Black Lives Matter

The music busines is responding to the death of George Floyd and its reignition of the Black Lives Matter movement. On 2 June it held ‘Blackout Tuesday’ in which many companies and organizations ceased business activity for one day in order to ‘disconnect from work and reconnect with our community’ and seek ‘an urgent step of action to provoke accountability and change’. Affirmative action has followed.

            In the first instance, there has been a funding pledge from entertainment companies and artists. The major labels, Universal, Sony and Warner have between them committed $225m, which will be used in support of black charities and to address ‘internal’ and ‘institutional’ change. YouTube has announced a £100m fund dedicated to ‘amplifying and developing the voices of Black creators and artists’. Stormzy had donated £10m to black British causes.

Secondly, there has been a semantic rethink. The One Little Indian label has changed its name because of ‘the violent history of the terminology’, the US Recording Academy has dropped the term ‘urban’ from two of its awards, and more broadly there are a number of labels who are rebranding their urban divisions. ‘Urban’ is being resisted because it is ‘rooted in the historical evolution of terms that sought to define black music’ and has ‘developed into a generalisation of black people in many sectors of the music industry, including employees and music by black artists’. Ultimately, its abandonment might result in structural as well as semantic change. The hope is that its departure will bring an end to the ghettoization of black employees and artists. The move is not universally welcomed, however. There are black music bosses who argue that this ‘we are all the same attitude’ will not work in a society in which some are more equal than others. They fear that the removal of barriers will result in white executives taking charge of black repertoire because they feel they know ‘better than anyone else’.

There is a manoeuvre that has received less attention but which could result in unquestioned good. One of the ways that racism has been ingrained in the music industries is through black artists receiving exploitative contractual terms. As such, it is not surprising that artists such as Kelis and Erykah Badu have retweeted a statement by the American professor, Josh Kun: ‘If the music industry wants to support black lives, labels and platforms can start with amending contracts, distributing royalties, diversifying boardrooms, and retroactively paying back all the black artists, and their families, they have built their empires on’. This has already had some effect. On Tuesday 9 June, BMG’s CEO Hartwig Masuch declared that    

Mindful of the music industry’s record of shameful treatment of black artists, we have begun a review of all historic record contracts. While BMG only began operations in 2008, we have acquired many older catalogues. If there are any inequities or anomalies, we will create a plan to address them. Within 30 days.

It is not only statues that are falling.

 

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.

Assets and Equity

Assets. They have long complicated music industry economics. Record companies have argued that they deserve to own the majority of sound recording copyrights because a minority of artists succeed. They need to keep the copyrights of the 10% of artists who recoup their advances in order to pay off the losses of the 90% who are in debt. While the losses from ‘unsuccessful’ artists are detailed in record company balance sheets, the value of their copyright catalogues does not appear there. Nevertheless, as the Music Managers’ Forum has argued, ‘the copyright catalogues of the record companies are their most valuable asset’. Traditionally, the biggest deals that have been made in the business have arisen when these catalogues have been sold on to other companies. These transactions have happened when the major companies have merged with one another and when larger companies have bought up indie labels. Derek Green, head of China Records, made the economics of the indie sector clear:

Well, the only reason we do it is because on our balance sheets we have the value of our masters and the value of our contracts marked as zero. Therefore technically every year our accountants tell us we’re bankrupt. But what we really know and believe is that the majors will pay millions to buy us.

The crucial factor about these takeovers is that the money went to the owners of the record companies that were being sold. Unless artists happened to have equity in the company, they would gain little, nothing or perhaps even lose out from the sale. There are many stories of artists who found themselves marginalised when transferred to a new corporation.

            The sale of one record company to another did at least have a degree of honesty and transparency about it. The owner of the record company that was being sold would be profiting from an institution that he or she had overseen. The assets up for sale were the recordings that they had invested in, even if some of those recordings had been fully subsidised by artists who had recouped.

Streaming provides continuities and discrepancies with this model. We still have the situation whereby companies are making little profit – even Spotify is running at a loss. The low sums of money being generated by these companies is presenting a problem for record labels, whose income from streaming is, in the first instance, based on a share of advertising and subscription revenues. The record companies’ songs might be being streamed billions of times, but this doesn’t mean that advertisers are willing to invest in these new advertising platforms or that consumers are willing to upgrade to subscription services. Last year in the UK there were 14.8 billion individual audio streams and 14.3 billion video streams. Despite this vast traffic, the money generated by subscription services only constituted 12.4% of the total income for recorded music, while the money from ad-supported services - although it was the avenue for the vast majority of those 29 billion streams - only constituted 3.5% of the same market. In total, the income from streaming contributed £115m to the UK’s recording ‘sales’ last year. Vinyl albums and CDs, meanwhile, contributed £320m. Record companies are nevertheless continuing to have faith in streaming services. If the income generated by these services hasn’t managed to offset the decline in physical and download sales, streaming is having the effect of converting ‘pirate’ users of musical content into legal consumers.

