Playing the Margins

One way to tell the history of rock ‘n’ roll is to look at changing profit margins. Musicians follow the money.

Jason Toynbee has argued that popular music is characterised by a high degree of ‘institutional autonomy’. Artists have freedom from capitalist jurisdiction. Toynbee believes that the music industries 'cede control of production (writing, performing, realizing) to musicians themselves’. I think he’s mostly right. Although popular music ‘belongs to capitalism’, popular musicians are not entirely in thrall to their employers.

One of the reasons for this is because musicians' jobs are diffuse: they write, they perform and they realize. Importantly, their employers in each of these fields are different: artists sign separate publishing deals, record deals and live performance contracts. They have further areas of activity that escape totalising control. Even the 360˚ deal is not all encompassing.

            History enters this matrix because the profit margins for each of these activities change and artists change direction accordingly. At present, for some, it is live music that is most economically rewarding. These performers are now making records to promote their tours, rather than the other way round. Publishing income has often outstripped recording income. It is this economic imperative, as much as an aesthetic urge, that had led many performers to become writers.

            Musicians are also subject to profit margins in the wider economy. There is money in live music for heritage acts and global superstars. At a grassroots level, however, the live music scene is struggling. In the UK many venues are closing. Upcoming artists are getting paid less for their performances. Sometimes they get paid nothing at all.

            One of the factors in play here is the profit margin on a pint of beer. This was greater in the past. Hence pubs and clubs could afford to give more money to live performers. They also wanted music because noise sells beer. As profits on alcohol have declined, bars have sought other ways of making money. One of these has been via food, on which the profit margins are high. The changing pub economy has not been great for performers, particularly loud or left-field ones, as noisy popular music does not go always go down well with a meal. The gastro-pub arrived in the 1990s, at which point cookery was being described as ‘the new rock ‘n’ roll’. It was also killing the old one.

Song City: Two Writers for Every Performer

How many performers and songwriters does it take to create a recording? For those who grew up in era dominated by bands, there are two common answers to this question. The first is that a band will contain more performers than writers. The Beatles, the Clash and the Smiths are examples of four-piece bands that had songwriting duos at their core. The Who, the Kinks and Oasis are bands who had solitary writers. The other answer is that the performers and the writers are coterminous. The Doors, the Stooges, the Sex Pistols, U2, REM and Elbow are examples of bands that split songwriting credits equally between their performer members.

            Neither of these methods is currently in vogue. This is, in part, because bands are a dying breed, at least when it comes to mainstream success. Instead, it is solo performers who dominate the singles charts. These artists sometimes come together in collaboration or for battles, as signalled by the terms ‘ft.’ and ‘vs.’ that litter performer credits. The charts also feature duos, trios and some girl groups. There are, however, very few ‘traditional’ groups who play recognisable instruments. The other phenomenon is that there are now very few artists who write their songs on their own. They instead work in conjunction with producers and with professional songwriting teams.

We can witness both trends by looking at the Top 40 selling recordings in Britain in 2016. 12 of the songs were by solo singers acting alone. 11 more were by singers working in conjunction with producers/DJs/EDM acts, and one of these acts worked with a three-piece funk band. One was by two singers collaborating. Four were by singers working in conjunction with rappers. One was by a rapper working alone. One was by a four-piece girl group, another by a five-piece girl group working with a rapper. Five were by producers/DJs/EDM acts working without guest vocalists. One was by a four-piece dance-rock band, another by a four-piece pop-soul band. Finally, there was one song by an old-fashioned guitar, bass and drums indie/rock band: Coldplay’s ‘Hymn for the Weekend’.  Overall, the average number of credited artists on a hit record was 2.4. If you takeaway all the ft. and vs. artists this drops to 1.75.

In contrast, the average number of writers per recording was 4.6. Only three of the songs were written entirely by outsiders. This appears to be an old idea, as two of these three songs were cover versions. Shawn Mendes ‘Stitches’ was the only recently composed song in the Top 40 for which the artist did not receive a songwriters’ share. Conversely, only four of the songs were self-contained, i.e. the artists received no help from outside writers. Mike Posner wrote his hit ‘I Took a Pill in Ibiza’ alone; Gnash and Olivia O’Brien co-wrote ‘I Hate U, I Love U’; and Tyler Joseph of Twenty One Pilots wrote their two big hits. Notably, the four members of Coldplay did not write their song on their own; they required help from five other songwriters. The reason why they are the only ‘old-fashioned’ band in these charts is because they move with the times.

