Spotify Announces Database to Properly Manage Royalties

Against a backdrop of controversy over interactive music services not properly licensing songs or paying publishing royalties to music publishers and songwriters, Spotify’s global head of publisher relations James Duffett-Smithhas posted a blog on the service's website, writing that the company “will invest in the resources and technical expertise to build a comprehensive publishing administration system to solve this problem.”

According to sources, Spotify will work in conjunction with the National Music Publishers’ Assn. and other publisher organizations around the globe to build a music publishing database that, when completed, will properly manage licenses and publishing royalties distributions going forward.
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While some applaud the move, saying non-payment and compliance is a mess that can and should be fixed, others say it's something the company should have prioritized from the start -- instead of chasing a billion-dollar-plus valuation at the expense of proper payments to publishers.

Since it initially choose to rely on outside vendors like Harry Fox’s Slingshot operation, industry sources tell Billboard that Spotify currently owes publishers and songwriters about $25 million for music played on its U.S. service. But a source close to Spotify disputes that amount and says its closer to $17 million.

Indie Publisher Atlas Music Signs Direct Licensing Deal With Spotify

Spotify is said to be one of the interactive services in the midst of settlement negotiations with the NMPA, the goal being to bifurcate the publishing royalty payment system. In this new two-step process publishers would have the opportunity to claim payments for songs played by the participating services and then, if any unclaimed money remains at the end of that process, the remainder would be disbursed according to publishers’ market share, according to sources.

In exchange for opting into that settlement, music publishers and songwriters would have to give up any legal claims they may have over licensing issues, sources say.

Beyond those negotiations, Spotify has been involved in a very public dispute with Audiam and its client Another Victory, the publishing arm of Victory Records, over non-payments and playing music without proper licensing.

Spotify says the overarching issue “is a complex problem -- we are committed to solving it, but it is going to take significant time and effort... we want to fix the global problem of bad publishing data once and for all, and that’s why we’re making this commitment today.”

Spotify infuriates some publishers, who say the company is downplaying the issue by saying it owes publishers and songwriters less than one percent of all the royalties it has paid -- $3 billion to date, including $300 million in the first quarter of this year alone, according to yesterday's post.

Some publishers, however, object to the publishing money involved being classified in that context because it lumps in payments to record labels amidst the company’s global operation, instead of just looking at U.S. publishing revenue. If Spotify looked at it that way, some sources estimate that it is misassigning 10 to 20 percent of those royalties. But a source points out that no matter what percentage is used to describe the issue, the Spotify blog notes  "that doesn’t change the fact that those royalties are important revenue to songwriters and publishers and we want to make sure they end up in the right hands."

Spotify declined commet

Wait, What? The Copyright Royalty Board, Webcasting Rates and Paying Artists, Explained

The Copyright Royalty Board (CRB) just announced new webcasting rates for 2016 through 2020. These are the rates services like Pandora and iHeartRadio will pay for their online streams. With the music business continuing its seemingly inexorable shift to streaming, the CRB's decision is incredibly important to a wide range of companies and people. But it's a complicated subject. So here are answers to some common questions that will help Billboard readers wade through the issue. 

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What just happened?
The Copyright Royalty Board has announced the webcasting rates for 2016 through 2020. The rate proceeding was called "Webcasting IV" (three rate proceedings came before it). These are statutory rates to be paid by eligible digital music services that use the compulsory license made available under the Copyright Act. A good introduction to webcaster royalties can be found here.

What is the Copyright Royalty Board?
Copyright Royalty Board is part of the U.S. Library of Congress and it consists of three Copyright Royalty Board judges who determine royalty rates for statutory licenses as provided by the U.S. Copyright Royalty and Reform Act of 2004.

Why is the Copyright Royalty Board Necessary?
The CRB is mandated by statute to set rates and typically encourages both music licensors and licensees to negotiate on rate settlements. But, more often than not, a consensus can't be reached and so a rate trial proceeds, wherein all interested parties make their cases through statements and testimony. After listening to testimony, the Judges make a determination as to what the statutory royalty rates will be for the upcoming five-year period.

