There has been much speculation over the last few years about how much revenue is generated in music streaming. Since the arrival of the this new model of music consumption, calculations (or miscalculations, I should say) have been made of the pay-per-stream revenue coming from the different streaming platforms, but the truth is that there is no magic number and this remuneration varies every quarter according to many factors that we may be able to adress on another occasion (country and plan from which the stream comes or the total number of streams for that month, for example).
The distribution of these revenues among platforms, distributors, record labels, artists, authors and publishers also creates a lot of confusion. This process is neither simple nor unified, especially if we focus on sharing the benefits generated by publishing rights. Why?
Well, as it pertains to neighbouring rights, record labels and/or distributors provide content to platforms and these pay for music consumption in their services directly to the first ones, the circle of content-consumption-payment-distribution is much simpler and straightforward. However, if we refer to publishing rights, in the process of paying for the works used there are more difficulties and agents involved that result in much longer value chains and variables according to platform, consumption model, payment and territory, affecting not only the payment term, but also the amount received, which is calculated at about 10 and 15% of the total revenue generated by the stream of a particular recording.
If we put as an example the last song of BTS, “Dynamite” (J. Agombar, D.A. Stewart), it would be easy to guess that the revenues generated by the recording would go to the band’s record label and eventually to the artists, according to their record contract. However, the components of the band are not the authors of the work, so where would the revenue generated by the composition and lyrics of the last hit of the Korean fan phenomenon go?
Each time a work is played, two types of copyright are generated, mechanical (or reproduction) rights and public performance (or execution) rights. For composers to receive these benefits first, they should be registered with an independent management entity or collecting society. These management entities license to platforms such as Spotify, Youtube, Deezer, etc. so that they are authorized to have the works available to consumers and, in turn, directly collect the generated revenues from the DSPs. (or foreign management entities through representation agreements).
How is this collection done?
According to the agreement between the management entities and the platforms, the platforms send to the management entity every so often (usually every quarter) files containing all the information of the recordings reproduced in their streaming services. These files contain millions of lines that the management entity has to find matches in their registered works database in order to claim all or part of the revenue generated by the works it controls. This process is not peaceful, as the data available to each agent is often incomplete or incorrect, resulting in delays in payments because the platform does not know to whom the income generated by the works belongs, or several entities claim the same work, generating what are called double claims. This process is complicated if we take into account the traditional fragmentation of the licenses granted, which is usually territorial (i.e. one country-one management entity-one license), as the management entities are represented by each other in the different territories, through unilateral or reciprocal representation agreements, and have to send the income generated in the country of origin of consumption to the entity representing the authors of the works consumed, necessarily leading to more delays and increasing net revenue per stream as a result of multiple administration discounts.
How to improve this pay-per-stream for authors?
On the one hand, improving the percentage paid to the authors, by a substantial increase that would be made by renegotiating licenses with the DSPs involved. In the past, some platforms have been more open than others to accept this renegotiation.
On the other hand, reducing the intermediaries between the platform and the rights holder, that is, signing multiterritorial licenses with the platforms that avoid this territorial fragmentation and indirect decrease in copyright income.
And finally, using technology to exponentially reduce errors and improve matches between works and recordings played on platforms, thus avoiding the double claims we have discussed earlier.
At Unison, our goal is to use all these tools to increase the digital revenue of our customers and represented right holders, using the combined technology of our partners and technology providers, and becoming the first independent european independent management entity with international agreements for the granting of direct multiterritorial licenses with streaming platforms.
VP of Operations