Tuesday, 31 May 2016

Bitter Sweet Sympathy

I have been reading Fred Goodman’s interesting Allen Klein bibliography, which includes a section on the Verve ‘Bitter Sweet Symphony’ sampling dispute. There were winners and losers amongst the publishers, record companies, writers, musicians and arrangers who were involved in this case. This has set me thinking: who amongst these players deserves our sympathy the most?
            It is certainly not Allen Klein. Although the Verve made unauthorised use of the Rolling Stones' song ‘The Last Time’, which was published by his company ABKCO, he made sure that he was recompensed. In return for granting permission for the use of the sampled tune, Klein insisted that Richard Ashcroft, who had written the lyrics to ‘Bitter Sweet Symphony’, sell the rights to them to ABKCO for just $1,000. As a result, the entire song came under the control of Klein’s publishing company. In addition to making publishing money from the sales of the Verve recording, Klein licensed the song for use in commercials. It has advertised products such as Nike shoes and Opel automobiles. According to Goodman, ‘“Bitter Sweet Symphony” remains one of ABKCO’s best-earning compositions’.
            Mick Jagger and Keith Richards aren’t due much sympathy either. The Verve had taken part of one of their songs, but they gained the whole of the Verve’s song in return. Although Mick Jagger, Keith Richards and Richard Ashcroft are credited on the record label as the joint authors of 'Bitter Sweet Symphony', Klein’s deal means that only Jagger and Richards receive royalties: the songwriting splits are 50% Jagger/50% Richards/0% Ashcroft. Most of the Rolling Stones’ income comes from the sales and live performance of songs that they first recorded in the sixties and seventies. ‘Bitter Sweet Symphony’ is the exception. It is the most successful Jagger/Richards composition of the last 35 years. It even earned them a Grammy nomination. With the ghosts of Milli Vanilli howling in their bones, they were finalists for the Best Song category in 1999.
            What about the Verve: do they deserve our sympathy? Here it should be noted that Klein’s deal was concerned solely with the publishing of their song. The Verve messed up in respect of these composition rights, with the net effect that they had to concede ownership to ABKCO. They were more efficient in clearing the sounding recording rights to the sampled version of ‘The Last Time’. These were purchased for a one-off fee from Decca Records. Although this money has probably been paid for from the band’s advances, they will have received their usual royalty rate from their record company as artists for sales of ‘Bitter Sweet Symphony’. They will also have received royalties for public performances and broadcasts of their sound recording. As musicians, the band has not lost out, it is the songwriting that has been affected.
            And so we turn to Richard Ashcroft, the Verve’s singer and the only member of the band who had a (potential) writer’s share in ‘Bitter Sweet Symphony’. He signed away his songwriting royalties for a paltry sum. He has failed to earn any songwriting royalties for single sales. He has missed out on the songwriting income for the public performances, licensing and airplay of this track. And so, is he the main victim?
Here we have to contemplate why he accepted Klein’s deal. Ashcroft’s decision could be considered odd in light of the fact that his record company expected ‘Bitter Sweet Symphony’ to be a hit. In addition, according to Goodman, it was this hit potential that encouraged Klein to press for and gain the maximum return. However, while Ashcroft would have therefore known that he had much to lose, he would also have realised there was more to gain.
‘Bitter Sweet Symphony’ was issued as a single in the late 1990s. This was an era in which singles were loss leaders: the record industry made its main profits from CD album purchases. The Verve’s 1997 album Urban Hymns is a platinum selling record in America and it is the 17th best-selling album of all time in the UK. This album includes ‘Bitter Sweet Symphony’ and it is this track, primarily, that has driven its sales. ‘Bitter Sweet Symphony’ doesn’t earn any more royalties from these sales than any of the other tracks on the album, however. In accordance with standard practice in the UK, the songwriting royalties are divided equally between each song. There are thirteen tracks on this album. Ashcroft is the sole writer of eight of them and he has a share in another four, which are group compositions. Making a rough calculation, it would appear that Ashcroft earns nearly 70% of the songwriting royalties for the album as a whole. In contrast, Jagger and Richards receive less than 5%. Ashcroft has done OK.
            But what about the Staple Singers? The Rolling Stones’ song ‘The Last Time’ is heavily indebted to their 1958 recording ‘This May Be the Last Time’. Keith Richards has acknowledged the debt, stating that the Rolling Stones’ recording ‘was basically re-adapting ... the Staple Singers’. He nevertheless stressed that the Staples Singers’ record is based on a ‘traditional’ gospel song and that ‘luckily the song itself goes back into the mists of time’. Roebuck Staples is, however, credited as the composer, rather than the arranger, of the Staples Singers’ version. According to Goodman, it is not the traditional nature of ‘This May Be The Last Time’ that has thwarted the Staple Singers’ claims to royalties, but rather the fact that they ‘weren’t managed by Allen Klein’.
Roebuck Staples does deserve some sympathy, but this is not a cut and dried case. There are differences between the two versions of ‘The Last Time’. The Rolling Stones composed their own verses to the song; they also wrote the guitar riff that dominates their recording. Moreover, the element of the song that is sampled for ‘Bitter Sweet Symphony’ is not present in the Staple Singers original.
It is not present in the Rolling Stones record either. ‘Bitter Sweet Symphony’ does not feature their recording of ‘The Last Time’; it instead samples the version by the Andrew Oldham Orchestra. It is the opening orchestral riff that is featured. This motif is only loosely based on Keith Richard’s guitar playing. The main credit for it should instead reside with David Whitaker, who composed and arranged the orchestral score. Whitaker will have received a one-off session fee for his work. He will have received no royalties for ‘The Last Time’ and none for ‘Bitter Sweet Symphony’ either. Have we finally found our man? 