Which companies are affected by this decision?
These new royalty rates are for webcasters, radio shows that transmit original programming, or simulcasts over the Internet. These are webcaster that meet the legal definition of a non-interactive digital music service. Pandora will pay these rates unless it has negotiated other rates with rights owners (it has direct deals with independent rights group Merlin and classical label Naxos). The same goes for radio companies like iHeartRadio, which has also negotiated some rates directly with record labels (such as Big Machine).

Which companies are not affected by this decision?
Webcasting IV covers only webcasters. Rates for satellite radio or cable radio are set in a different rate proceeding. Thus, only the webcasting aspect of SiriusXM Radio is affected by Webcasting IV. Cable radio services like Music Choice are not affected either.

What royalties are being paid?
The Digital Millennium Copyright Act created a master recording performance right for digital transmission. These royalties are paid to record labels, recording artist and musicians for the performance of master recordings streamed over the Internet. But Webcasting IV doesn't cover other types of performances. The U.S. is one of the few countries in the world without a performance right for master recording for performances at terrestrial radio, in public places like retail stores and bars, and on television

Does this decision affect music publishers and songwriters?
No. Webcasting IV involves only the master recording side of copyright. Royalties related to the other side of copyright, the musical work, are set in different ways. Rates for musical works are affected only to the extent that the CRB's determinations are used as a benchmark for establishing other royalty rates.

Are these royalty determinations important?
Yes. Hundreds of millions of dollars are at stake. With just Pandora alone, in 2014, the music streaming service paid out $446 million in royalties, of which, Billboard estimates, about $410 million was paid to Sound Exchange for payments to record labels, artists and musicians.

Does the CRB have final say in the rates?
Yes, to the degree that they set the rates, but their determination must be reviewed by the U.S. Copyright Register to ensure their ruling is legally correct. Moreover, their determinations can be appealed by any of the participants.

How does the money get paid to labels and artists?
If the licensee has not cut a direct deal with the copyright owners, it can get a compulsory licenses which comes with a statutory rate  as determined by the CRB judges and is paid to SoundExchange, an agency set up to administer payments. Those payments are split as follows: 50 percent to the master rights owner, which are typically record labels; 45 percent to the artist that recorded the music; and 5 percent to musicians, via their unions.

Michael Jackson's 'Thriller' Becomes First-Ever 30 Times Multi-Platinum Album: WOW!

Michael Jackson's Thriller has become the first album ever to be certified 30 times multi-platinum for U.S. sales, marking more than 30 million sales in the States. 

The Recording Industry Association of America (RIAA) made the announcement Wednesday (Dec. 15) with the Estate of Michael Jackson, Epic Records and Legacy Recordings, as the new milestone continues Jackson's reign as the most selling artist of all time with over 100 million sales for Thriller worldwide and 1 billion total sales to his credit. 

"RIAA has awarded Gold & Platinum records on behalf of the music business for nearly 60 years, but this is the first time an artist has crossed the 30X multi-Platinum plateau," RIAA chairman and CEO Cary Sherman said in a statement. "We are honored to celebrate the unique status of Thriller in Gold & Platinum history. What an exceptional achievement and testament to Thriller's enduring spot in our hearts and musical history."

Jackson's Thriller was released Nov. 30 1982 and spent nearly 2 1/2 years on the Billboard album chart with 37 weeks at No. 1, holding the modern day record. It was also the first album in history to spend its first 80 weeks in the album chart's top 10, which has only been replicated once since. 

The Quincy Jones and Jackson-produced LP was also the first ever certified RIAA 20 times multi-platinum, doing so after 112 weeks on the album chart -- less than two years in all. Seven tracks off the album became top 10 singles with three -- "Beat It," "Billie Jean" and "Thriller" -- topping the singles chart.

Worldwide, Thriller topped charts in nearly every market, hitting No. 1 in the United Kingdom, France, Italy, Australia, Denmark, Belgium, South Africa, Spain, Ireland, New Zealand, Canada and apartheid South Africa. The album won a record-setting 8 Grammys with nominations in 12 categories -- another first. 

