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Let’s start from the top. The music business is like the finance industry 20 years ago. Unregulated by governments who misunderstand how it works. When I direct my anger at ‘the IFPI’, I’m talking about the Major Labels: @UMG, @sonymusic & @warnermusic.
They have been able to run the market based on their terms. They own more than two thirds of ALL recorded music. You may ask, but *how* have competition authorities allowed this to happen? Sadly the answer is: fuck knows.
They are presently making between 20 and 50 million dollars every single day from streaming and this is how they did it.
Streaming should have been split fairly from the start. It should have been a considered decision based on value. All parties at the table.
No one considered the fact that sometimes streaming is like a small purchase (when you choose to listen to something) and more like a radio broadcast (when it chooses something for you). This distinction is important.
Instead Spotify just needed the big rights-holders at the table so that they could do a deal. What was said at those meetings is concealed behind our old friend, the NDA. The big three set the rates everyone else got, and took massive stakes in Spotify in the bargain.
You might think there are only two sides that needed to be treated fairly. Who owns the recording and who owns the song. But there are 4 associated rights that needed to be considered within fair remuneration.
The Master Right (recording), the Performance Right (the song), the Mechanical Right (the reproduction rights of a song dating from ye olde publishing on paper days) and the oddly-named Neighbouring Right (performers and players earn money from a broadcast of their performance).
The Major Labels decided “of course there is no broadcasting element to streaming”. That meant direct purchases from them. So the Neighbouring Right was brushed away. When Spotify choose something for you to listen to does that feel like a purchase or more like the radio?
The companies that own the Major Labels are also the biggest publishers in the world. Publishers, on behalf of writers, control guess what? The Song! That’s the Performance Right and the Mechanical Right. Sigh.
So these entertainment conglomerates didn’t need their publishing arms to be part of the negotiations. They make money 4:1 from the recording and 1:4 from the song - guess which one they prefer?
They also have powerful seats in all the organisations (the PROs) that collect monies for songwriters because they own *so many* rights. It is easy for them to apply pressure within these organisations. These organisations were surprisingly quiet about the dividend to the song.
Who knows whether certain CEOs made calls to the heads to PROs and publishers telling them to stand down while they filled their wheelbarrows with cash? It would be somewhat reminiscent of the Libor scandal wouldn’t it? Insider dealing. Setting rates.
Here are the splits: Spotify keeps 30%. The Recording gets 57%,the Song gets 13% (of which publishers get half). So that’s 6.5% that goes to the writers of which, on any song, there may be multiple.
What an artist earns from that 57% varies enormously. A few self-releasing and successful artists do very well out of this situation. But most artists labouring under Major Label contracts are unlikely to make as much as 50% of it. Closer to 20% in most cases.
If the broadcast element of streaming was recognised money would go directly from streaming to the artists but also to the people who play on the recording. Wouldn’t that be nice? The Americans need to fix their system where there are no royalties from radio DESPERATELY.
We are in a global crisis. Performers, players & writers are all terrified. This broken system has survived because we had the touring business to fall back on. We made do. We can’t any more. Time to get real and be fair. For the IFPI do the right thing. Why not @IFPI_org?
Please share or RT. We need this to be fixed. ASAP.
Addendum (insult to injury): @sonymusic have, thus far, banked 50% of their shares in Spotify for around $750m. @warnermusic have banked 75% of their shares for approximately $400m. @UMG's equity in Spotify is worth approximately $1bn. Source:…
And stuff like this is going on:… via @helienne
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