Wednesday, 25 May 2016

The Collective Licensing Question: To B2B or to B2C?

Music industry income can be divided into two main categories. There is business-to-consumer (B2C) income, the music that the public pays for directly. This includes record sales and live music. There is also business-to-business (B2B) income, music that is purchased by licensees from licensors. This includes broadcast music and the use of recorded music in public premises.
            As always, when it comes to matters of music and copyright, there are oddities and there are complexities. Curiously, the music that the public pays for is often private, whereas the music that is licensed between businesses is usually public. The B2C purchase of recorded music is regularly an individualistic affair. The consumer will select titles from the wide repertoire of music. They will choose when and where to listen to them. Each of these processes can take place in a solitary fashion. B2B licensing, in contrast, is the music of everyday life. This is particularly the case with the blanket licensing of music for radio stations, bars and shops. In these situations it is the collection societies who perform the task of the ‘2’. They sit between the licensor and licensee. If a music user obtains a blanket licence it will give them unfettered access to the entire repertoire of music of the collection society’s members. As I have written elsewhere, this process provides a reversal of Lord Macaulay’s oft-quoted beliefs. He argued that copyright ‘produces all the effects which the general voice of mankind attributes to monopoly ... to make articles scarce, to make them dear, and to make them bad’. The music industries’ most obvious monopolies are the collection societies. Collective licensing makes music abundant and it prices it democratically.
            The second issue is that the categories of B2C and B2B are not clear-cut. Although records and gigs usually classify as B2C, they include an element that can be considered B2B: the songwriting copyright. This money is passed from record companies and venue owners to composers and publishers by means of the collection societies. However, although the specifics of this income move from business to business, it is the consumer who generates the money. This income is built into the dealer price of recordings and forms part of the ticket price of gigs. This is Will Page’s viewpoint in his influential Adding Up the Music Industry reports. It is in fact possible to extend this line of thinking to the entirety of collection society income. In the final analysis, the consumer pays the copyright royalties for broadcast music: with public service broadcasting they are built into the licence fee; with commercial broadcasting they form part of the cost of the goods that are being advertised. And it is the consumer who foots the bill for the use of the collection societies’ music in public premises: this expense is added to the costs of the products that the premises are trying to sell.
This is not the perspective of the collection societies, however. They maintain that all of their transactions – broadcast, online, public performance or recorded media – should be categorised as business-to-business. Responding to a Monopolies and Mergers Commission (MMC) enquiry, PRS stated that ‘our primary customers are our members and affiliates but in our capacity as a rights licensing body, the licensee can be seen as a customer’. The MMC reported that ‘PRS did not accept that the ultimate music user, the listener, was its customer’. This outlook is reflected in the PRS for Music website, which is divided between sections for its licensor members and its licensee customers. There is no portal for listeners. PPL’s website is similarly divided between a section for its members and a section for music users. MCPS shares this twin perspective. When I worked for the company in the late 1990s, the executive director, Chris Martin, encouraged us to think of the society as being an estate agent, facilitating the sale and purchase of (intellectual) property. The concern was not with the music listeners, the people who actually had to live in these musical buildings.
The collection society’s B2B perspective has been influential. MMC investigations into PPL in 1988 and PRS in 1997 aimed to find out whether these societies were operating in the ‘public interest’. Their reports dealt with a circumscribed ‘public’, however. They dealt solely with the interests of licensors and licensees. In each case the MMC sought the correct balance between the amounts music users should pay and the amounts music creators should receive. Ultimately, they endorsed the practice of the collection societies ‘because the convenience they offer to both the owner and the user of copyright is unlikely to be matched by any other means’. They did not consider the listener.
The raison d’ĂȘtre of the collection societies is ‘to do collectively what creators cannot effectively do for themselves’. This is putting them in jeopardy, however, as what seemed ‘unlikely’ in the 1980s and 1990s is less so today. Creators are breaking ranks. Record company members of PPL are self-administering the income from streaming. Many publisher members of MCPS are also withdrawing from this field, as they too feel that they can negotiate higher streaming income licences on their own. These manoeuvres weaken the collection societies. They are losing out on a significant area of income, which has a knock-on effect for their cost-effectiveness as a whole. The collection societies also face the prospect of blockchain technology, which could make it possible for any of their members - whether large conglomerates or individual writers or musicians – to self-administer their rights. Graham Davies of PRS is fatalistic about this. He has stated, ‘If there were a new model which meant that our members didn’t need PRS that would be fine in principle. We should disappear because we would no longer add any value’.
This is B2B thinking. It is restricted to the value that collection societies hold for licensors and licensees. There is, however, a consumer value in collective licensing. If the collection societies go they will take blanket licensing with them. This will be disastrous. We are already witnessing its effects in streaming: the repertoire of even the biggest providers is patchy, principally because the biggest stars are holding out for more pay. Its effects will be felt more profoundly when it comes to the licensing of broadcasters and public premises. If we lose blanket licensing in these areas then music really will become more expensive and scarce. It is time, therefore, to start collectively thinking B2C.  

