Thursday, 22 November 2018

Dún Laoghaire Vinyl Festival

Last weekend a vinyl festival was held in Dún Laoghaire in Ireland, bringing together the likes of Don Letts, Gavin Friday and Terri Hooley to discuss and play vinyl records and consider the importance of vinyl in culture today.
            In the run up to the festival I was interviewed by Liam Geraghty for RTÉ, Ireland’s national broadcasting company. If you want to hear me rattling on about the birth of vinyl and the importance of the Dickies' ‘Banana Splits’ you can access the interview via this link:

Sunday, 11 November 2018

Memorial Silence

The practice of marking two minutes of silence is a relatively modern phenomenon and one that is indebted to noise.
The increased mechanistic volume of everyday life prompted the Italian futurist artist Luigo Russolo to publish Art of Noises in 1913. The following year witnessed the outbreak of the First World War. Russolo had thrilled at the musicality of combat, quoting the poet Filippo Marinetti in his text: ‘ZANG-TOUMB-TOUMB war noises orchestra blown beneath a note of silence hanging in full sky captive golden balloon controlling the fire’. The Great War amplified these noises and, for the first time, recording technology was able to preserve them. The Gramophone Company recorded a bombardment in 1918 and issued it for sale to the public. It was advertised as a ‘marvellous record’ offering an ‘actual reproduction of the screaming and whistling of gas shells’. The recording was made by William Gaisberg, who with his older brother Fred had pioneered record production in Britain. Tragically, he was gassed in the expedition and fell victim to a flu pandemic. William Gaisberg died in November 1918
            It was because life and death had become so noisy that silence offered the best means of contemplation and withdrawal. The first two-minute silence occurred in Cape Town, South Africa, towards the end of the War. This practice was adopted in London for the first anniversary of the Armistice in 1919; George V wrote to The Times expressing ‘desire and hope that at the hour when the Armistice came into force . . . there may be, for the brief space of two minutes, a complete suspension of all our normal activities’. At the 1920 Armistice, Columbia Graphophone recorded the burial of the Unknown Soldier, the first electric recording to be commercially released. Recordings of the two-minute silence were also made, but for broadcast purposes only.
            They were first gathered together on record in 2001, when Jonty Semper issued Kenotaphion. This compilation features 81 two-minute silences, recorded either on Armistice Day or Remembrance Sunday. The first dates from 1929; the last from the millennium. One interest of these documentary ‘silences’ lies in the fact that they are not silent. We can hear the sounds of nature and the sounds of recording processes. David Toop notes that:
In 1986, two pigeons flapped their wings. In 1988 a baby was crying, a child coughed, voices were raised and tape deterioration overlaid a patina of decay that suggests 19th rather than late 20th century. In 2000, seagulls flew overhead and a strange absence of lower frequencies emphasised the vibrato in Big Ben’s tolling strokes.
The other interest of these silences lies in the fact that they still work. We have had one hundred years of remembrance, but silence is still the best means to think upon the glorious dead.

