Royalty Reform Must Put Equity For Musicians And Songwriters First

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Anyone concerned about the future of American music, interested in making certain songwriters and composers can actually afford to continue to create it, and looking for answers to the problems vexing both, will find little, if anything, of value in the recent opinion piece by Daniel Horowitz (“ASCAP and BMI’s Cartel-Like Behavior Against Pandora Earns Them a DOJ Investigation,” 8/29/14). Mr. Horowitz, a self-described “independent consultant,” whose recent resume includes lobbying for the Digital Media Association (DiMA), has written a piece so misleading and riddled with errors it’s hard to know where to begin to set the record straight.

Let’s start with this: ASCAP is not a “publisher” as Mr. Horowitz boldly asserts at the top of his piece. It is, in fact, a member-owned organization that includes many of America’s greatest songwriters and the publishers who publish their work.

But beyond simple factual errors, perhaps his most ridiculous assertion is that “licensing agencies” (his erroneous term for performing rights organizations like ASCAP and BMI) are aiming to “stifle the industry” and “raise rates even if (or maybe because) it will kill streaming music services.” This little bit of fantasy clashes with the reality that most songwriters and composers and their publishers are relying on streaming services as among the most efficient means to deliver our music to our audiences.

The real issue here is that music creators are finally demanding just compensation in the digital world. And the digital music distribution business, for which Mr. Horowitz appears to speak, wants to keep our compensation low, so their profits continue to soar. To do so, it is necessary to attack ASCAP and BMI, as they are among the strongest advocates that songwriters and composers, like us, have. If they can be diminished, so can any chance songwriters and composers, whose work makes the music business possible, have to secure a healthy future.

Mr. Horowitz gets one thing right: the internet isn’t going away and we need to adapt to it through “real market negotiations.” In fact, that is exactly why music creators are advocating changes that will replace the current system of essentially a federal court determination of the value of the creative work of songwriters with something much closer to “real market negotiations.”

Those of us on the front line of music creation know better than anyone that the music landscape has changed dramatically since the federal regulations that govern music licensing were first written in 1941 – and even more so since the ASCAP consent decree was last updated in 2001 (notably, before the iPod even hit stores).

New music services, like Pandora, have found ways to take advantage of this outdated system, ways that are having a profound effect on the ability of American songwriters and composers to achieve licensing rates that reflect the true value of our contribution to the marketplace, even as our music is being played more often than ever before.

Anyone who doubts that position need only consider the fact that it takes roughly 1,000,000 streams of a song on Pandora for a songwriter to earn just $90.00 in royalties. Meanwhile, record labels and recording artists often earn 12 to 14 times as much for the exact same stream.

Such imbalance suggests the only real “shakedown” (to borrow Mr. Horowitz’s term) target here is American songwriters and composers. It certainly explains why Pandora, DiMA and others are lobbying hard to preserve a status quo that works so much to their financial advantage.

We acknowledge that improvements in the current collective licensing system need to be made. But surely any close and careful observer — including Mr. Horowitz — will recognize that a fragmented music licensing system would be more costly for everyone involved, including consumers.

With that in mind, in an effort to restore some balance and modernize a system that no longer serves the needs of the vast majority of stakeholders, ASCAP and others have proposed reasonable updates to its Department of Justice consent decree that would make the music licensing system more competitive and efficient in the new digital age of streaming.

Rather than standing in the way of progress and trying to distract the music community and the music-listening public with misinformation, we urge Mr. Horowitz and the digital music distribution interests he has represented to join the effort to establish a constructive dialogue about the future of music licensing. They can start by acknowledging the reality of the music creators’ situation and avoiding distortions about those organizations that are working so hard for them.

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Phil Galdston and David Wolfert