Friday, 1 November 2019

Stream Weavers

In last September’s blog entry, ‘Stream a Lie’, I pointed out how the recording industry is disingenuous when it comes to its revenue figures:
Streaming income is not calculated in the same manner as physical sales income, yet the record industry presents it as such. In its market reporting, the industry lumps together the wholesale revenue from CD and vinyl sales with the money it receives from streaming and downloading companies to present an overall picture of industry wellbeing. This is misleading, as the revenue from physical sales income includes costs that are absent from streams. The former is provided as a gross revenue figure and the latter details net revenue. 
The result, in the UK, is that the trade figures provided by the British Phonographic Industry (BPI) look like this:

While I still stand by my analysis, there are some amendments to be made. In the first instance, while the money from physical sales is represented as a gross revenue figure, it was wrong of me to represent the money from streaming and downloading as net revenue. Some, but not all, of the expenses are taken out.
The percentage splits that make up the wholesale price of a physical release can be broken down as follows:

            Record company 45.5%
            Artist 20%
            Manufacturer 14%
            Distributor 12%
            Songwriting copyright 8.5%

The first key difference between the reporting of physical sales and the reporting of downloads and streaming is that the costs of songwriting copyright are only included in the former category. This not because the record companies are masking this expenditure in respect of downloads and streams, but instead because it is not them who bear it. They pay the songwriting royalties for physical sales; it is the digital service providers who pay them for downloads and streams. A more equal tabulation would nevertheless have these payments removed from all formats. It would then look like this:

This does make a difference. Whereas the record industry depicts their overall trade in 2018 as bringing in only 75% of the revenue that it had in 2000, once songwriting copyright is factored out it is instead worth 80% of the business at the turn of the century.
The next thing to eliminate are the costs of manufacture and distribution. As with songwriting royalties these form part of the record companies’ expenditure when it comes to physical sales but they are not spending in these areas for downloads and streams. On the one hand, there are no (significant) costs of manufacture. Each digital download of stream costs little to create. On the other hand, it is the service providers, rather than the record companies, who bear the costs of distribution. If we additionally remove these costs from the physical sales figures, we end up with the following chart:

Viewed from this perspective, the record companies were more prosperous in 2018 than they were in 2000.
            One reason why it is important to remove these costs is because it gives us a clearer idea of record company profits. Following on from this, we can gain a clearer perspective of what share of royalties it is fair for recording artists to receive. Record companies could perhaps justify their claim for 80% of the revenue for physical sales on the grounds that they had significant costs to bear. That 80% looks more questionable once the expenditure on songwriting royalties, manufacture and distribution are removed. Together they represent 34.5% of the wholesale price of a physical product. The record companies have nevertheless paid their artists the same royalty rates for downloads as for CDs. They have accounted for this parsimony by pointing to their figures. Their representation of revenue has painted a picture of an industry in decline, while at the same masking the reduction in their costs.
            Streaming has been treated differently. Whichever way the figures are represented, the position of the recording industry has improved. BPI’s own figures demonstrate an increase in revenue of 29% since trade bottomed out in 2015. My adjusted figures demonstrate an increase of 30%. Against this background, recording artists have been in a stronger position to demand higher royalties. They can also highlight the diminished role of record companies in the digital age. Some of them are being successful too. At the top end, there are artists who are now receiving 50% royalty rates for streaming.
            This also has an effect on the figures. If our next move is to remove the costs of royalties from each of the formats, bearing in mind that the record companies are now paying out higher percentages for streaming, the overall trend is reversed once more. We arrive once more at a downturn in the overall figures from 2008 to 2018. The trade in 2018 worth 83% as much as it was in 2000:

It should be pointed out that, even when we reach this stage, the figures do not detail net revenue. There are still the costs of artist advances, recording advances, video production, tour support, and marketing and promotion to take into account. IFPI have given their own representation of these figures, breaking down the US$500,000-US$2,000,000 that represents their ‘typical investment in a new signing’ into expenditure that looks like this:

