“This industry really has to get its shit together not only to generate revenue, but to get money to those people who actually need it and deserve it,” Casey Rae, CEO of the artist-forward nonprofit Future Of Music Coalition, said at the opening panel on transparency and its relation to money. He then noted that the music industry had three flavors of transparency to grapple with: Structural, or the understanding of how services generate and pay out royalties; deal and terms transparency, which examines how contracts lay down the terms for music’s use and compensation; and repertoire, which deals with the data and information management systems that track the consumption and usage of music.
Welcome back to our series on transparency in the music business. If you haven’t already, be sure to check out Part One, Part Two and Part Three.
Here’s an overview of the three types of transparency we previously outlined:
1. structural transparency: how different services function and how they compensate artists 2. rates and revenue transparency: how money is split, who gets paid what and why 3. repertoire transparency: readily available ownership information to facilitate more efficient licensing and accuracy in payment
Today, we’ll take a closer look at revenue transparency. This goes beyond simply knowing how much you’re getting paid as a musician or songwriter. Revenue transparency should also include information about the terms of compensation and how revenue is collected and distributed.
Before we get started, it’s crucial to understand that there are two distinct copyrights in music: the musical work (think lyrics and notes on paper) and the sound recording (think of performances captured to tape or hard drive). Musical works belong to publishers and composers, while labels typically own sound recordings (though sometimes it’s the artist).
In certain circumstances, the law treats these two copyrights completely differently. This can make the revenue picture even more complicated. For a great breakdown, check out our Music and How the Money Flows charts—they’re particularly helpful for visual learners.
Keep in mind that the laws and business practices that govern compensation are often in flux. New or hybrid technologies can emerge that require a novel approach to payment, and some individual deals end up affecting the entire marketplace. Additionally, the US government is currently examining current copyright law with an eye towards an eventual update. With those caveats in place, here are some examples to consider.
Welcome to Part Two of FMC’s look at transparency and why it matters to musicians and composers. In Part One, we described three different types of transparency, and outlined why each matters to anyone who wants to get paid in the digital age:
1. structural transparency: how different services function and how they compensate artists
2. rates and revenue transparency: how money is split, who gets paid what and why
3. repertoire transparency: readily available ownership information to facilitate more efficient licensing and accuracy in payment
Today, we’re going to look at a current hot topic—direct deals for performance rights in music publishing—as a case study.
Let’s say your metal band is playing a headlining club gig. At the end of the night, the promoter hands you an envelope containing $200. Is that a fair share?
Or say you’re a R&B singer with a CD released by an independent record company. Your label sends you quarterly royalty checks, but how do you know if the amount is correct?
Or imagine you’re the composer & lyricist of a popular country song that gets played on an on-demand streaming service. You get regular checks from your performing rights organization (PRO) for this use, but how do you know if the rate you’re getting is fair compared to what other songwriters get for plays of their songs?