This Week in Royalties: Jan. 23 - 27

Jan 27, 2017

In this week's news roundup, professor Benom Plumb from the University of Colorado--Denver Department of Music and Entertainment Industry Studies weighs in on the impact of the new FCC leadership, more battles over radio royalties and streaming payouts among the biggest stories of the week affecting music royalties.

FCC Chairman Nominee Is Bad News for Musicians (Chicago Tribune) 
Benom’s Take:
Potentially a major game changer for the music industry. Abolishing net neutrality and utility-like restrictions on ISP’s will very likely create a new “pay to play” system that will restrict and stifle the creative industries. For the music industry and up and coming artists, this could be the new radio “payola” for the digital age - meaning wealthy and powerful corporations will have more control over the dissemination of creative content to the public. Independent and up-and-coming creative talent could be left out in the cold.

Radio Royalty Battle Lines Being Drawn In New Congress (Billboard)
Benom’s Take:
Speaking of “payola” in radio, why would the radio industry want to start paying a royalty that has NEVER been a cost of doing business for them since the advent of radio? In fact, for decades radio has been accustomed to getting paid “under the table” by the record companies to play certain artists! Nevertheless, the U.S. needs to get in line with the rest of the developed world on this issue. We currently line up with North Korea, China, and Iran by not recognizing a terrestrial radio performance royalty for recording artists. That just doesn’t look good, no matter which way you present it.

Report: Apple Music Streaming Rates Higher Than Spotify (Apple Insider) 
Benom’s Take:
What’s not mentioned in this article is that the approximate half-penny per stream royalty rate is the TOTAL rate split between record labels/artists (for the sound recording) AND music publishers/songwriters (for the musical composition). In streaming, the sound recording generally earns exponentially more than the composition side due to over regulation by the government on music publishers, while the record companies generally enjoy a free-market rate. So while higher rates sound good in the headlines, it is certainly not paid out on an equal and level playing field.

Industry Executives Talk Lowering Streaming Prices to Customers (Billboard)
Benom’s Take:
The streaming services already pay approximately 50% or more of their revenues to music rights owners and creators. Lowering the monthly subscription price to gain more subscriber numbers would disrupt the market and undoubtedly hurt their bottom line, as well as the music industry at large. Overall streaming consumption is increasing by +/- 10% year over year. Therefore, as the executives all agree in the article, let’s just stay the course.