Friday, 12 October 2018

Articles of Association

Streaming has made the use of music transparent. YouTube shows the number of views for each video; Spotify outlines the number of times a sound recording has been played. Yet this transparency has not resulted in comprehensible rates of pay. Recording artists compare these figures with their royalty statements and find the results confusing.
            There are two main factors that affect their recompense. First, there are the deals that are struck between record companies and streaming companies. The methods of payment are complex and there is no uniformity. Second, there are the artists’ recording contracts. If the contract is old, streaming will not be explicitly referenced. Moreover, streaming is not something that can be easily reconciled with existing contractual categories. Is it equivalent to a record sale or to a radio broadcast? Should it be considered as selling or licensing the artists’ recordings? The answers can make a fundamental difference to royalty payments.
            The European Union is aiming to legislate for change in both areas. Its parliament has recently voted in favour of a new Copyright Directive. Streaming companies are addressed by Article 13, which outlines measures for ‘certain uses of protected content’. This Article is largely targeted at YouTube, which has thus far enjoyed ‘safe harbour’ provisions, meaning that it is not financially liable for user content that infringes copyright. Record companies have argued that, in citing this protection, YouTube has forced them to accept inferior licensing deals. At every possible opportunity over the past few years the BPI, the RIAA, the IFPI and other trade bodies have spoken of a ‘value gap’ between the income that the recording industry derives from YouTube, which is calculated on a share of total advertising revenue, and the higher rates it receives from Spotify, which pays a fixed minimum fee for each song streamed. Article 13 aims to close this gap by forcing YouTube ‘to prevent the availability on their services of works’ that have not officially been licensed.
            Articles 14-16, meanwhile, aim for ‘fair remuneration in contracts of authors and performers’. Article 14 seeks better accounting information. Article 15 states that ‘performers are entitled to request additional, appropriate remuneration from the party with whom they entered into a contract for the exploitation of the rights when the remuneration originally agreed is disproportionately low compared to the subsequent relevant revenues and benefits derived from the exploitation of the works or performances’. Article 16 offers a ‘dispute resolution mechanism’, stating that if conflict arises in relation to the previous two articles, the warring parties ‘may be submitted to a voluntary, alternative dispute resolution procedure’.
            There has been much debate about Article 13 and whether it will ultimately benefit the record industry. It has been argued that YouTube works differently to Spotify and that in penalising the grassroots, quasi-legal promotion and creation of music (memes, cover versions, etc.) the industry could cut off a valuable promotional tool. It has also been suggested that, in retaliation for the removal of safe harbour provisions, YouTube might walk away from music and in the vacuum a more a pernicious form of digital piracy could rear its head. There has also been debate about the benefits of Article 13 to recording artists. As Mark Mulligan has pointed out, the ‘value gap’ is not really their concern. It is instead ‘about how much labels, publishers and PROs get paid’. He adds that none of these entities ‘are talking about changing the share they pay their artists and songwriters once Article 13 is put into action. That particular value gap isn’t going to be fixed’.
This leads us back to Articles 14-16, the sections of the Copyright Directive that aim to address performers’ digital rates of pay. There has been campaigning in this area too. Fair Internet 4 Performers (FIFP) has demanded ‘fair remuneration in contracts’. They are disappointed with the Copyright Directive, however, having sought a different set of measures. The Directive has its roots in Towards a Modern, More European Copyright Framework, a communication issued by the European Commission in 2015. Among the proposals was a promise to investigate ‘contentious grey areas’ in EU law. The most pertinent issue was whether streaming should be classified under the ‘making available’ right, which is how record companies have interpreted this form of income, and/or whether it should considered in the same manner as performers’ other ‘communication to the public’ rights, whereby recording artists are guaranteed non-recoupable ‘equitable remuneration’. The licensing income from communication to the public rights has tended to be split 50/50 between record companies and recording artists. FIFP believe that 95% of performers will be better off if streaming is not exclusively a making available right. Hence they demand that recording artists also ‘enjoy an unwaivable right to receive equitable remuneration’.