There is some sleight of hand here. Much of the expenditure on advances, recording costs, video production and tour support is borne by the recording artists out of their share. The record companies advance this money to the artists, but it is ‘recouped’ from their royalties. Amongst the expenditure outlined by IFPI, it is only the costs of marketing and promotion – tellingly portrayed as the major expense – that the record companies pay for outright. They do, however, also have staff, legal and facilities costs to account for.
And there is one further twist. The BPI do not adjust their figures for inflation. If we update my final ‘net’ figure according to the Bank of England’s inflation figures, we end up with this chart:

The result is an industry that is worth only 50% as much in 2018 as it was at the millennium.
What can we gather from all of this? On the one hand, the BPI has inflated a story of decline. On the other hand, it has under-reported it. When it comes to the over-representation of decline, the most important tactic to bear in mind is not the overall totals, but instead the manner in which BPI’s representation of revenue masks the differences between physical sales and downloads/streams. Not only has this enabled them to downplay disputes about artists’ royalties, it has also aided them in their negotiations with the service providers. They have obscured the fact that the turn to downloads and streaming has reduced their costs.
The under-reporting is harder to account for. The recording industry has tactically employed its decline as a means to strengthen copyright laws in their favour and as a means to defend punitive recording contracts. Why then, has it not factored in inflation to illustrate an even more precipitous decline? Maybe, this too is about their negotiating position. They want to tell the world they are suffering. They don’t want to place themselves as beggars, however, by demonstrating that theirs is an industry that has been on its knees.

Thursday, 31 October 2019

Dividing up the Pies

Take a look at this:

Now take a look at this:

These vastly contrasting pie charts tell a history of the music industries. On the one hand, we have the division of income for physical products, such as cylinders, shellac records, vinyl, cassettes and CDs. It is skewed towards the creators and owners of sound recordings and away from the writers and publishers of the songs that those recordings contain: 91.5% of the revenue goes to the recording and 8.5% to the song. This weighting has been roughly the same for as long as there have been copyrights in recordings. In the UK, the ‘mechanical’ right, which provided royalties for the deployment of compositions, and the ‘master’ right, which gave a copyright to recordings themselves, were both established in 1911.
            There are reasons for this division. In the first instance, the record companies would only accept the imposition of the mechanical right on certain conditions. One of these was that it must be subject to compulsory licensing. It was stipulated that once one record company had recorded a song all other companies were then entitled to record it as long they paid a pre-determined fee (it is compulsory licensing that gave birth to the cover version). Another condition was that these fees be fairly small. Despite complaints from music publishers, the mechanical royalty was originally set at 2 ½ % of the retail price of a record, with a stipulation that this rise to 5% by 1913. It is currently set at either 6.5% of the retail price or 8.5% of the ‘dealer’ price (the cost of the recording to retailers).
            The record companies also argued that they were taking the most significant risks and that they bore the major costs. They were paying for the manufacture and distribution of recordings, as well as for their promotion and marketing. These costs also account for the division of physical sales revenue between record companies and recording artists. Record companies argue that they can only afford to pay recording artists 15%-20% royalties because they have so many overheads. In contrast, the compositional royalties are split in the writers’ favour. One of the reasons why they are receiving a 75% share is because publishers do not have significant costs. They are not manufacturing or distributing the recordings, and since the mid-20th century their promotional role has declined.
            Why does the division for radio play look so different? The answer lies in the trade off between compensation and promotion. The songwriters and music publishers gain substantial revenue from radio because they deserved compensation. Radio usurped other forms of income. The publishing trade used to be centred on the sales of sheet music. Radio brought this to an end. Domestic music making (which required sales of sheet music to the public) was replaced with transmissions of the work of professional performers (which did not). The songwriting industry sought and gained compensation. In the UK, their broadcast revenue from the Performing Right Society (PRS) soon became primary.
            In contrast, the recording industry has gained promotional benefits from radio play. The broadcast of a recording boosts its sales. And it was these sales on which the industry was traditionally centred. The record companies still felt that they deserved some payment from the broadcasters for the use of their work, however. In Britain they managed to secure a performing right of their own in 1934, and they immediately set up the collection society PPL to administer it (the US, in contrast, has never had a performing right for recordings in respect of analogue radio. Consequently, if the second pie chart were to represent American FM or AM radio, there would be no share whatsoever for the record companies, featured artists, session musicians or for the collection societies that look after their interests).
            Recording artists are in a slightly different position to their record companies. While their record sales gain promotional benefits from radio play, the broadcast of their music can also put them in competition with themselves. Why pay to see a performer in the flesh when you can hear their music on the radio instead? It is the technological unemployment that radio occasioned for musicians that accounts for their substantial share of broadcast income. Where they might be on a 15%-20% royalty for physical sales, they are assured 50% of the sound recording income for radio play.
            It would be wrong to suggest that the establishment of these splits has been easy. Songwriters have fought for an increased share of publishing income, while featured artists, session musicians and musicians’ unions have all lobbied for performers’ shares vis-à-vis the record companies. I should also note that the 50/50 division of radio revenue between songwriting and sound recording is an estimate. The licensing income gained from broadcasters is not readily available. What has not been contested by any of the interested parties, however, is that the revenue from physical sales and radio play should have these vastly different splits.
            This difference is now rearing its head in respect of the revenue for streaming. What is a stream? The position of this format is vague within copyright law. There are those who argue that it is more akin to a physical sale (and hence should fall under the reproduction right) and there are those who argue that it is more like radio play (and therefore should be established as a performing/communication to the public right). The solution of the music publishers, in the UK at least, has been to divide the revenue 50/50. Half of it is treated as sale. Half of it as a broadcast.
            But how is the overall income from streaming being divided? Take a look at this:

When it comes to streaming, the division between songwriting and sound recording looks roughly the same as for physical sales. Songwriting has increased its share fractionally from 8.5% to 13%, that is all. Where there is a difference between streaming and traditional retail is in the the division between record company and recording artist. Some featured artists have increased their royalties from the 15%-20% they might get for physical sales to as much as 50% for streaming. There is a good reason for this: the record companies are doing and paying less. They do not have to manufacture or distribute streams; these overheads have gone.
            If record companies are doing less, why then shouldn’t the share for the songwriting copyright also increase? Writers and publishers are making this case. Session musicians are missing out too. They receive royalties for radio play, but they do not receive them for streaming. As a result, an argument has been mounted that the overall revenue for streaming (rather than just the revenue for the songwriting copyright) should be split 50/50 along reproduction right/communication to the public lines. If this were implemented, it was result in the split of payments looking more like this:

The record companies are resisting. When it comes to determining the splits between themselves, the featured artists and the session musicians they have legislation on their side. Streaming falls under the ‘making available’ right. This is a sub-set of the communication to the public right, but it has particular characteristics. Most importantly, it is not subject to the ‘equitable remuneration’ rule that is applied to broadcast revenue, meaning that rather than automatically dividing the revenue 50/50, it is instead subject to negotiation between the record companies and the featured artists (and the session musicians are squeezed out). The net result is that, in this one instance, the communication to the public right operates in the same manner as the reproduction right.
            The record companies have different arguments regarding the overall split between sound recording and songwriting. Although their costs of manufacture and distribution have been removed, other areas of expenditure remain. In particular, they are now emphasizing their spend on marketing and promotion. Publishers do not spend a great deal on advertising their wares. In contrast, the record companies’ international trade body, IFPI, stresses that marketing is now the major expenditure that record companies encounter. They posit a deliberately intimating figure of US$500,000-US$2,000,000 to launch a new act. Marketing and promotion accounts for around a third of this figure. IFPI’s estimate is that it amounts to US$200,000-US$700,000.
            There is something else that we can look at too. Compensation has always played large part in determining royalties. When a new music technology comes along, the licensing rates and the division of revenue tend to be established on the basis of the deprivation that is being caused. Therefore, we could ask, who is streaming affecting the most: is it replacing radio play or is it affecting record sales? Thus far, the figures would appear to play out in the record companies’ favour. Since streaming first rose to prominence in 2011, the revenue for physical sales and downloads in the UK has more than halved. In contrast, the UK’s collection societies for songs and sound recordings have increased their revenue for radio:

This increase in radio revenue is not vast, however. And how should the streaming splits be calibrated if it goes into decline? We have a pie fight on our hands.

