This Week In Royalties: YouTube, More YouTube, Spotify for Artists, and the Prince Estate Mess

While the UK/EU go to war w/ YouTube, German collection agency GEMA reports record earnings thanks to YouTube revenues. We examine the discrepancy, as well as analyze the new Spotify for Artists feature and Prince's legacy estate confusion.
April 21, 2017

Benom Plumb, Assistant Professor of Music Industry Studies at the University of Colorado Denver, reviews the biggest stories of the week affecting music royalties. He is a music industry professional, not an attorney.

UK and EU Music Industry Go to War with YouTube (The Guardian)
Benom’s Take: This summer, the European Parliament will vote on copyright reforms that would level the playing field for YouTube vs. other music streaming services. This development “across the pond” could help us in the U.S. with our YouTube troubles. Because of internet “safe harbor” laws that shield YouTube from copyright infringement activity committed by its users, the vast majority of music on YouTube is actually not paying out royalties. It’s true that YouTube has licensing in place with the major record labels (primarily through the VEVO platform), music publishers and performing rights organization. However, as the article states, YouTube pays about one-seventh the streaming royalty rates that other bona fide music streaming services pay.

YouTube argues that it paid over $1 billion globally to the music industry last year, but that’s not really the point. With over 800 million music users on YouTube and only around 100 million users on Spotify, Spotify paid out DOUBLE that figure.  Honestly, when I look at royalty statements, the YouTube numbers just drive me nuts. For example, on the publishing side, one of my client’s BMI statements reported approximately $80 for over 2.4 Million YouTube views. You’re killing me YouTube. Throw us a bone, not grains of sand!

As of now, YouTube has an advantage over other music streaming competitors because they are not held to the same licensing standards. YouTube is arguably the #1 music discovery platform, and in fact, music is also one of the top (if not THE top) factor driving traffic and advertising revenue to the site. YouTube’s royalty payments should therefore reflect its vast user network and their massive ad revenue. If these reforms pass, it will be good news for our industry and means that YouTube will finally be held to a higher standard.

With Help From YouTube Settlement, German Society (GEMA) Tops $1 Billion in Revenue (Billboard)
Benom’s Take: Continuing our international royalty and YouTube discussions, this news is more positive and consistent data showing worldwide music royalty growth. I have years of personal experience with GEMA in Germany. If there’s one thing I know about GEMA, it’s that they are aggressive and relentless in their licensing and royalty collection efforts. Some industry insiders might even say to a fault. I wouldn’t go that far, but unfortunately, that’s what it takes sometimes to get a fair rate in this business.

It’s interesting to note that the article states something I’ve been whining about for a long time: The market clout of the major record companies force digital licensees of music to pay high(er) royalty fees to the sound recording side, leaving little room for payments to the songwriters and music publishers. So, same old story, just a different country.

Spotify Launches “Spotify For Artists” CMS/Data System (Spotify) / (Tech Crunch)
Benom’s Take:  Hallelujah, it’s here and available to all artists on Spotify! “Spotify For Artists” is essentially a backend content management system and data management tool for artists and their management teams. The system provides access to listener and streaming data, plus tools for artists to manage and update their Spotify profile pages. The data available to them will include not just streaming data and numbers in real-time, but also demographic details like age, gender and location of the listeners.

This system will be incredibly valuable to artists when strategizing promotions, partnerships, touring and engaging their fan base. I think with this kind of knowledge and power in the artist’s hands, they now have a stronger ability to increase their exposure, popularity, as well as royalties! Just think about the local grocery store: They know who I am and what I usually buy at their store, so they send me promos and coupons matching that data. It’s gonna be the same kind of idea for recording artists on Spotify, but bigger. This new dashboard absolutely gives Spotify an advantage over other competitors and will certainly help Spotify’s argument for long-term viability in the market, as well as confidence in that rumored IPO.

Former Prince Estate Advisor Denies Misrepresenting Recorded Music Assets (Billboard)
Benom’s Take:  In short, the Prince Estate is a mess. Prince didn’t leave a will and it’s rumored he generally didn’t believe in various forms of legal paperwork. Some of the people that were handling the Estate’s business were removed from their positions and ex-Lady Gaga manager and Spotify executive, Troy Carter, recently took over as advisor to the Prince Estate. Universal Music recently acquired rights to manage the sound recordings, music publishing, as well as merchandising. This deal was reported to have been finalized under the previous Estate managers.

However, since their removal, Troy Carter is reported to be distancing himself from this Universal agreement, stating that he is “in the process of assessing all rights relating to Prince’s recorded music.” So naturally, Universal feels there may have been some misrepresentation if it appears Troy Carter is about to renege on the deal - which may, or may not be true. There’s honestly no way for us to know unless we are one of the involved parties looking at agreements, details, etc.

The drama surrounding the Prince Estate will likely not diminish anytime soon. As talented and amazing as Prince was, I think it’s a good example of what not to do. We should all have a written will so that we don’t leave too big of a mess behind when we pass away. Unfortunately, Prince is gone and various interested parties will be making a lot of money from his posthumous work.  

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