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The Dickensian World of Music

The pittance received by most musicians through modern distribution formats is hardly news. Records sales have long tanked and online streaming – the trending means of music consumption – is famous (see here and here for example) for paying out a fraction of a penny per listen. By one US estimate, it takes over 172,000 plays per month for an artist to make a living wage. The upshot is that you need to go big or go home – or at least tour a lot. In what follows, I will explain the financial side of the business in Canada, and then offer some ideas for improving the plight of musicians.

There are basically three main streams of income for musicians – splits on each of songwriting, sound recordings, and touring. If you write songs, then you get an extra steam of income that your non-composer band members don’t get. These rates are all set by Copyright Board tariff and include performance monies (think radio and online streaming mostly) as well as reproduction royalties (think vinyl and download copies onto which compositions are recorded). Reproduction royalties can also include synchronization deals for placements of a song in movies or ads (which can be quite lucrative though a one-off). If you have a contract with a publishing company, then they will take off at least 25% from all these streams of income. Unless you have a big hit, this royalty stream to the songwriter is not likely to add up to much.

The record contract royalty split for the sound recording (a separate copyright) is even less favorable than publishing. It can range from 15 – 50 per cent to the artist or band (which then has to be split up among the band members). Given our small market, most contracts are more generous in Canada (in the 50% range) otherwise there would be even less opportunity for bands to make a living. Again, there is a set tariff for radio and TV performance monies. However, streamed music is not part of the tariff regime and so access to record company catalogues must be done through private deals (the same goes for downloads and synchronization licenses which are part of sound recording reproduction royalties).

Because sound recordings in the digital world are outside the tariff system, private deals can be arranged between record companies and online streaming services such as iTunes, Spotify and Google Play. This is also made possible by the fact that the record company, through its contract with the musicians, owns the copyright in the sound recordings. This alignment of copyright ownership and private contracting has allowed record companies to make lucrative deals for themselves that they do not share with the artists. They do so by negotiating large lump sum payments for themselves (or receive shares in the streaming service) that is not split with the artists. Outside of these lump sums, the royalty streams for sound recording do not offer a living wage for most musicians.

That leaves touring where the royalty splits on tickets sales ranges from 20 to 60% gross of a much larger pot of money. As opposed to the paltry royalty streams from publishing and sound recording for new and mid-level artists, touring is the way to make a living (provided you do a lot of it!). For superstar artists (given the even higher split and the huge venues and inflated ticket prices) touring is a gold mine.

Some may not view this as a problem (more touring is great and the market will decide who are winners and losers) while others may see it as the normal dislocation that occurs when business models change. One thing seems certain – the all-you-can-eat $9.99 subscription model is not going anywhere and musicians need to get better deals for themselves. Musicians need to educate themselves about whether they are receiving value from the publishing house / record company intermediaries in exchange for the money they are giving away in those contracts.

Even if value is there in terms of distribution networks, promotion, industry contacts, etc.., the royalties should not be what they once were. Costs of recording, advertising and distribution, for example, are way down and of course a DIY option on both these fronts is available through various internet platforms (i.e., YouTube, streaming services, and social media). Contracts also need to be iron clad so that record companies do not sneak money for themselves through the back door. Also, musicians should negotiate for a right of reversion (getting their copyright back) after a period of time.

All of this of course only comes through proper representation at the contract negotiation stage. In other words, whether you view this as a policy problem or not, it is definitely an access to justice problem. There are various artist legal advice clinics across Canada that offer public education and legal advice to artists though it is not clear whether, or the extent to which, any engage in contract negotiations. Similarly, the Canadian Federation of Musicians seems to offer similar services. The power imbalance between record companies and musicians is legendary and new developments have only made it more complicated for musicians posing even a greater threat to their livelihood.

Comments

  1. Professor Cameron: In today’s Globe & Mail (02/01/2018) there is an article, “AI and data are music to recording industry’s ears for recouping song royalties” that discusses technological mechanisms for SOCAN and RE:Sound to employ to get a better look at performances of copyrighted musical works in a variety of settings (including streaming, synchro with visual products, etc.) that may increase artists’ income. Do you see this as having an effect on the situation you outline above?

    pj

  2. Thanks for that Peter. I like the use of new tech to monitor unknown uses of music. It seems like a more accurate and less labor intensive way to make accountings to collective societies. One potential problem with this however might be overreaching. Some uses are not compensible such as home videos or fair dealing under our Act. Technology can’t make these distinctions and so judgements will need to b made about which uses will fall under tariffs and which do not. As to improving revenue streams to musicians, this would likely be for the benefit of more famous songs and recordings though there is no denying the possibility of gains across the board. I do not think however that it changes the analysis or dire outlook for most musicians suggested in my piece.

  3. Not at all my area of expertise but I recall this unusual Finnish case about taxi drivers having to pay royalties for music played in their cabs. I am not sure whether this was the kind of thing you had in mind. It would certainly raise complex questions about distributive justice, although I am unclear on the class position of Finnish taxi drivers. http://www.dww.com/articles/finnish-taxi-drivers-to-pay-copyright-fees-to-listen-to-radio

  4. This is a performance in public though to pay a royalty on it would have to be set by copyright board tariff. I don’t think a tariff on cab music has been set in this country probably because there is no taxi specificmusic providers. But tariffs on things like DJ music at weddings and other small fry certainly do exist. If there is enough money to made, the collectives usually go after a tariff.

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