"It is crystal clear that Michael Jackson is simply the greatest and biggest artist of all time," Epic Records chairman and CEO LA Reid said in a statement. "Not only are his charts hits and sales stats staggering, but his pure musicality was other-worldly. Thriller was groundbreaking and electrifying...it was perfection. I am extremely proud that Michael is the heart and soul of Epic Records and he will forever remain the one-and-only King of Pop."

Rhapsody Nears 3.5 Million Global Subscribers

Stalwart streaming music service Rhapsody has grown its subscriber base by 45 percent over the last year, and now has nearly 3.5 million global subscribers in 34 countries, the company announced on Monday. Rhapsody was able to grow despite increasing competition in the streaming market by the likes of Apple Music, Tidal and YouTube.

"Next year, Rhapsody will celebrate its 15th anniversary and we’ve never been more excited or optimistic about a category that we helped define in early 2001," said Ethan Rudin, chief financial officer. "Despite increasing competition, we continue to believe in the value of music and see our role as vital in creating experiences with music that users around the world will pay for."

According to Rhapsody, the year’s growth was fueled by various product enhancements and "activity-specific" features, including Rhapsody Kids, Rhapsody Auto and Twitter Audio Cards, which lets users share full-length, licensed music on Twitter. The company also inked numerous partnership deals, with Sonos, Google’s Chromecast, Shazam, and Tango.

In Europe, where it operates as Napster, the company launched a product with supermarket chain Aldi, paired up with German news outlet BILD.de and became the featured music service for the sixth season The Voice in Holland. It also inked partnership with several football clubs.

Rubin said the "idea of streaming music is still new to a lot of people and we believe there is still a lot of innovation to be had at price points between free and $10 per month."

Rhapsody keeps things simple in terms of subscription tiers, with an ad-free streaming tier for $9.99 per month, plus a Pandora-like radio product for half that. Like most of its competition, it does not offer a free, ad-supported option.

$25 Billion Global Music Industry

The global music business, at least what's tied to music copyright, is worth over $25 billion. Actually, it's worth $25.3 billion, according to Will Page, the director of economics at Spotify who calculated the figure. But that's just a start.

Page's $25.3 billion is an eye-opening number for sure. Much of the figure based on publicly available information. Page's figure consists mostly of data inside reports by the IFPI, covering sound recordings, and the global International Confederation of Authors and Composers Societies (CISAC), covering musical works. Add the total revenues from those reports and you'll have a good but rough estimate.

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Page needed more research and arithmetic to arrive at his estimate. Some publishing revenues are hidden from the public eye and not included in the CISAC report. Revenue from direct licensing of $1.7 billion came from a from a MIDiA Research report. Also counted was revenue of $423 million from mechanical royalties collected outside of CISAC from organizations such as Harry Fox. Page also eliminated the double counting. IFPI sales numbers include mechanical royalties paid to record labels, which count them as revenue, and then paid to publishers, where they also count as revenue.

But there's much more -- maybe $40 billion more. Released last week, a joint study between CISAC and the United Nations Educations, Scientific and Cultural Organization (UNESCO) and published by the company formerly known as Enrst & Young, put a dollar value on different creative industries around the world. For music, the study of cultural and creative industries quantifies the impact of sound recordings, music publishing and live events in terms of both revenue and employment.

Page's $25.3 billion figure is revenue derived only from music copyright. This includes purchases and streams of recorded music -- both the recording and the embedded mechanical royalty -- streaming royalties, performance royalties and synchronization royalties. It's a compact, easy-to-understand number. If the music business is a series of concentric circles, revenues from music copyrights are at the center.

Live music, included in the CISAC study, is one circle out from the core. Global live music revenues are $25 billion, according to IBISworld. Given the known value of music copyright, CISAC must have put the live music market at roughly $40 billion. Some concert-related revenues aren't included. The concentric circles of the music industry could, in theory, expand to ticketing revenue. Live Nation, AEG and SFX has linked their promotion businesses to their ticketing businesses. Ticketing, both primary and secondary, is a profit engine that can be driven by live events.