Wednesday, 4 May 2016

The Loser's Standing Small

Poor Prince. Even in death he is not getting the support he deserves. His 1990s battle against Warner mystified many of his fans. It continues to frustrate some journalists. Here, for example, is Barney Rooney, writing in the Guardian,  ‘It’s difficult not to feel that Prince eventually became his worst enemy. Instead of settling for a role as a treasured cult act, he fought the industry, bit the hands that fed him, and painted “Slave” on his face’. And here is the Independent’s Ben Chu, ‘there has been a lot of purple prose in recent days talking about how Prince valiantly stood up for all musicians with his various battles with record labels. But it’s nonsense. When big acts attack the funding model of record companies what they are doing, whether they know it or not, is pulling up the ladder behind them’.
            There are at least two factors that are coming into play here. One is the record industry’s romantic ideology. It has always been acceptable – even encouraged – for artists to fight against their record companies, but to do so they have to fall on the right side of the art/commerce divide. They receive more sympathy if they are fighting for their musical expression than if they are fighting for their contractual rights. And they receive more sympathy if they are not seen to have done well. The complaints of rich people usually fall on deaf ears.
            And this is where the second factor comes into play. The music business has a famous statistic: only one in ten succeeds. Prince was certainly on the preferable side of this divide. He was among the minority who prospered, while the majority around him failed.
            Unfortunately for Prince, the record industry’s success ratio has been presented in ‘winner takes it all’ terms. This idea goes back at least as far as 1776, albeit that the formula was doubled in those days. In The Wealth of Nations Adam Smith wrote about ‘the exorbitant rewards of players, opera-singers, opera-dancers etc.’ and noted that ‘in a profession where twenty fail for one that succeeds, that one ought to gain all that should have been gained by the unsuccessful twenty’.
This is not how things work in the record industry. The losers are the unprofitable artists who are dropped by their record companies. These artists take nothing, but at least they are not left in debt: their labels waive any money that is in arrears. The winners are those who have achieved profitability. Their gains outweigh the losses of the failures.
However, rather than taking the spoils from the unsuccessful artists, it is the unsuccessful artists who rob the winners of their spoils. Or at least this is the case when it comes to copyright. British law suggests that the owner of sound recording copyright is the party who ‘made and paid’ for the arrangements for the recording to take place. The record companies usually claim this honour, arguing that they draw up the plans for the recordings and they provide the funds.
But they don’t pay for those recordings, artists do. The budgets for recordings are issued in the form of advances. Artists then pay back these advances from their recording royalties. A recouped artist could claim that they have paid for their recording in full.
And yet the record companies still cling on to their copyrights. They defend this practice by referring to their success ratio. The copyrights of the 10% of the artists who succeed are compensation for the debts of the 90% of failures. When it comes to the ownership sound recording copyright it is not the successful artist who takes all; more commonly it is the record company.
It is this practice that Prince was fighting against. He had a right to be hostile.