Monday, 30 September 2019

India on Film

In December 2018 I was interviewed for a television series about Indian documentary film of the pre-independence era. The reason why a popular music scholar was posing as a film historian was because my first academic job was as a researcher on the AHRC-funded project Colonial Film: Moving Images of the British Empire, which involved me viewing, cataloguing and analysing film collections held by the BFI and the Imperial War Museum.
            The resultant two-part television series, India on Film, was recently broadcast by Channel News Asia, who have made the programmes available via this link. They do an excellent job of bringing the early documentaries to life, and I am rightfully outshone by scholars who have spent their working lives studying India and/or film.

Thursday, 1 August 2019

From Bohemian Rhapsody to the Buddy Holly Story

I was recently interviewed for an article about the factual accuracy of musical biopics, written by Tom Fordy for the Telegraph. Following on from last year’s Queen film, Bohemian Rhapsody, which was criticised for manufacturing and being loose with the truth (notably in relation to Freddie Mercury’s diagnosis and disclosure that he had AIDs), there was a rash of articles that explored the printing of musical legends. With the recent release of the Rocket Man about Elton John, similar thought pieces have made a return.
            Fordy asked me to talk about the ‘truth’ of the Sex Pistols-related film Sid and Nancy and the Joy Division films Control and 24 Hour Party People. One thing that I wanted to get across, which is in the piece, is that music films rarely do a good job of dealing accurately with bands. They are oriented towards star turns by individuals, including the ability of an actor to assume the persona of a lead singer or musician. What they do not manage to capture is intra-band politics. Hence, Gary Oldham delivers an astonishing performance in Sid and Nancy, where he embodies the spirit of Sid Vicious. Andrew Schofield’s limp turn as Johnny Rotten could hardly be called nuanced, however. Similarly, the various Joy Division films have worked hard at capturing the tics of lead singer Ian Curtis, but have spent far less time on the other members of the band (this seems particularly unjust, as Joy Division are one of the rare bands in which each member’s contribution is equally vital). Bohemian Rhapsody offers a partial exception to this rule, with its attention to detail spreading beyond the lead singer. The fact that Queen members Brian May and Roger Taylor acted as consultants to the film presumably helped here, as did the fact that the group had already developed ways of portraying themselves on screen, notably in the video for ‘The Miracle’, in which four young children do a great job of being Queen.
            Another thing that I talked about with Fordy, but which did not make it into the article, is that this analysis of historical accuracy should be extended to documentaries. It is presumed that they get closer to the reality of singers and musicians than acted portrayals, but I’m not sure this is always the case. On the one hand, musical biopics such as 24 Hour Party People or the Todd Haynes’ Bob Dylan film I’m Not There have done a better job of capturing musicians and scenes than most parades of talking heads could ever do. On the other hand, a documentary can be just as partial as a biopic. They will be oriented towards one version of the truth or one member of a band. Take, for example, the three attempts that director Julien Temple has made to tell the Sex Pistols’ story. He has spoken of the Rotten-oriented The Filth and the Fury (2000) as being a ‘corrective’ to his earlier film, the Malcolm McLaren-instigated Great Rock ‘n’ Roll Swindle (1980). This did not stop him from having another crack at the Pistols, however, providing a more London-based setting in The Knowledge (2008). Each film has its moments, but they are also indicative of the fact that the Sex Pistols’ story is too rich and diverse to be contained. A further point about documentaries is that their tendency to place social context around music can be just as falsifying and mythologizing as the manufacture of narrative events in biopics. About ten years ago I heard a great talk by Richard Witts, in which he took apart the documentary Factory: Manchester from Joy Division to Happy Mondays, indicating that its scene-setting footage of Salford, which was supposed to visualise the milieu in which the members of Joy Division emerged, was in fact taken from an era prior to their births. It had originally been employed to illustrate ‘before’ and ‘after’ images of slum clearance, but the film implied that those slums were still there.
And there’s a final thing that I didn’t mention to Fordy at all. When analysing the ‘reality’ of music films, the focus tends to be on truth to history, truth to personality or truth to sociology. There is less discussion about truth to music. But which films best manage to capture the spirit of a song? Musical biopics are not the place to look. With their orientation towards narrative and character they lose the ability to deliver a good tune. Documentaries can edge closer to the marvels of music. As I have written elsewhere, there is something exciting about hearing music talked about. It sets up a thrill of anticipation for the moment that the song in question finally arrives. Ultimately, however, the films that best communicate what music feels like for us – the fans - are not the ones that concentrate on its makers. It is the reception of music that comes across most effectively. Therefore, if you want to see a movie that conveys the musical impact of Elton John, you would be better off watching the bus scene in Almost Famous than digesting Rocket Man.

