We should support music streaming services

DigitalPlatforms_Blog_CST Published 10/9/2014

By Eric Baptiste

You might find this surprising: I welcome music streaming services of all types, and stand ready to support Canadian-based and international services so that they may thrive here in Canada.

On one key condition: they must fairly compensate all of the creators and other rights holders responsible for the music that is the very lifeblood of their business.

Yes, all creators and rights-holders, including authors, composers and music publishers, as well as the record companies and the artists they represent.

For both individual consumers and businesses, music has value. As ASCAP President Paul Williams so well noted, “Literature, music and art have value to individuals, to businesses and to countries. They open our hearts and minds. They inspire. They teach. They comfort. They drive economic growth and innovation. They define our time; they define our cultures; they bring us together.”

Copyright supports that value. Copyright helps music creators as they work to make an honest living writing songs or composing music for lyricists and AV works for film and television. Copyright is what allows songwriters to earn money for the public performance of their music. Copyright allows SOCAN’s members to sustain a career in music creation, maybe even flourish . . . and, most importantly, continue writing.

But today when music is streamed online – the increasingly preferred format for listeners – songwriters are vastly underpaid for the music they create. We’ve all read news stories about songwriters earning some thousandth fraction of a penny for each streaming play, or making only a pittance for a million or more plays.

There are many reasons for this. In Canada, one reason is that, despite best efforts to establish a general framework that might have allowed their earlier entry into the market, streaming services have been slow to arrive. Remember also that streaming services require a number of different rights to operate legally in any country. In Canada we have two things that pose challenges to streaming: ISP usage caps that no longer exist in other countries, or are much lower here; and bandwidth costs that are much higher than in comparable countries.

Other factors are not specific to Canada and reflect the relatively small economic size of emerging streaming services when compared with radio and television stations, which were established decades ago.

Whatever the metric, these new services are dwarfed by many orders of magnitude by traditional media such as TV and radio. The only metric in which streaming services might excel is market valuation, and this is not one against which we can apply royalties. This is a big concern for the future.

Many people don’t realize that when a radio station in a major market plays one song (“a spin”), that spin may very well have hundreds of thousands of listeners at the same time. The economic value of such a spin, reaching so many people simultaneously, cannot simply be compared to the value of one stream, reaching only one person. This is a key point that is almost always overlooked.

Finally, the split of royalties between rights holders tends, in most countries, to disproportionately favour record companies, and to a lesser extent, performers over music creators and their publishers. In many cases that split is 80% to 20%, respectively.

While I sympathize with Re:Sound and Music Canada about the low value assigned to their rights by the recent Copyright Board of Canada’s “Tariff 8” decision, the Copyright Board was quite correct to continue its longstanding approach, which has been confirmed by the courts, that the relative values of the rights of creators and their publishers on the one hand (“authors’ rights”), and of the record companies and performers on the other hand (“neighboring rights”), are generally equal. In the music ecosystem, the source of music is represented by two separate yet equally important groups: the authors, composers and publishers who are at the origin of music; and the performers and record companies that play a major role in bringing it to the market. More and more people are agreeing with this apt description of the manner by which music makes its way into society.

We should all want fair compensation for all of those who are involved in the creation and performance of music. We want to work together, with the labels and the streaming digital platforms that wouldn’t exist without the music created by members of music rights organizations worldwide. We want to create a win-win-win-win situation for those who stream music, those who create it, those who record it, and those who listen to it.

Fair compensation for streaming will eventually be established. After all, we’ve successfully licensed the rights of every new music delivery system that has ever been invented, from radio and television, to cable and satellite. Online streaming is just the newest kid on the block, and we’ll need to work toward fair compensation with them, as we have with other media before. Current problems will eventually be solved, as they have been before.

However, the eventual economic success of streaming services is out of our control. The number of paying subscribers matters. The size of the ad revenues they’re able to collect from “free tiers” matters. These revenues are very small today and, even with the best splits between all right -holders in the world, and the application of higher rates to the revenues of streaming services, the total compensation paid to rights-holders will remain low unless their fundamental economic metrics improve.