The European Commission has failed them. When the first draft of the Copyright Directive appeared in 2016, there was no specific mention of streaming and the making available or communication to the public rights. This contentious area was not probed let alone resolved. Instead, there was the loose wording of Articles 14-16, which FIFP described as ‘staggeringly’ ambiguous, ‘weak’ and ‘based on the wrong assumption that contractual remunerations are fair by default, leaving performers with the burden of proof and the obligation to go through complicated, long, costly and uncertain procedures in order to try and redress an imbalanced situation’. Conversely, there had been no mention of ‘safe harbours’ or the ‘value gap’ in Towards a Modern, More European Copyright Framework, yet the Copyright Directive was now targeting YouTube via Article 13.
In a further twist, several leading recording artists have chosen to associate themselves with the record companies’ ‘safe harbour’ crusade, rather than strengthen the Copyright Directive in respect of fair remuneration in contracts of authors and performers’. Signing an open letter on behalf of 'over 1,000 artists', Paul McCartney has pronounced that the value gap jeopardizes the music ecosystem’. It is here, rather than in legislation for recording contracts, that he seeks justice, stating that ‘We need an Internet that is fair and sustainable for all’.
Why would big name artists choose to wave the safe harbour flag rather than promote the contractual interests of 95% of performers? One answer is that they have been effectively press-ganged. The lobbying around Article 13 has been intense. The record labels have made it their priority and in return there has been concerted campaigning from YouTube/Google. To win this battle, the record companies have used a familiar tactic. They have employed their artists to speak up on their behalf. This has lent their campaign some glamour and made it appear more worthy. In contrast, the FIFP campaign has had less funding, lower awareness and consequently a reduced star quality.
A second reason why superstar artists such as McCartney are not supporting FIFP is because they are in the 5% of performers who would not be better off under FIFP’s proposals. As I detailed in my previous post, the suggestion of an unwaivable, CMO-administered, equitable remuneration right would benefit artists who are receiving a royalty rate of 20% or less for their streaming income. Those artists who have rates above that, and those who have the hope of getting rates above that, are not as likely to welcome the FIFP deal. This is not to say that it is a bad proposal. It would result in a wider distribution of royalties, one that is not as biased towards blockbuster acts. It would also guarantee all recording artists a share of streaming income that is non-recoupable from their record company advances. Session musicians would benefit most from the FIFP idea. At present these performers receive no royalties for streaming income. They would do, however, if streaming were classified as an equitable remuneration right. Those who stand to benefit the least are the major stars.
            The different ways of interpreting streaming income could potentially set performer against performer. Already we can see their organisations taking different stances. The UK’s Musicians’ Union is in favour of unwaivable equitable remuneration rights. This is not surprising, as they probably lean more towards session musicians than they do towards featured artists. In contrast, the Featured Artists Coalition (FAC) – the representatives of signed artists in the UK – has offered only qualified support for FIFP. Their hesitancy is captured in a forthcoming article by Ananay Aguilar, which addresses the campaigning that has surrounded the Copyright Directive. She interviews a representative of FAC, who stakes out the organisation’s belief that exclusive rights are ‘stronger and better in an effective market’ than unwaivable rights, but concedes that ‘Music is not an efficient marketplace and, therefore, the security of compensation through remuneration rights at a lower level is more attractive to most artists than the ability to exploit and negotiate individually on their exclusive rights’. It is FAC’s vision, however, that ‘in an ever-improving market, if digital lives up to its vision of transparency and the ability to actually see what’s going on’ there would be no need for the FIFP’s demands. Session musicians would undoubtedly disagree.
We are entering new territory. Copyright law has previously been employed to balance the vested interests of record companies and publishers. It has also been used to balance the interests of record companies, broadcasters and performers. It could now be brought into play to balance the interests of different types of performer. Yet this is old territory as well. The victors in each case are those who are most effective at lobbying. It is a game of power and association.