Many other revenue streams are adjacent to music copyright and concerts. Take music sponsorships, a growing category that isn't directly tied to copyright. Sponsorship revenue doesn't come from a copyright, but still depends on the popularity of recordings. Sponsorships and recordings also share some beneficiaries. For example, a sponsorship deal can generate revenue for an artist, a manager and a label. This is real money. Just in the United States, live music sponsorship revenue was $2.04 billion in 2014, according to the latest PricewaterhouseCoopers' Entertainment & Media Outlook report. IEG put the value of music sponsorships by North America-based brands alone at $1.34 billion. Either way, sponsorships aren't included in the CISAC study.

Merchandise sales are also adjacent to music copyright. A touring artist can make good per-head money in merchandise sales at concerts. At the high end,Taylor Swift makes an estimated $17 per head in merchandise sales at her concerts. Even a lower per-head figure contributes to artists, managers and, in the case of multi-rights deals, labels, too.

Expand further and there are music instrument sales, tour bus rentals, and money spent on beer at concerts. It can practically go on forever. It's probably a good thing Page stuck with music copyright.

Nicki Minaj Testifies at Meek Mill Parole Hearing

Nicki Minaj said she'll keep boyfriend Meek Mill on the straight and narrow when she testified Thursday during the rapper's latest parole violation hearing in Philadelphia.

Minaj took the stand for about half an hour in an effort to keep Mill out of jail. She told the judge she'll help Mill stay organized and work with him to fulfill his community service requirement.

"He's not perfect but I can't believe how much he's changed," Minaj said.

Common Pleas Judge Genece Brinkley is threatening to send Mill back behind bars. Prosecutors say the 28-year-old rapper violated parole in a 2009 drug and gun case by repeatedly changing his court-approved travel schedule.

Minaj and Mill recently attended the American Music Awards in Los Angeles, where Minaj picked up two awards.

Defense lawyer Frank DeSimone said the music industry is chaotic, and Mill is not trying to disrespect the judge. He also said Minaj and Mill are serious about getting married.

Mill is due back before Brinkley on Dec. 17. The judge said Mill, whose real name is Robert Williams, also submitted a suspicious urine sample.

Michelle Obama Hits No. 1 on Billboard + Twitter Trending 140 With 'Go to College'

First Lady Michelle Obama rose to No. 1 on the real time Billboard + Twitter Trending 140 chart with “Go to College.”

The comedic and empowering track finds FLOTUS teaming with Saturday Night Live’s Jay Pharoah in the College Humor-produced clip, rapping about (no surprise here) the importance of going to college.

Mrs. Obama doesn’t get much time to flex her skills in the two-minute clip, but she dishes inspirational lines in her verse, such as “South Side Chicago, we all know. We had to overtime every night to make it tomorrow.”

The track promotes the first lady’s Better Make Room and Reach Higher initiatives, which aim to inspire college-readiness programs and completion goals for teenagers.

FLOTUS’ new No. 1 also earns her bragging rights at the White House. Her husband, President Obama, reached No. 2 on the Billboard + Twitter Trending 140 on Nov. 17, thanks to a featured turn on JX Cannon’s “Pop Off.” Cannon released his Soundcloud-only cut, which is based on a the line, “If folks want to pop off and have opinions about what they think they would do, present a specific plan” from a Nov. 17 presidential address.

In addition, President Obama helped spark a Trending 140 No. 1 yesterday (Dec. 9), after Mrs. Obama told Time that her husband's favorite song of the year was "How Much a Dollar Cost" by Kendrick Lamar. The news sent the song darting to No. 1 on the real-time survey, where it became Twitter's most discussed track for nine straight hours. "Dollar" features on Lamar's To Pimp a Butterfly album, which debuted at No. 1 on the Billboard 200 in April and recently powered the rapper to 11 Grammy nominations, the most for any artist this year.