Tag Archive | royalties

#MusicBusinessMonday: About Direct License ‘Black Box’ Royalties And Music Publishing Administrators

(Author’s Note 07/08/2019 10:33 AM PST: An industry associate of mine who is an independent music publishing industry leader and activist/advocate, as well as the owner of a small music publishing administration company, reached out to me to express his concern that my blog post paints all music publishing administrators in a bad light. He explained that entering into direct licenses is common practice for all publishers — including full-fledged publishers that own or co-own copyrights, as opposed to just handling administration like pub admins do — and not just pub admins. I know that. He felt that pub admins are being unfairly singled out in my blog post. As I explained to him, that is not my intent. I have many blog posts of opinions, analyses, criticisms, praises and reviews of many sectors and companies of the music industry. It is my role as a music creators’ rights advocate and watchdog, if you will, to raise awareness about these issues and practices, and educate music creators on their rights and business. This particular blog piece is not about small pub admin shops, like the one he operates, that has an overage of a few thousand dollars at the end of the year from direct deals, but rather the nature and effect of some of the large “catchall” pub admin services aggregating hundreds of thousands to millions of copyrights and the potential voluminous black boxes that direct licenses can accrue for their bottomline. These are some of the issues that we are asked about at TuneRegistry when speaking with songwriters who have or are considering switching to self-administration or to supplement the efforts of their existing large pub admin. Calling out provisions, or lack thereof, in contracts that songwiters may not be aware of, and which ultimately impacts their income, regardless of if it’s a small shop or goliath, is fair industry criticism. But, for clarity, this piece is in direct response to recent inquiries we’ve received at TuneRegistry regarding some of the popular catchall pub admin services on the market and not small pub admin businesses)

In this particular case, I get that he may take offense when the criticism may extend to parties that are not acting malicious — and I’m not saying that the big players are acting malicious anyway, but rather this issue is a fact of the deal that songwriters sign and should be aware of — and want to be presented in a fair light. So, to that end, I’ll update the post and my socials.

A music publishing administrator’s (“pub admins”) job is to register your musical works with CMOs/PROs/MROs in the territories for which you’ve hired them to represent your administration rights and to collect your royalties, prepare and remit income statements and payments to you. However, some pub admins go a step or two further and issue or enter into direct licensing agreements with companies on behalf of the compositions that it represents, such as direct performance licenses for startup social music apps or a blanket license for background music services.

The right to enter into direct licenses may be included in your contract with the pub admin. In this case, you will have explicitly granted the pub admin the right to license your songs, without asking permission per license, to third parties. In some direct deals, companies give advances or negotiate minimum guarantees to be paid to publishers. These advances and minimum guarantees are deducted from the actual earned royalties that are calculated from the usage of songs by the licensed service. However, in the event that there is an overage (meaning, the total volume of usage does not equal or exceed the advance or minimum guarantee) the difference between the overage and the actual earned royalties is the unallocated “black box” royalties.

It is important that these monies flow to the songwriters that the pub admin represent (less an appropriate commission) as the license fees were paid against the licensed catalog of songs, regardless of actual usage.

Surprisingly, although pub admins that ask songwriters to grant them the explicit right to direct license the songwriter’s songs, many pub admins do not have or do not communicate their policy for distributing unallocated “black box” royalties that stem from these direct licenses. And some cases, they just keep the black box royalties as miscellaneous income.

What’s in your contract? Talk you your pub admin about direct license black box royalties.

10 Income Streams For A Music Producer

A breakdown of income you could earn by producing one hit (or at least, viral) record.

Production Icome

1. Production fee for your creative input in producing the track.
2. Recording Engineer fee for performing recording engineer duties in the studio.
3. Mixing Engineer fee for mixing the track.
4. Mastering Engineer fee for mastering the track.

(1-4 could be embodied all in one fee, or you could line item it in your contract and/or invoice.)

