The elephant in the room: Pay disparity between song and record rights holders
The elephant has been standing in the middle of the room for too long, and now it’s being unveiled in the UK. DCMS is flagging out what everybody knew (but nobody cared): the split between publishing rights and recording/master rights of the percentages of revenues from digital music services is unbalanced. Strongly and unfairly unbalanced.
This is not about an imaginary fight between copyright and neighbouring rights, or who came first, or without one the other couldn’t exist (which it’s true indeed as songwriting is undoubtedly the first mandatory step on the creative path down the road that builds and generates all those chains of rights). This is about the sad reality of the marketplace where you can find an approximate average of 20/80 split (sometimes higher sometimes lower) between what is channelled to the songwriters and their publishers and to the neighbouring rights owned by record label. Meaning, in a very simple and basic view, that for each 100€ of rights generated on a DSP, 20€ would drive to the publishing side and € 80,00 to the master side. As the report summary says “This comes from a model which applied to physical sales, where labels had overheads such as manufacturing, storing and transporting CDs.”
This creates an unfair and unbalanced market for creators that could have been addressed several times in the past though horizontal lawmaking (Directives) or vertical one (Regulations). It was not, and you will probably ask why? I don’t have the answers, but I guess that the answer could be a simple one: during the long and hard debate that led to the Copyright Directive and the so much debated (it was even presented by some as the assassin of the internet as we know it…) Article 13 (now 17), rightholders did concentrate their efforts in the unbalance existing between the high revenues generated by some Digital Music Platforms and the little of this that is allocated to publishing and neighbouring rights. So, basically this was an open field war between who creates/performs/owns rights and those using/giving access to the musical content. Naturally, having an internal conflict between right holders could have jeopardized the other main objective. Just my guess, and I believe it was the right approach.
As it is now the right approach (and so immensely important!) to have this huge input and impact coming from the UK, flowing from the discussions from the Digital, Culture, Media and Sport Committee (DCMS) and which culminated in the publication of the report on the ‘Economics of music streaming’ that also encompasses or takes into account several stakeholders contributions. The report covers several topics (low revenues even for successful artists, three Majors having control of the market, and “safe Harbour” and copyright infringement) and drives us into deeply impacting legal considerations (such as if and why music streaming should be funnelled mainly to “making available right” or could and should encompass other rights such as “rental right” that would allow performers to have equitable remuneration) which we don’t have time, nor this is the right forum, to cover. The diamond and key aspect is that it points out, publicly: see point 2 of the report summary that there is “Pay disparity between song and record rights holders”. And it wraps it up as this: “The current revenue share from streaming gives the record label the majority of a track’s revenue. This comes from a model which applied to physical sales, where labels had overheads such as manufacturing, storing and transporting CDs.
This leaves songwriters and publishers with the smallest share of revenue, despite being integral to the creative process. Music creators and music publishers argue that this model is outdated and unfair as these overheads don’t apply to digital music production.”
Having this statement publicly made, constitutes one first big step that we at UNISON must applaud and support, as we know and understand what an even minor change in such unbalance would mean for our clients and we will keep being together with the first ones to advocate for them and their rights.
Hope this is just the first grain of concrete to build the upper floors of a complex (but need to be resistant and durable) Digital Music Revenues building that can benefit, in a fair manner, all those contributing on a daily basis to enrich our lives with good music. In the end, it’s all about music, it’s all about loving what we do!
Licensing and International Manager at Unison.