Overall, six of the songs featured the artist(s) composing in conjunction with one extra writer; seven songs featured the artist(s) plus two writers; four songs featured the artist(s) plus three writers; seven songs featured the artist(s) plus four writers; two songs featured the artist(s) plus five writers; five songs featured the artist(s) plus six writers; one song featured the artists plus seven writers; and one song - ‘Let Me Love You’ by DJ Snake and Justin Bieber – was composed by the artists plus nine other songwriters. What is more, this plethora of credits cannot be put down to sampling. Only two of the songs have obvious composer credits for sampled works, and there are two more that might feature sampled writers.

            What does this all mean? Well, as my previous blog entry indicated, the money continues to be in the publishing. This economic bias accounts for the massed ranks of writers and for the growing number of solo performers. It also means that to achieve a top-selling song you have to move amongst the elite. You need to find professional songwriters to write with and you need to find successful artists to collaborate with. The digital age was supposed to bring with it a new wave of independence. Within popular music we have instead witnessed the growth of an internet jet set.

It's a Merry Christmas for Songwriters

Songwriters are earning four times as much as recording artists.

            We can reach this conclusion by using the work of Will Page, who is the go-to person for music industries’ statistics. When he worked for PRS for Music he would annually total up the British figures. Now that he is Spotify’s Director of Economics he is performing the same task on a global scale. He has discovered that our planetary music copyright business was worth $24.37bn in 2015. This represents a rise of $941m on 2014.

            In his findings, Page lists the money earned by the record company members of the International Federation of the Phonographic Industry (IFPI); the income of the publisher and composer members of the International Confederation of Societies of Authors and Composers (CISAC); and the money that is going to the publishers directly. The results are as follows:

IFPI digital recordings                           $6.5bn

IFPI physical recordings                        $5.0bn

IFPI performing rights                            $2.1bn

IFPI sync rights                                          $0.3bn

CISAC performing rights                          $6.8bn

CISAC mechanical rights                           $1.2bn

CISAC private copying income                 $0.2bn

Publishing sync rights                                 $0.8bn

Publishing other                                            $0.8bn

Non-CISAC publishing mechanicals          $0.5bn

It is size of the collections and the increase in the money that has attracted headlines. Nevertheless, Page is also keen to point out that there is ‘a misconception about the David-Goliath relationship between labels and publishing’. The publishers are not dwarfed. The overall income for songwriting copyrights is $10.4bn (42.7% of the total), while the income for sound recording copyrights is $14bn (57.3% of the total). According to Page:

When you factored in all the monies that flow to PROs [Performing Rights Organisations], publishers and songwriters, they were much more neck-and-neck in true value than often perceived. However, how that money then flows from firms (labels, publishers and collectives) to individuals (artists and songwriters) is an entirely different conversation.

Page does not enter into this dialogue and it is easy to understand why. It is hard enough getting the total income figures from industry organisations, but at least this information is available. In contrast, the contract details of songwriters and recording artists remain private. As such, it is difficult to determine the percentage royalties that they are receiving from their publishers and record labels. Moreover, these royalties vary from country to country and from artist to artist. These royalties have also varied through time. Songwriters and performers who signed contracts in the 1950s or 1960s, for example, will generally be on lower royalty rates than artists who are signing contracts today.

But the conversation is still worth having. It provides a means of assessing the relative prosperity of songwriters and recording artists. And while the precise details of contracts are not known, some general figures are available. If all artists were on contemporary UK contracts, the splits would look something like this:

Sound Recoding Copyright $14bn

IFPI digital recordings            80%-85% record labels/15%-20% recording artists

IFPI physical recordings         80%-85% record labels/15%-20% recording artists

IFPI performing rights             50% record labels/50% recording artists

IFPI sync rights                        50%-85% record labels/15%-50% recording artists

Songwriting Copyright $10.4bn

CISAC performing rights                           20%-25% publishers/75%-80% songwriters

CISAC mechanical rights                           20%-25% publishers/75%-80% songwriters

CISAC private copying income                  50% publishers/50% songwriters?