Master Income

5. Income share in the master sales, downloads, streams, often referred to as “points on the record.”
6. If you add background vocals and/or live instrumentation to the production, while you may not earn a session musician fee, you are still entitled to receive all or a portion of the non-featured performer share of statutory master royalties for US non-interactive streams, or so-called “digital radio royalties.” To get this, make sure that you are credited not only as a Producer but also as a background vocalist or musician for whatever instrument you played. These royalties in the US are paid out by the AFM & SAG-AFTRA Intellectual Property Rights Distribution Fund. These funds do not reduce the featured artist’s neighboring rights (US = digital radio) income. It is completely separate from the featured performer share of income and non-negotiable by that featured performer. If you don’t claim it, you still earn it but you leave it on the table!
7. Thanks to the passing of the Music Modernization Act, which became law on October 11th, 2018, and the inclusion of the Allocation for Music Producers Act (AMP Act), studio professionals such as producers and engineers have a legal and permanent right to directly collect non-interactive, digital royalties agreed through a letter of direction with the featured artist from SoundExchange. Join the Creative Affiliates Program at SoundExchange and submit your letters of direction.
8. A producer’s share of international neighboring rights royalties in several territories where recordings that you produce are performed on broadcast radio and TV.

Publishing Income

9. If you composed the melody or co-authored the lyrics, you should be considered a Writer on the musical work and be entitled to receive writer-share of publishing income (performance royalties, mechanical royalties, synchronization royalties).
10. If you composed the melody or co-authored the lyrics, as a Writer on the musical work, you are entitled to receive or assign the publisher-share of publishing income (performance royalties, mechanical royalties, synchronization royalties).

In conclusion, if you’re a music producer, make sure that you understand all of the income streams associated with the work that you put in on a recording AND your legal entitlements under copyright law and music publishing industry customs. Also, join the Recording Academy / GRAMMYs Producers & Engineers Wing.

Want to learn more? Download my FREE ebook “The DIY Musician’s Starter Guide To Being Your Own Label And Publisher.”

How Blockchain And Cryptocurrency Can Speed Up Spotify International Publishing Royalty Payments To US Songwriters

cryptocurrency and music

There’s been a lot of talk about applications of blockchain technology and cryptocurrency payments in the music industry. In fact, there isn’t a single major music industry conference that doesn’t dedicate some programming to related topics. There are several projects and startups currently underway to address licensing, discovery, attribution, remuneration and more with blockchain, smart contracts, and cryptocurrency.

For those of us who aren’t blockchain developers, simply keeping up with the many applications of blockchain in the music industry is the closest we’ll get actually knowing how this all (could) works.

I’ve been thinking about how blockchain and cryptocurrency could speed up the process of paying U.S. songwriters, who wait upwards of 1.5 years to get paid for the use of their songs on Spotify outside the U.S.

The current state of the flow of international publishing income to U.S. Independent Songwriters who own their publishing and use traditional publishing administrators to collect in the U.S. is quite depressing.

As an example, Tommy released a song on Spotify in January 2018. In the United Kingdom, the song earned $100 “publisher share” Spotify UK digital public performance royalties.

Here’s the breakdown:

START: $100 “publisher share” of Spotify UK digital performance royalties in January 2018.

1. PRS collects Tommy’s publishing income in the UK ($100) in January 2018.

2. PRS retains 10% admin fee and remits the balance ($90) to ASCAP in October 2018.

3. ASCAP retains 12% admin fee and remits the balance ($79.20) to the Publishing Administrator in February 2019.

4. Publishing Administrator retains 20% admin fee and pays Tommy ($63.36) in July 2019.

END: Tommy is paid $63.36 for his Spotify UK “publisher share” income (earned $100) after waiting 1.5 years and experiencing a reduction of 37% of his royalties. Imagine $1,000 reduced to $633.60 or $10,000 reduced to $6,336.00.