Fair compensation for online streaming is a top priority everywhere. The livelihood of music creators depends on finding solutions that allow them to earn a fair living for their work from the streaming businesses whose essential product is their music. Songs and compositions are the engines that drive huge revenues for these big streaming businesses, so music creators must be compensated fairly.

Technological innovation should be supported, but we can only fully embrace such progress when it allows music creators to thrive alongside the businesses that provide new platforms for distributing their works.

About Eric Baptiste

Eric Baptiste is the CEO of SOCAN. In this capacity, he leads the close to 300 staff members coast-to-coast, who connect the 115,000 Canadian composers, songwriters and music publishers who are direct SOCAN members, and their more than three million colleagues worldwide, with more than 125,000 Canadian businesses that depend on music to enhance their activities. A native of France, before joining SOCAN in 2010, Eric led CISAC, the World Federation of Authors Societies for 12 years, had an eight-year stint in radio as COO of Radio France International and then CEO of a Paris commercial station. Eric has chaired music and radio trade associations in France, currently serves on various boards of organizations such as CISAC and the CPCC, and chairs the ISAN International Agency based in Geneva, as well as Radio Neo, a French non-commercial radio network dedicated to emerging artists. As a graduate of École Nationale d’Administration who started his early professional life at the Conseil d’État in Paris, he could have become a government official or even a lawyer, but this is a different story, in a parallel universe… Eric lives in Toronto and music (of course), good food, fine wines and science fiction are passions he’s ready to acknowledge.

Comments

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  1. Bob Ezrin

    As a writer and producer of music I applaud Eric’s call for fair compensation for everyone involved in the creation and marketing of music. We all have our place in the value chain and we all deserve to be fairly compensated for our work.

    However, I am disappointed in Eric’s failure to challenge the astoundingly low overall level of compensation that Tariff 8 puts into place here in Canada. In saying that he sympathizes with “Re:Sound and Music Canada about the low value assigned to THEIR rights”, he separates SOCAN from that part of the industry and forgets to fight for OUR rights – all of our rights. The compensation outlined by Tariff 8 is abysmal for ALL of us – writers, performers, record companies, publishers. We are ALL being asked to accept a number that is 1/10 or less of what is being paid by these same streamers in the rest of the western world.

    Rather than fighting to increase the overall pie, Eric’s blog suggests that it is more important to SOCAN that we insist that the master rights holders get no more than what is defined in Tariff 8 in order to preserve the ratio – even if the actual price is pitifully low. I would rather see us all fight for a bigger pie!

    I am also compelled to say here that, as a writer who is living on both sides of this equation, I don’t agree with Eric’s position that composition and performance are of equal value and should receive equal shares of performance royalties. Compensation for performance depends more on someone actually performing the song than on someone writing it, by definition.

    There are millions of songs that have been written that never see the light of day because no one chooses to perform them or invest in them and bring them to market. Not all of them are terrible songs either. In that huge sea of unrecorded or unperformed material are sure to be countless jewels that would be hits and really valuable if only someone would take the time and spend the money and creative effort to record them well enough to attract pubic attention and make money.

    The writing can take hours, the recording (which is often also the refining of the song into a more marketable product) can take weeks or months, cost small fortunes and then require additional significant investment to release, promote and market. One person can write the song, but it takes an army to deliver it to the market and make it a success.

    I do not see these as having equal value and I think it hurts the entire industry when we as writers and publishers refuse to budge on the relative value of our rights even when it means that the whole pie shrinks – or that deals get blown altogether. The mechanical royalties for songs vs performances seemed to work for the business for decades. With the advent of new marketplaces, the publishers have striven to redefine the relationship between composition and performance. While I agree that songs have not been accorded the value they deserved, I never thought that they could be seen as having equal value to performances and recordings.