What is more significant for our immediate purposes is that record companies have found diverse ways to generate income from streams. Their share of advertising and subscription revenue is backed up by minimum guarantees. Each record company who enters into a licensing agreement with a streaming company will be guaranteed a minimum sum each time one of their tracks is played. In addition, some record companies receive a guaranteed sum for each subscriber who signs up to the streaming company. These minimums only come into force if the revenue target is not reached. In the instances where this income did come into play last year, it will have been reported as part of the total streaming income of £115m.

There are, however, areas of streaming income that are not reported on the record industry’s balance sheets. Most importantly, record companies demand equity in streaming companies as part of their licensing agreements. Here, as the MMF have identified, there is an echo of the ‘bankrupt’ nature of indie record companies. Just as those old indie companies were aware that their impoverished balance sheets disguised the fact they could be worth millions if sold on to larger record companies, today’s record labels are aware that, when it comes to streaming, the ‘single biggest revenue generator may be the sale of the streaming business, either to an existing major tech or media firm or through flotation on a stock exchange’. What is more, the record labels might even ‘agree to less favourable terms on revenue share and minimum guarantees, where income is shared with the artists, in return for a better deal on equity’.  And who will get the money from the sale of the sale of the streaming companies? The MMF have reported that:

The assumption is that many labels will keep these profits in their entirety, citing clauses in artist contracts that say the record company is only obliged to pay royalties to artists on income directly and identifiably attributable to a specific recording.

Here there is a difference to earlier practice. The record companies will be profiting from the sale of companies that they haven’t even had a hand in creating. The labels might argue that they have provided the essential content that has transformed streaming companies into valuable commodities, but that content is sound recordings, which have been created and in some cases paid for by recording artists. The record companies will not even be selling this content on to the new purchaser of the streaming company: the purchasing corporation will still have to licence the recordings. No wonder then that it is artists, rather than record companies, who are raising questions about the land of streams. 

R4949 Starr

I’ve had a couple books on the go recently and they’ve both had something to say about the status and economic worth of vinyl records. First, there’s The History of Live Music in Britain, Volume 1: 1950-1967, a brilliant collaborative venture between Simon Frith, Matt Brennan, Martin Cloonan and Emma Webster. The book seeks to redress the balance of most accounts of the music industry, which, as the authors rightly point out, ‘over-privilege the recording sector at the expense of the sector in which most musicians in all genres have been located historically: the live arena’.

In the period that this first volume covers even the most well known musicians made more money from touring than they did from recording. The authors quote Gordon Thompson, who states that in the mid-1960s ‘recording contracts provided so little money that a band such as Herman’s Hermits needed to tour because most of their income came from live performance’.

            As so often, what was true of Herman’s Hermits was also true of the Beatles. The second book I’ve been reading is another opening volume: Mark Lewisohn’s Tune In, the first part of his trilogy of books covering the Beatles’ history. The book is unusually forthcoming about recording contracts. It reveals just how little the Beatles stood to earn from their record sales. Lewisohn writes:

the everyday business of management was the stage. No ‘pop stars’ could live off broadcasting fees and only the very biggest of chart stars could live off record royalties, so miniscule were the percentages. No one even tried. The sole object of making records was to attract a bigger profile and so earn higher fees from concert and ballroom shows – and, if the artists were lucky to be chosen, to appear in summer seasons in seaside resorts.

The Beatles’ initial contract with EMI gave them a royalty rate of one penny for each single sold (taking into account both sides of the record). This was payable on only 85% of sales (the other 15% was kept by the record company in lieu of ‘records returned and/or damaged in transit and/or used for demonstration of advertising purposes’). Albums were calculated proportionally, ‘usually as six or seven singles’. The royalty rate was halved for sales outside Britain. Lewisohn does the maths:

In the Beatles’ case, this penny they’d get on 85 per cent of sales would have to be divided five ways: 15 per cent to Brian [Epstein, for his manager’s commission], the rest split between John, Paul, George and Pete [Best]. If they sold a thousand records, they’d get fifteen bob each, and if they ever managed such a famous, gilded, pinnacle-of-career accomplishment as a million-seller, they’d each get £750. If this happened in America – which was, quite obviously, ludicrously unlikely – it would be £375.