Had Spotify used blockchain technology to dynamically identify Tommy as the rightsholder in his song and paid him instantly at the close of the month with cryptocurrency, Tommy would have already spent his $100 on studio time!

Why More Pop Songwriters Are Stepping Into the Spotlight

I shared my thoughts on the status of income-earning for songwriters in today’s streaming landscape in this piece by Elias Leight for Rolling Stone:

“But regardless of whether you’re an upper-echelon songwriter living large or a middle-class one struggling to pay rent, the new system encourages writers to ‘think creatively about how to get more income streams,’ says Dae Bogan, Founder and CEO of the music-rights administration platform TuneRegistry.

If songwriters are indeed feeling the crunch, pushing for artist credit when possible is a natural response – it gives them access to money on the master’s side of recordings. Historically, “we get paid on publishing, the the words, the lyrics, the melody, the staff music written on a page,” explains Watt. “The master is the physical recording: Justin Bieber’s voice and DJ Snake’s production on ‘Let Me Love You.’ The master is where the money is. When a song is sold to a label, they buy the master. If the label gives that to an act, they make sure they own part of that master, otherwise in the streaming world, they’re not making any money.”

Now, Bogan says, “songwriters can say, I write hits; this is gonna be a hit for you; I want a piece of the master’s side.” That’s especially true if hit writers are in a position of leverage relative to the singer – “if it’s a young artist or an artist who’s been stagnant.”

This is in some sense a form of poetic justice for writers. “I used to manage songwriters, and we’d write for a number of artists who would demand that they get 10 percent of the publishing even though they didn’t write a single lyric,” Bogan says. “For decades, artists would dip into publishing to diversify their income stream. So now it’s like, let’s take that model and flip it on its head.”

Read the full article: https://www.rollingstone.com/music/music-features/benny-blanco-eastside-pop-songwriter-credit-711061/

Do So-called Music Advocacy Groups Avoid Deeper Discussions On Black Box Royalties To Appease Their Major Members?

jonny-clow-3965

Over the last few weeks I’ve come to consider the notion that some of the biggest so-called “advocacy” groups for music creators censor their discussions on black box royalties due to the top-heavy makeup of their membership.

I’m Working On A Side Project Addressing ‘Black Box’ Royalties

I feel that some directors avoid, or lighten, their criticism of major labels and publishers, at the expense of their independent and DIY members, because representatives of the majors sit on the boards of these organizations. They have deep pockets for annual gifts and dues, and a non-profit can’t afford to see those dwindle.
In my presentation on the state of unclaimed royalties and music licenses at the Music Industry Research Association’s first inaugural MIRA Conference earlier this month, I presented several arguments of how black box royalties manifest. This included cash advances paid to music companies by digital service providers that go unattributed to their artists at the end of the contract term. What I didn’t include are the distribution of unattributed royalties to major publishers, by market share, from music rights organizations.

[Preview] The State of Unclaimed Royalties and Music Licenses in the United States (7)
Major labels and publishers cannibalize most distributions of black box royalties in an unfair and imbalanced manner. It is my belief (and feel free to correct me if I am wrong) that the majors have the resources and manpower to do a better job of registering their works and claiming their earnings. It is my opinion, based on my work through TuneRegistry — a music and rights metadata management platform for the independent music community — that the independent sector have the most difficult time in this respect; especially the DIY segment, which is all but blacklisted from being represented in these secret imbalanced conversations and distributions.

But who should be the outspoken opponents of these types of distributions? The advocacy groups? When “watch dogs” should be shining the light in every dark corner of the royalty vault, some of these groups tend to prefer dim conversations regarding black box royalties and how those funds are cannibalized by their major members.

This is why I believe A2IM (American Association of Independent Music) and AIMP (Association of Independent Music Publishers), despite my concern for how the music industry categorizes independents, is a great thing overall for DIY musicians.

DIY musicians need to do a better job of joining and navigating the worlds of trade associations. After all, they are their own record label and music publisher.