Publishing sync rights                                  15%-35% publishers/65%-85% songwriters

Publishing other                                            15%-35% publishers/65%-85% songwriters?

Non-CISAC publishing mechanicals            20%-25% publishers/75%-80% songwriters?

Although some of these splits can only be estimated, these percentages would place the income of songwriters far above that of recording artists. Their take home would be something like $7.75bn, while the overall copyright income for recording artists would only be $2.1bn.

Songwriters would also be in a better position than recording artists when it comes to non-recoupable royalties, the money that cannot be used to pay off advances. At least £3.4bn of the songwriting income would be free from recoupment. In contrast, the only element that would be non-recoupable for recording artists would be the $1.05bn earned from their 50% share of the IFPI performing rights.

            These total figures would have to be reduced, however. At least half of the worldwide copyright income is derived from back catalogue. Consequently, there will be many recording artists and songwriters who are on less favourable percentages than presented here. However, even though the totals for songwriting and recording would come down, there would be an even greater bias in favor of the writers. Old recording contracts tend to be more punitive than old publishing contracts are. The percentages for the artists are proportionally lower and the terms of the contracts last longer. Moreover, songwriters have been guaranteed at least 50% of the performing rights income in most territories for over a century. This is the biggest single income stream and it is non-recoupable. In contrast, recording artists in many countries are still not guaranteed equitable remuneration for performing rights income. Although this 50% share is now mandatory throughout the European Union, this has only been the case since the Rental and Lending Rights Directive of 1992.

            The money is still in the publishing.

I’ve Been Making Available All My Life

In recent blog entries I have been taking a look at the recording and publishing industries, as well as at mechanical and performing rights. Mechanical rights, which are also known as reproduction rights, incorporate the right to copy a work and the right to issue copies of a work to the public. Performing rights encompass the right to perform to work in public and the right to communicate the work to the public, which includes broadcasting.

In ‘Adding Up the Publishing and Recording Industries 2014’ I stressed the monetary importance of performing right for both songwriters and recording artists. Under PRS for Music rules, songwriters are automatically entitled to 50% of income whenever their song is licensed for performance, whether this be in a live setting or via a broadcast. Similarly, under the ‘equitable remuneration’ rules operated by PPL, recording artists are entitled to 50% of income whenever their recordings are played in public premises or are broadcast on radio or TV. In both cases these royalties are safeguarded: they cannot be recouped from advances.

In ‘Broadcast Y’Self Fitter’ I stressed the difference between classifying digital income as a performance or a mechanical right. If it is regarded as the former, being considered more akin to broadcasting, then artists as well as songwriters can be entitled to as much as 50% of the royalties. If it is regarded as the latter, being instead associated with physical recordings, the recording artist’s royalty rate can drop to something like 15%.

            I’m not alone in having this interest. Since uploading my last blog entry, the Music Managers Forum has published Dissecting the Digital Dollar: How Streaming Services are Licensed and the Challenges Artists Now Face. It is an important document, providing a detailed and lucid account of copyright and royalties in the digital age. It also provides further detail for the case that I have been making.

            One of the best ways to highlight injustices and inconsistencies in respect of royalties is to compare the activities of the collection societies, publishers and record labels. Publishers’ collection societies view the broadcasting of songs as involving both a mechanical and a performance right. In Britain, both the Performing Right Society (PRS) and the Mechanical-Copyright Protection Society (MCPS) have collected income for radio broadcasts. The performing and mechanical rights are present for online licensing as well, whether this is for online radio, downloads or streams. Consequently, the umbrella society, PRS for Music, operates joint licences to capture both of these forms of copyright.

There are differences in the way that income is divided, however. Perhaps understandably, as the format has an affinity with the sales of records in record shops, downloads are regarded as being more mechanical: 75% of royalties collected under the relevant joint licensing scheme go to MCPS and 25% to PRS. Online radio witnesses the reverse: 75% of income goes to PRS and 25% to MCPS. Again, this is understandable, as radio leans more towards the communication right that is enshrined in PRS activity, than it does towards the right to copy, which is patrolled by MCPS. Streaming sits in between: here the money from joint licensing is divided 50/50 between MCPS and PRS. These splits have implications for songwriters. They might receive similar overall shares in each area: for example, both the mechanical and performance income could be divided 75/25 between artists and publishers. As stated above, however, it is only the performance income that is safeguarded against advances: 50% goes directly to the songwriter and cannot be recouped.