He also has the figures for their first EMI royalty statement, which rewarded the band for the sale of 36,868 copies of ‘Love Me Do’. The total received was £130 11s 6d, out of which the Beatles took just £27 15s each. Lennon and McCartney earned more from their songwriting royalties for the single than they did from their record contract. According to Lewisohn, the ‘mechanicals’ for this volume of sales would bring in £325. After Epstein’s 20% commission on this income, this would give the composers £130 each. However, this songwriting income paled in comparison to the money the band was earning from live performance. At the time of ‘Love Me Do’ the Beatles were commanding £50 for each concert appearance.

            And yet it was not live performance that the band venerated, it was records. Here’s Ringo, recalling the experience of seeing ‘Love Me Do’ pressed up as a 45:

[It was] The most momentous moment – that we had a record out, that we had a bit of plastic with us on it. Just the idea of being on a bit of plastic was really incredible after all those years of playing. My God, a record that you hadn’t made in some booth somewhere . . . you don’t believe how great that was.

Ringo, lest we forget, would earn less from recordings than the other Beatles. He wrote the fewest songs. He’s not alone, though, in lauding the moment of seeing yourself on record for the first time. Here’s Keith Richards, talking about the Rolling Stones and their contemporaries:

In a way, in those days, being able to get into the studio and get an acetate back sort or legitimized you. ‘You’re now a commissioned officer’ instead of being one of the ranks.

If only someone would ask him, I’m sure Peter Noone has a similar quote up his sleeve.

            Reading these books made me think about my own work. In Vinyl I argue that one of the distinguishing features of the analogue disc – from the 1880s to the present day – is that it is very difficult to manufacture copies within your own home. This is a format for professionals. As Keith Richards says, it legitimizes you, and it does so in a way that live performance can never do.

            Thus far Ringo and Richards back up my claims. I have paused for thought, however. In the fourth chapter of Vinyl I write about the desire of musicians to escape the commodification process, focusing in particular on the the negative comments rock musicians have made regarding the transformation of their art into serially produced consumer goods. However, it is clear that most musicians (myself included) loved the experience of being pressed into a record for the first time. Consequently, I would now temper my analysis in two ways. Firstly, mass manufacture is not always spurned. There are many artists (and consumers) who place their faith in the most multiplied of products. Jimi Hendrix was amongst them (at least when it came to guitars). According to Charles Shaar Murray:

he seldom bothered with special left-hand models, both because right-handed guitars were more plentiful and easier to obtain, and because – with a touchingly American faith in mass-production – he believed that they were likely to be manufactured to a higher standard.

This depiction of the performer as consumer leads me to the second aspect that I would now change. In the chapter I make a crude distinction between artists and audiences. In doing so, I draw upon the work of Jon Stratton, but I now realise he may have led me up the wrong path. Stratton’s argument is that, in creating a vinyl record

The music is not only commodified; in the process it is also distanced, alienated, from the artist, and becomes an object which is understood to exist in its own right. It moves from the private domain of the artist to the public domain of the market place. Reciprocally, the artist experiences a distancing from his or her music as it becomes product, and is experienced as existing in a different social context. The record company, like a book publisher, acts as a gate-keeper shifting the experienced position of the music from the artist’s individual identification with his/her music to the experiencing of the music as a commodity in the market place.

He suggests that, as this happens, the artists aren’t only distanced from their music; they are distanced from the fans. The musicians stand at one end of a process, their audience is at the other. In between is the apparatus of recordings, gatekeepers and mediation.

He’s clearly right that the music becomes a product and that it exists in a different context. He’s wrong about other things, though. By entering the market place, the music isn’t distanced from the artists: they are consumers too. In fact, one of the reasons why artists are excited about seeing their work on record is because it enters shops in which they have browsed their whole lives. This isn’t alienation; this is coming home.

            What’s interesting to note, though, is that artists’ excitement about the commodity form always seems to come in relation to their first record releases. In the Beatles’ case they each knew by heart the R4949 catalogue number of ‘Love Me Do’. It had become etched into their memories as they had gazed at the record label for so long. And yet, once they had a few releases under their belts, the band members struggled to remember in which order those records were issued or which songs each album contained. Maybe the point at which pop stars become alienated is not when their music is turned into product, but when they stop hanging out in the market.