Lead Photo by Jonny Clow on Unsplash

Royalty Claim Announces Pre-launch Webinar For This Weekend

rc-webinar

Just Announced: Royalty Claim Pre-launch Webinar

Get a sneak peak behind the curtain with Royalty Claim’s Founder & Chief Researcher, Dae Bogan.

Agenda:

  1. Overview of the Royalty Claim Initiative.
  2. An encore presentation of our presentation at the Music Industry Research Association Conference.
  3. Live demo of Royalty Claim Platform v1.0.
  4. Music industry Q&A.

The webinar will take place on Saturday, August 19th at 10am PDT

REGISTER HERE

Royalty Claim’s Full Presentation At The Music Industry Research Association Conference

Royalty_Claim_Founder_Dae_Bogan_at_MIRA_Conference

Royalty Claim attended the Music Industry Research Association‘s first inaugural MIRA Conference at the UCLA Luskin Conference Center this week. Royalty Claim’s Founder and Chief Researcher, Dae Bogan, MIA, had the honor of presenting a preview of our in-progress The State of Unclaimed Royalties and Music Licenses in the United States report before an audience of economists, sociologists, and researchers from universities and institutions from around the world, as well as music industry executives representing firms such as Nielsen, Pandora, Universal Music Group, and Warner Music Entertainment.

For the first time, updated statistics regarding the filing of “address unknown” Section 115 NOIs on the US Copyright Office during the first half of 2017 was revealed. Insights included an overview of the organizations that have utilized the procedure, including Amazon, Google, Spotify, iHeart Communications, and Microsoft. However, those large music users were expected. Interesting inclusions to the list were The Recording Academy and the Christian music service, TheOverflow and interesting omissions from the list are platforms that boast millions of tracks — Apple and Tidal — but may not be reaching every independent rightsowner that may have compositions available on those platforms.

A slide from the “[Preview] The State of Unclaimed Royalties and Music Licenses in the United States” presentation at MIRA Conference.

A slide from the “[Preview] The State of Unclaimed Royalties and Music Licenses in the United States” presentation at MIRA Conference.

The presentation also discussed the nature and causes of so-called “Black Box royalties”. A black box is an escrow fund in which music royalties are held due to an organization’s inability to attribute the royalties earned to the appropriate payee. Examples were given, including unattributed advances from DSPs to music companies, the US’s limitations on sound recording rights, and other issues.

A slide from the “[Preview] The State of Unclaimed Royalties and Music Licenses in the United States” presentation at MIRA Conference.

 

The presentation concluded with a video demo of the Royalty Claim Platform, which received positive reviews from conference attendees. The full presentation is  here.

Dear Indie Musician: Do you have a will?

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Screenshot of unclaimed royalty checks list at Film Musicians Secondary Market Fund

What musicians should keep in mind is in the event of an untimely passing, your royalty streams are bona fide assets that need to be discussed in a will. Some of the unclaimed royalty information that we have at Royalty Claim is from musicians who’ve passed away, but did not file a beneficiary with the various music rights organizations. So, their music continues to earn revenue, but the organizations do not have beneficiary info to pay it out. Or, musicians who’ve passed away and left no instructions in their will on how their royalties should be allocated, and various claimants have created a dispute.

We should definitely talk more about musician estates (even smaller musicians can have estates). Royalty streams are assets with which musicians can receive loans from companies like Lyric Financial or Sound Royalties, or even sell via platforms like Royalty Exchange. If you’re serious about your music career, be serious about your estate.

Royalty Claim Initiative Unveils RoyaltyClaim.com

Royalty Claim website

I’m so proud to be able to unveil the info website for Royalty Claim today. I’ve had endless sleepless nights developing and designing the info site, and the actual database platform that’s launching soon.

Check it out, get your questions answered (see FAQ page), and pre-register for the beta. 

The first public demo will be this Thursday at SCMIP x AMC LA Music Industry Meetup | DTLA Arts District.

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