If the recording world were to have parity with music publishing, streaming would be regarded as having an equal split between mechanical and performing rights. It would then follow that record companies would collect the 50% of the streaming royalty that relates to the mechanical right themselves. From this income, they would pay their recording artists a similar royalty to their income for physical sales: this would result in a new recording artist receiving an approximate 15% share. The recording artist should do better when it comes to the performing right. 50% of streaming income would be collected by the relevant performing right society, which in the UK is Phonographic Performance Ltd (PPL). This income would itself then be split 50/50, with half going to the record company and half to the recording artist.

But this doesn’t happen. Record companies collect the whole of the streaming income. According to PPL’s own literature, the labels regard both downloading and streaming as involving the mechanical right only. Their 2011 Annual Report states:

PPL’s online revenues remain limited as the majority of online sound recording licensing is carried out directly by rights owners. This reflects the prevailing view of record companies that downloading and on-demand streaming is analogous to the distribution of sound recordings, a traditional record company function.

Running somewhat counter to this argument, the record companies’ also claim that recording artists are not entitled to ‘equitable remuneration’ when it comes to downloading and streaming because this is an area in which performing rights operate differently.

            Here they refer to the ‘making available’ right, which was formulated during World Intellectual Property Organisation treaties of 1996 and enshrined in EU law in 2001. Dissecting the Digital Dollar outlines the origins of this right:

the communication control, where defined in copyright law, traditionally related to conventional broadcasting which, while easily extended to webcasting, might not apply to other kinds of digital transmission. To ensure digital communication of this kind would still be restricted by copyright, and perhaps to distinguish it from the existing controls that covered broadcasting, some rights owners lobbied to have a separate control added to copyright law called ‘making available’.

The activity controlled by this law is ‘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’. As such, it clearly encompasses downloading, but does not encompass online radio (as a result online income in this area is collected by PPL). The record companies believe that the ‘making available’ right encompasses streaming as well. However, as the MMF report states, ‘not all artists agree’ with this point of view. As illustrated by the way that the publishing sector deals with streaming income, this activity can be regarded as akin to both broadcasting and to record sales.

            Why does any of this matter? ‘Making available’ is the only area of sound recording performance rights that is exempt from ‘equitable remuneration’. Consequently, artists are not guaranteed 50% of this income. Instead, it can be collected by record companies directly and some artists will therefore be on a standard royalty rate as low as 15%. What is more, any royalties collected can be recouped from advances.

            Dissecting the Digital Dollar includes a survey conducted with artist managers. Their responses to two questions are particularly telling. 78% of respondents believed that equitable remuneration should exist for all digital services, including both downloads and streams. However, when asked if they know how collection societies proportion streaming income according to the mechanical right and the performing right, only 3% replied in the affirmative.  

And Don't it Feel Good?

How much is a hit worth? In 2012 the BBC broadcast a documentary titled The Richest Songs in the World, which provided a countdown of what they believed were the top ten earning songs. Their number one was ‘Happy Birthday’, which they claimed had earned around £30m in publishing money since its disputed origins in the late nineteenth century.

            If recent news stories are true, a hit song is worth far more than this. It was reported last week that BMG publishing have paid £10m to acquire the rights to the Kyboside Catalogue, which represents the works of a single songwriter, Kimberley Rew. Its value is primarily located in just one of his songs. Rew is the guitarist and principal songwriter writer for Katrina and the Waves. The group recorded the original of ‘Going Down to Liverpool’ and secured Britain’s last victory in the Eurovision Song Contest in 1997 with ‘Love Shine a Light’.

            The jewel in his crown, however, is ‘Walking on Sunshine’. This is the song that BMG have paid all this money for. Alexi Cory-Smith, the company’s executive vice president, said ‘“Walking on a Sunshine’ is a classic copyright, an instantly recognisable song and a very powerful addition to our roster’. Their head of marketing & sync, Patrick Joest added, ‘The striking thing about “Walking On Sunshine” is its ability to work across virtually every medium from film to TV and advertising in – and in virtually any product category’.