And which moment of film best captures the essence of Queen? It’s ‘Bohemian Rhapsody’ in Wayne’s World of course. 

Friday, 26 July 2019

Dance to the Video

Earlier in the month I attended Orchestral Joy Division at the Royal Albert Hall, an event that was organized by the band’s old bass player, Peter Hook, in conjunction with Tim Crooks, conductor with the Manchester Camerata. There were three guest vocalists, one of whom, Bastien Marshal, became an Ian Curtis impersonator for the night. He had Curtis’s look and idiosyncratic dancing moves spot on. Is struck me, though, that Marshal is young and has grown up in a world in which he been able to access footage of Joy Division at the same time as he been able to access their sound recordings. This was not the case for me growing up. I first heard Unknown Pleasures not long after it came out. I heard Closer when it was released. Throughout this time I had not seen the band perform, though. I was too young to see them live and I had missed their three appearances on television. Two of these took place on the Granada network, so (I think) they were restricted to the north of England only (I was in the midlands). The third was on BBC2’s Something Else. This was a programme that I did see occasionally, but I missed this particular episode. In fact, I can’t remember when I did first see the Joy Division clips. It probably wasn’t until the end of the 1980s, when the first documentaries on the band began to appear. Three things follow on from this. The first is that what has become an ‘iconic’ dancing style, simply wasn’t so at the time. Most of the people buying and listening to Joy Division records didn’t get to see Curtis’s moves. The second is that the ‘iconic’ sleeves of the records took on even more weight. The sleeve to Unknown Pleasures in many ways was Joy Division. There were also key photographic images, but in contrast to Curtis’s manic dancing, these were stills. Conversely, the third thing is that is that if you did manage to see television clips in the pre-MTV and YouTube age, they did tend to stay with you. You had to register them whole. Johnny Marr suggests in his autobiography Set the Boy Free that Curtis cribbed his dance moves from David Bowie, via a one-off television appearance on the Dinah Shore Show in 1975. The evidence does appear to be telling. The question, though, is how did Curtis get to see this American programme?

Another thing that struck me about Orchestral Joy Division, and which also struck me when I saw Peter Hook and the Light at the Round House in 2017, is what a towering song ‘Ceremony’ is. If anything, it is even more powerful musically (but not culturally) than ‘Love Will Tear Us Apart’. It’s an unusual late twentieth century song, however, as it doesn’t have a definitive recording. The surviving members of Joy Division issued it as New Order’s debut single. This almost felt like a cover of Ian Curtis’s intended version. Then, when the studio recording by Joy Division was released on the Heart and Soul box set in 1997, this didn’t seem like it was the ultimate version either. Maybe, it is this situation makes the song so redolent live. It can only be completed by Joy Division fans.

Thursday, 11 July 2019

One Directive? Equitable Remuneration and the Making Available Right

On Monday 1 July I spoke at The Future of Music Law conference at the University of Central Lancashire in Preston. It was a good event, with a mixture of industry professionals (Ann Harrison, Judge Jules) and academics. Peter Hook was due to speak, but sadly had to pull out due to preparations for his Joy Division Orchestrated gig at the Royal Albert Hall.
            My paper concerned the European Union Directive on Copyright in the Digital Single Market and the fact that, despite promising to investigate the making available right, it failed to discuss what the European Commission had referred to as a ‘contentious grey area’ of copyright law. I contrasted this with the Commission’s measures for safe harbours and value gaps, which were not a part of their original proposals, but became the most prominent part of the Directive. You can access the paper here.