Friday, 5 October 2018

Adding Up the Streaming Industry

Most British recording artists receive their streaming income directly from their record companies, rather than via a collection society or from the company that is streaming the music. This is because streaming has been classified under the ‘making available’ right. In the UK, this right is the only element of the broader ‘communication to the public’ rights that is exempt from equitable remuneration rules.
If streaming income were to be covered by these rules it would operate differently. The other communication to the public rights are ‘unwaivable’, meaning that they cannot be assigned to a record company; they are non-recoupable, meaning that they cannot be used to claw back the personal or recording advances that record companies have paid to artists; and their ‘equitable remuneration’ is divided equally between the record company and the recording artists. This means that recording artists receive 50% of the rights revenue. In contrast, the making available right is ‘waivable’. It can therefore be assigned to a record company and the royalty rate can be negotiated. As a result, recording artists are currently receiving anything from 15%-50% of the streaming income for their sound recordings. Their record companies are keeping the remainder. The artists’ share is also fully recoupable. Therefore, some artists will never see their streaming royalties, as they are forever paying off their record company debts.
            The ‘making available’ right is confusing and contentious. It is meant to encompass ‘electronic transmission in such a way that members of the public may access the recording from a place and at a time individually chosen by them’. This definition would appear to cover the majority of streaming activity, with the exception of live streaming in real time (and some copyright experts believe that it addresses this too). It was nevertheless configured before streaming became the dominant means of consuming recordings. It was also conceived without due consideration of the economic consequences for performers. There are many people who believe that if the making available right were treated in the same manner as other communication to the public rights, it would result in higher royalty income for the majority of artists.
Consequently, organisations such as Fair Internet for Performers (FIFP) are campaigning for a revision of making available rights. They believe that all artists should ‘enjoy an unwaivable right to receive equitable remuneration, notwithstanding any possible transfer to the producer of their exclusive right for the making available on demand of their performances, independent of any terms agreed for such transfer and in addition to any possible contractual payments that are made by producers in this respect’. This is not a left-field proposal. Croatia, Lithuania and Spain have already decided to apply equitable remuneration measures to the making available right. Copyright scholars such as Fiona McGugan also believe that equitable remuneration will benefit most performers, as do 78% of artist managers (or at least this was their position when surveyed in 2015).
There has been little economic analysis of the proposals, however. FIFP state that they represent the ‘95% of performers who simply transfer all their rights to the producer for a single payment’. In respect of sound recording, this means the session musicians. As we shall see, these performers would be better off under their proposals. But what about featured artists, those have exclusive, royalty-based contracts with record companies? Here things are not so clear-cut. When streaming began its rise to dominance, many artists were being given the same royalty rates for this use of music as they were for record sales and downloads. More recently, things have begun to change. Music Business Worldwide has reported that several ‘superstar’ performers have negotiated 50% royalty rates for streaming income, and that the ‘traditional’ deal, whereby a 20% royalty is applied to both physical sales and streaming is ‘fast becoming obsolete’.
In the following, I will look at how the FIFP proposals could affect featured artists on a 20% royalty rate and those on a 50% royalty rate. In addition, I will look at their potential impact on artists who are releasing music through aggregators, and for those who have Spotify direct deals. The case for session musicians will also be outlined.
Record Company Distribution of Streaming Revenue
At present, the streaming companies keep approximately 30% of the overall money that their use of music generates before passing on the remainder to the rights owners. This money is split between the copyright in the sound recording (usually owned by the record company) and the copyright in the musical composition (usually assigned by songwriters to their music publishers and CMOs). The balance is 65/35 in favour of the recording copyright. As a result, recording artists royalty rates pan out in the following manner:
·      A featured artist on 20% royalty will receive 13% of the rights revenue (the remainder will be split 52% to the record company and 35% to the songwriters/publishers)
·      A featured artist on a 50% royalty will receive 32.5% of the rights revenue (the remainder will be split 32.5% to the record company and 35% to the songwriters/publishers)
·      A DIY artist with an 85% aggregator/distributor deal will receive 55.25% of the rights revenue (the remainder will be split 9.75% to the aggregator/distributor and 35% to the songwriters/publishers)
·      An artist with a 50% Spotify direct deal will receive 31.25% of the rights revenue (this figure is lower than that gained by a featured artist on a 50% royalty because the Spotify direct deal is worth 62.5% of the rights revenue, in comparison to the 65% achieved by record companies; the remaining rights revenue will be split 31.25% to Spotify (acting in a record company capacity) and 37.5% to the songwriters/publishers)
·      Session musicians receive no royalties for streaming; they are instead paid one-off fees via contract
Equitable Remuneration Distribution of Streaming Revenue
In contrast to the above, FIFP are proposing an equitable remuneration right. In Britain, if this were to operate in the same manner as the other communication to the public rights, it will be split 50/50 between performers and record companies. If implemented for all streaming income, we have the following rate of pay:
·      Recording artists will receive 32.5% of the overall rights revenue (the remainder will be split 32.5% to the record company and 35% to the songwriters/publishers)
Looked at one way, this appears to be beneficial to all recording artists, even those who are already on a 50% royalty rate. This is because these equitable remuneration royalties are not recoupable from advances. Yet there are some disadvantages too. The maximum royalty that artists receive from PPL will be limited to 50% (no other equitable remuneration rate in the UK has gone higher than this). In contrast, because of the ‘waivable’ nature of current rights, it is possible that some artists could eventually negotiate above the 50% ceiling. In addition the PPL rates are subject to deductions and splits. PPL charge a 15% administration fee, which reduces the recording artists share to 27.63% of the streaming spoils (record companies, on the other hand, do not charge for their distribution of royalties). In addition, the artists’ share of PPL income is divided 65/35 between featured artists and session musicians (current record company royalties are not divided in this manner; the session musicians are instead remunerated via contractual fees). Taking these two factors into account, the equitable remuneration rate looks more like this:
·      Featured artists will receive 17.96% of the overall rights revenue
·      Session musicians will receive 9.67% of the overall rights revenue
·      The remainder will be divided 27.63% to the record company, 9.75% to PPL and 35% to the songwriters/publishers (whose income is subject to its own administration charges from their CMOs)
It should be noted, however, that not all recordings utilise session musicians. In these instances the featured artists will receive a 27.63% share.
Record Company/Equitable Remuneration Distribution of Streaming Revenue
There is a further complicating factor. Few people believe that streaming revenue should be subject to an equitable remuneration right only. Any tendency to make it akin with other broadcast/communication rights tends to be balanced by equating it with traditional record company distributions. This is the policy adopted by the UK's CMOs for songwriters and publishers, for example. They split streaming income 50/50 between the communication (performing) rights and issuing to the public (mechanical) rights. The Musicians’ Union have expressed a similar view about streaming; they have proposed that ‘50 percent of the making available right should be an equitable remuneration right, non-assignable and administered by a collecting society, with the other 50 percent being an exclusive right assignable to the record company’. FIFP are in accord. They envision their ‘unwaivable right to receive equitable remuneration’ being split with an ‘exclusive right for the making available on demand of ... performances’, which featured artists may choose to assign to a record company.
            If we divide recording artists’ streaming income along these lines - so that half of the income is regarded as an ‘unwaivable right’ distributed by PPL at a 50% rate, and the other half is an ‘exclusive right’ distributed by record companies at contractual rates - we arrive at the following:
·      A featured artist on a 20% royalty rate will receive a 6.5% share of the rights revenue via their record company and an 8.98% share via PPL, giving them 15.48% overall
·      A featured artist on a 50% royalty rate will receive a 16.26% share of the rights revenue via their record company and an 8.98% share via PPL, giving them 25.24% overall
·      A DIY artist on an 85% deal will receive a 27.62% share of the rights revenue via their deal with their aggregator/distributor and an 8.98% share via PPL, giving them 36.6% overall
·      An artist with a 50% Spotify direct deal will receive a 15.63% share of the rights revenue via their deal with Spotify and an 8.63% share via PPL, giving them 24.25% overall
·      A session musician will receive 4.84% of the rights revenue via PPL
Record Company/Equitable Remuneration Distribution of Streaming Revenue with Broadcasting Rebalance
And things don’t end there. If half of the streaming income is viewed as being akin to broadcasting/communication rights, then we should consider how this rights revenue is usually divided in the UK. These royalties are not split 65/35 in favour of the record companies. Instead, this revenue is commonly split 50/50 between the rights in the recording and the rights in the composition. If the FIFP proposal were adopted, and the ‘communication’ half of recording artists’ streaming revenue was controlled by a CMO rather than their record company, we could see this revenue recalibrated in the same manner. Record companies are generally more powerful than music publishers. This is one of the reasons why they have gained a higher percentage of overall streaming revenue. In contrast, the CMOs for recording rights are junior to the CMOs for songwriting rights. The latter would seek an advance in songwriters’ and publishers’ fortunes.
            It could therefore transpire that, while the ‘issuing copies to the public’ half of streaming income would continue to be divided 65/35 in favour of the record companies, the ‘broadcasting’ half would be split 50/50 with the songwriting copyright. This produces the following results:
·      A featured artist on a 20% royalty rate will receive a 6.5% share of the rights revenue via their record company and a 6.91% share via PPL, giving them 13.41% overall
·      A featured artist on a 50% royalty rate will receive a 16.26% share of the rights revenue via their record company and a 6.91% share via PPL, giving them 23.17% overall
·      A DIY artist on an 85% deal will receive a 27.62% share of the rights revenue via their aggregator/distributor and 6.91% share via PPL, giving them 34.53% overall
·      An artist with a 50% Spotify direct deal will receive a 15.63% share of the rights revenue via Spotify and a 6.91% share via PPL, giving them 22.53% overall
·      A session musician will receive 3.72% of the rights revenue via PPL
The Results
If we compare this final ‘Record Company/Equitable Remuneration Distribution of Streaming Revenue with Broadcasting Rebalance’ with the current situation, whereby all of the recording income for streaming is distributed by record companies, we are left with the following results:
·      A featured artist on 20% royalty will gain an increase of 0.41% in their royalties via the FIFP proposal (13.41% of the rights revenue as opposed to 13%); they will also benefit from having 6.91% of their royalties free from recoupment
·      A featured artist on a 50% royalty will suffer a decrease of 9.33% in their royalties via the FIFP proposal (23.17% of the rights revenue as opposed to 32.5%). They will, however, have 6.91% of their royalties free from recoupment
·      A DIY artist on an 85% aggregator/distributor deal will be 20.72% worse off via the FIFP proposal (33.53% of the rights revenue as opposed to 55.25%)
·      An artist with a 50% Spotify direct deal will be 8.72% worse off via the FIFP proposal (22.53% of the rights revenue as opposed to 31.25%)
·      Session musicians will receive 3.72% more of the royalties via the FIFP proposal (3.72% of the rights revenue as opposed to nothing)
There are of course some caveats to this analysis. Streaming payments are complex. Different streaming companies have different deals with record companies, and these record companies have different deals with their artists. The movement, nevertheless, is towards a system that is based on payments that reflect that actual usage of recordings.
            But what is the best way to split that payment? On an overall income basis, it looks as though the FIFP proposal is only of benefit to session musicians and to featured artists whose royalty rate for streaming is 20% or less. There is nevertheless a virtue to a proposal that secures a guaranteed, non-recoupable element of streaming income for all featured recording artists. And many people would feel that it is right that session musicians should receive a performance-based payment for recordings that they have helped to realise.
            But would the most successful recording artists feel this same way? It is notable that few of them have stood behind FIFP’s proposal for an unwaivable streaming right. It is unlikely, however, that any of them have gone through the complicated sums outlined above to calculate that they will be worse off under this deal. They may have been swayed, instead, by the desire to have control of exclusive, waivable rights. And they may also have been swayed by their record companies, who are detracting attention from demands for ‘fair remuneration in contracts of authors and performers’, and focusing their artists’ thoughts on the ‘value gap’ instead.