            But £10m? This wasn’t a number one record – when first released in 1985 it made it to number 8 in the UK charts and number 9 in the US - and Katrina and the Waves are some way off being inducted into any music industry hall of fame. There were even fears that the devastating hurricane Katrina of 2005 might have dented the song’s appeal. If ‘Walking on Sunshine’ is worth this much, what is the actual value of ‘Happy Birthday’? What about the Beatles hits, or of the Jewish Christmas classics that populated the rest of the BBC’s richest songs top ten? That said, it was always apparent that ‘Walking on Sunshine’ had something special. I was in one of my first bands when it came out. It was a song that my band mates loved. We discussed and we analysed it and we were jealous as hell. You always know when someone else has nailed it.

Words and Music: Doing the Splits

In his book Performing Rites, Simon Frith tells the story of a correspondence between the novelist/lyricist Margaret Radclyffe-Hall and the publishers Chappell and Company, which took place in 1918. Radcylffe-Hall had written the words to the hit song ‘The Blind Ploughman’. She had not received any royalties, however, and wrote to the publishers seeking redress. William Davey, the chairman of Chappell, excused his company’s parsimony on the grounds that:

Unfortunately, we cannot afford to pay royalties to lyric writers. One or two other publishers may, but if we were to introduce the principle, there would be no end to it. Many lyrics are merely the same words in a different order and almost always with the same ideas. Hardly any of them, to be frank, are worth a royalty.

He concedes that he has ‘admiration’ for the words to ‘The Blind Ploughman’ and offers her a one off payment of 20 guineas for her troubles. Frith states that Davey’s ‘letter is interesting in a number of ways, not least for its revelation that Chappell was, apparently, routinely breaking the law – the Copyright Act of 1911 included lyricists in musical composition regulations even though music publishers had campaigned against this’. Frith is alluding to clause 19.2.b.ii of the Act, which states, ‘a musical work shall be deemed to include any words so closely associated therewith as to form part of the same work’. Here, British law was following the Berne Convention of 1886, which sought copyright protection for ‘musical compositions with or without words’.

            Frith is right. It is interesting that Chappell were refusing to pay Radclyffe-Hall. What’s less clear is whether the publishers were breaking the law. If the issue was to do with sheet music, then presumably so: Chappell would have been printing copyrighted words without permission. If the issue was to do with royalties for public performance or for the sale of records (the mechanical right), then things are more complicated. It is mechanical royalties that clause 19.2.b.ii is referring to. Despite the 1911 Copyright Act's recognition of the integral importance of lyrics, however, it set no value on what they were worth. In fact, as far as I am aware, British copyright law has never determined what portion of a song’s performance or mechanical royalties should go to the lyricists and what portion should go to the musical composers. The responsibility for determining these splits was first taken on by music copyright societies. France took the lead here. It established the world's first collection society in 1851. It is of consequence that this society was formed jointly by a lyricist, a composer and a publisher, a partnership that is reflected in its title: Société des auters, compositeurs et éditeurs de musique (SACEM). It was determined that these three parties would share copyright money in equal proportions. When the UK eventually set up its own Performing Right Society (PRS) in 1914, the same split was adopted. Other countries have used different methods, however. The German society, GEMA, originally determined that publishers could have no more than a 25% share. Moreover, while France has retained is three-way split, other countries have moved towards a model where the publisher has a 50% share and the songwriters split the remaining 50% between them (albeit that in private the publisher might also give the songwriters a portion of their share).  

For much of the 20th century, whatever the size of the remaining portion, its most common allocation was to be divided equally between a lyricist and a composer. It was in the inter-war period that much of the ‘Great American Songbook’ was composed. Many of these classic 1920s and 1930s songs were written by partnerships: Harold Arlen and E.Y. Harburg; George and Ira Gershwin; Richard Rodgers and Lorenz Hart; etc. and etc. In each case the former wrote the music and the latter wrote the lyrics, and in each case the composers and lyricists were allocated an equal split of the royalties. The Brill Building songwriting teams of the 1950s and 1960s also operated according to this split, as did the songwriting partnerships in British beat groups. It has been prevalent in musical theatre and has been used by classicist indie songwriters. The idea of a divided split between lyricist and composer is also maintained in much copyright advice.

