MECHNICALS SPLIT
PERFORMING RIGHTS MECHANICAL RIGHTS UK
FI/NO/SE
DN
Particularly important for Anglo-American repertoire.
But often affects payment terms in other countries too.
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SHOULD WE SHIFT TO A USER-CENTRIC DISTRIBUTION APPROACH?
CC’s SUBSCRIPTION MONEY
20% OF CC’s CONSUMPTION
20% OF TOTAL OF CC’s SUBSCRIPTION MONEY
PAYMENT
This time the money is split and allocated based onthe consumption of each individual subscriber.
The revenue share agreement is then applied to allocationsfrom each individual user’s subscription money.
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THE END
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