Friday, 31 May 2019

Unfinished Symphony

Three years ago to the day I was writing about the Verve’s 1997 song ‘Bittersweet Symphony’, searching for the author who had been most deprived. Famously, the composition has been attributed to Mick Jagger and Keith Richards as a result of the inclusion of a looped sample of their song ‘The Last Time’, as recorded by the Andrew Oldham Orchestra in 1965.
            There have been developments. Richard Ashcroft, the singer of the Verve who wrote the main body of ‘Bittersweet Symphony’ (i.e the 'unsampled' parts of the song) has become increasingly outraged at his lack of royalties. In November last year he declared, ‘I’m coming for that money. Someone stole god knows how many million dollars off me in 1997, and they’ve still got it’. He was pointing towards Jody Klein, the son of Allen Klein and inheritor of his publishing company, ABKCO. It is ABKCO who control the Rolling Stones' early repertoire and who had demanded 100% of the publishing royalties for ‘Bittersweet Symphony’.
There are reasons for Ashcroft’s intensified fury. Firstly, he was promoting his new album, Natural Rebel and this publicity was good publicity. Secondly, as I pointed out in my original blog entry, in the days of physical products he would not, ultimately, have been deprived. He may not have had the publishing for the Verve’s ‘Bittersweet Symphony’, but he did write the majority of the songs on its parent album, Urban Hymns, and would have received nearly 70% of the songwriting royalties each time a copy was sold. Urban Hymns is a platinum selling record in America and it is the 17th best-selling album of all time in the UK. Unfortunately for Ashcroft, streaming has taken us to a world where it is singles rather than albums that rule. ‘Bittersweet Symphony’ is his most successful song and he receives nothing for it when it stands on its own. He suggests that it is worth $50 million and that this money has been stolen from him.
            Jagger and Richards appear to have listened. Last week Ashcroft received the Outstanding Contribution to British Music prize at the Ivor Novello Awards. He used the occasion to announce:
As of last month Mick Jagger and Keith Richards agreed to give me their share of the song ‘Bitter Sweet Symphony’. This remarkable and life affirming turn of events was made possible by a kind and magnanimous gesture from Mick and Keith, who have also agreed that they are happy for the writing credit to exclude their names and all their royalties derived from the song they will now pass to me.
I’m not sure if this is a happy ending. In the first instance, the copyright details for ‘Bittersweet Symphony’ have not yet been changed. The money, at present, is still going ABKCO. In addition, if the song is to be credited to Ashcroft, this might ruffle feathers elsewhere. Ashcroft believes he should have the sole credit for the song and has justified this as follows:
I was saying to myself, ‘look, rock n roll is a spirit, and if I want to sample something and make it into a hip hop/rock n roll anthem, it’s still rock n roll. And it’s even more rock n roll because it’s another white English kid, influenced by hip hop, sampling some fucking white English guys, influenced by black blues guys, and it goes on and on and on. But sonically what I’m saying at the end with “Money Money” is that you lot are just a Xerox of a Xerox of a Xerox of a Xerox of Xerox of a Xerox’.
What he’s attempting to state here is that, while the Rolling Stones took much of the inspiration for their song from the Staple Singers’ ‘This May Be the Last Time’, the Staple Singers in turn had drawn upon traditional music of no fixed authorship. It is only Ashcroft who is an originating author.
            This is dubious enough in itself, but what Ashcroft fails to mention is that the riff in the Andrew Oldham Orchestra sample does have an author and that it is not Jagger or Richards. The motif in the sample is only loosely based on Keith Richards' guitar playing. The main credit for it should instead reside with David Whitaker, who composed and arranged the orchestral score.
            One of things about rethinks is that they prompt further rethinks. Popular music has always had multiple authors – writers, arrangers, musicians, singers, producers, engineers, mixers – and it has always been unfair with its attributions of credits and royalties. Traditionally, many songwriting disputes have been settled out of court. This has suited publishers, as they do not want legal precedents to be set. It has also suited the victorious authors, as they have not want it known who is receiving shares of income and who is being deprived. Ashcroft might wish he had been quieter. If he has been successful in his pursuit of stolen dollars, then it might prompt the Staple Singers and the estate of David Whitaker to think about the money that is being taken from them.

Monday, 29 April 2019

The Story of Sound Recording

On Saturday the BBC World Service broadcast ‘The Story of Sound Recording’, the first part of a series exploring A History of Music and Technology. I’m a featured interviewee, alongside noted experts Mark Katz, Andre Millard, Greg Milner, Nick Morgan, Sophie Maisonneuve and Sean Williams. It’s a great series and for the second time in my life (following on from the Music on the Blockchain report), I find myself being introduced by Pink Floyd’s Nick Mason. The episode can be accessed via this link for the next 29 days.