It has, however, been challenged in a number of ways. One of the problems that traditional splits have presented for self-contained groups is that they are equitable for some members, but not for others. The songwriters will end up richer than the other performers in the band. In many cases the high earners will be the guitarist (who is receiving royalties for writing the music) and the singer (who gains royalties for the words). This disparity has caused bands to split. Alternatively, they might amend their ways. Queen used to allocate songwriting royalties to the principal songwriter of each song, but by the end of their existence were splitting shares for all songs four ways. The Clash were another group who progressed towards presenting their songs as group compositions. Other groups, among them some of the longest-lived, have decided from their inception to allocate shares equally to all members. U2, REM, Coldplay and Elbow all operate in this manner. Others devise more complicated methods. Each member generally receives a royalty share for every track, but these are not allocated equally. The most ‘important’ members (still commonly the singer and the guitarist) will receive a larger allocation. These practices aren't limited to ‘authentic’ guitar bands, either. Some pop acts, such as the Spice Girls and the Sugababes, split their shares between writer/producers and the singers in the group, and the same is true for many solo artists who work with songwriter/producers. In the pop world, too, there is a wide variance in shares. Sometimes they will be split equally, other times more complicated divisions are devised.

Songwriting spits have also been complicated by the practices of sampling and interpolating. Hip-hop tracks, in particular, are a mess of credits. Many, in fact, remain perpetually unresolved. Hip-hop and dance music have also turned traditional musical hierarchies on their head. Where it used to be the case that a song’s melody and words were deemed to be of most value, these genres have seen more credit accorded to the beat. This could be considered an ironic outcome for hip-hop, the most word-based of all popular music forms. It was this genre, however, that shone a light on how unfairly some copyright allocations had been devised. The raps of hip-hop have traditionally rested upon sampled drum breaks. The drummers who devised these breaks have failed to see any royalties for their work. Clyde Subblefield played the famous 'funky drummer' solo, but it's composition credits go to the composer of the song's 'melody', James Brown. Gregory Coleman devised the 'Amen Break', often considered to be the most sampled drum solo of all, and yet the royalties go to Jester Hairston, writer of 'Amen', the song that Coleman's band, the Winstons, were covering. Fewer drum breaks are sampled today. Rhythm tracks are instead created by producers, who will then send these beats to other songwriters so that they can be completed with melodies, harmonies and words. As if mindful of the past injustices meted out to drummers, these producers will demand half of the songwriting royalties. Correspondingly, there are now songwriters who specialize in writing only one part of the song, whether that be the hook or an eight-bar of rhymes.

 There’s something good about these changes. The complexity of pop composition is being recognised and more of the interested parties are receiving some shares. It is also good that popular music copyright is no longer in thrall to classical conventions, with their emphases on melody and harmony over rhythm and timbre. Nevertheless, if the old melodist/lyricist split represented an unfair reflection of the contributors to a work, the new methods fail to bring us any closer to knowing exactly who did what, or towards an understanding of what any of it is really worth.

They also have another consequence. In many cases it is rhythm that is on the rise. When it comes to rock music, the bass players and drummers in bands now appear on more songwriting credits. When it comes to dance music, the producers of rhythm tracks are often the ones who are determining the splits. It is generally assumed that this is happening at the expense of the other musicians, and it is true that many guitarists and keyboard players now receive a lower share of the royalties. There is, however, another activity that is getting squeezed. On the surface, lyrics are still worth 50% of the songwriting shares. If you look at the credits for any song, at least half of the writers' income is going to somebody who is credited as an 'author'. When it comes to popular music, however, few of these writers are only responsible for the words. Most are instead listed as 'composer-authors', meaning that they have an input into both the music and the lyrics. The complicating factor here is that it is not just the main lyric writers who are adopting this credit, in many cases it is being applied to all of the members of a band. It is also being applied to all the members of songwriting teams. And it is being applied no matter how great or small the contribution to the lyric writing is. In fact, there's really no way of checking whether these numerous composer-authors actually contributed to the lyric-writing process. As a consequence, the author who was responsible for writing the majority of the lyrics might well end up with less than 50% of the songwriting share. The composer-author title is reflective of modern songwriting practice. At the same time, it allows songwriters to circumvent the strict 50/50 lyricist/composer split that some of the collection societies require. It has also had another consequence: the composer-author credit has helped to provide longer-lasting copyright protection. But that’s another story for another day . . .