    In what other creative medium do the writers get the same money as the performers? Theater? No. Film? No. Television? No. There isn’t one.

    And if we needed any further proof of the different relative values, just ask all the used-to-be artists and producers who have given it up for just writing because it’s faster, cheaper, requires much less work and risk and they have an actual chance at making some money.

    But what if EVERYONE gave up producing and performing because it no longer pays? What if, as Lefsetz has said, all the talent goes to tech or film or TV and leaves music behind because we have rendered it unprofitable for them?

    I fear this threatens to become a case of mutually assured destruction if we don’t start acting like AN industry and not two separate and independent businesses.

    I have been a member of SOCAN since its inception. I am not the enemy. But I am someone who believes that while we sort out the relative size of our slices of the pie with our colleagues and allies in this industry, we should all be fighting together for a bigger pie! If we support Tariff 8 just to preserve a better ratio thinking that later on we can raise the bar, we are smoking crack. Once the streaming industry establishes the low water line, it will ground all boats. And they will fight to keep it as low as it is forever.

    Bob Ezrin

    Reply
  2. Eric Baptiste

    Bob, thanks for your input on this important issue – you raise important and valid points, and the passion you have demonstrated in this and other communications on the subject are a testament to your support for the music industry.

    These are complicated issues with a diversity of sides and perspectives. I believe that we need to get started – streaming services have already been kept out of Canada for too long, which is unhelpful to rights holders and unfair to consumers. My experience tells me that with relevant and compelling evidence and arguments, the Copyright Board and the courts will, more often than not, provide rights holders with the reasonable compensation they deserve.

    Ultimately, users are only interested in knowing what their total copyright liabilities will be. This necessarily entails a discussion and analysis of what all rights are worth, not just those of the record labels. You have provided your personal views in support of your belief that sound recordings are worth more than the creations of songwriters and composers. But the simple truth is that those views were considered, debated and rejected in Canada years ago.

    As the Copyright Board then concluded: “In the end, it was probably Mr. Reynolds, [esteemed labels representative Ross Reynolds, past President then Chairman of Universal Music Canada], who best stated the conundrum, when he expressed the view that establishing the relative value of the authors’ and performers’ contribution in a successful recording ‘is the classic chicken and egg situation. I don’t think you can extricate the two and say, this is more important than that.’”

    Reply
  3. Eddie Schwartz

    In 1601 Richard Burbage performed these words for the first time,

    “To be, or not to be, that is the question—
    Whether ’tis Nobler in the mind to suffer
    The Slings and Arrows of outrageous Fortune,
    Or to take Arms against a Sea of troubles,
    And by opposing, end them? ”

    So here’s the question: which is intrinsically of more value, Burbage’s reportedly mesmerizing performance, or Shakespeare’s immortal words? In a more modern vein, what is intrinsically more valuable, the song “Yesterday” or McCartney’s brilliant performance? How about Bob Dylan singing “The Times They are A’ Changin” – what is “worth” more the song or the performance? Some might well argue that in each case – from Shakespeare to Dylan and beyond, it’s the brilliant underlying work that gives the performance any value at all. They might further say, that without that crucial underlying work, the performance would be “a tale told by an idiot, full of sound and fury, signifying nothing.”

    One further thought: songwriters are almost never paid salaries for their work, unlike the examples Bob gives above. They are usually entirely compensated by back-end royalty streams. Only if the work attains massive success do songwriters succeed in making a living. In other words, being “paid” for your work, as are record producers and TV writers, is an entirely different method of compensation from being solely compensated by royalty streams and really can’t be compared. In fact, the way songwriters are compensated, de facto transfers financial risk to the songwriter and (in some cases) the music publisher. Share in the risk, share in the reward, and respectfully, it must be done equitably.

    Reply
  4. Andrew Berthoff

    Brilliant comment, Eddie.

    Reply
  5. onlar?n

    What’s up, every time i used to check webpage posts here early in the morning, as i like to learn more and more.

    Reply

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