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Opposition to online streaming has been intense this summer. Songwriters, performers, and various music companies have spoken out against the meager royalties the streaming giants Spotify and Pandora dish out to musicians. Many prominent and influential artists have taken their music off Spotify. It seems that these streaming companies are in the business of fixing and maintaining their reputation against the onslaught of musicians and have little time left over for developing and improving their core competency – streaming music.

This past week, Pandora won an important court case against ASCAP, which solidly reiterates what was already written in copyright law. Spotify is an “interactive streaming service,” meaning users can skip as many songs as they like and choose what song or artist they want to listen to at any given moment. Because of this function, it almost replaces the need to own music. Musicians therefore have the right to choose to license or not to license. Pandora, on the other hand, is a “non-interactive streaming service,” and functions similarly to terrestrial radio. Like terrestrial radio, there is a compulsory license in place, requiring artists to license their music if they are associated with a PRO like ASCAP. This is why you hear about artists taking their music off Spotify, but not Pandora.

So what does this court case actually mean? Basically it removes the possibility of getting through any loopholes to take music off Pandora. If an artist wants to boycott Pandora, their only option is to remove all their music from performing rights organizations like ASCAP, BMI, and SESAC. Publishers and songwriters are not allowed not allowed to make separate, market-driven deals with Pandora if they are also a member of a collecting society. Pandora had made private copyright deals with prominent publishers like Sony, EMI, Universal, and BMG, requiring the streaming company to pay a higher royalty rate to their artists. This court decision will most likely void those deals and prevent any similar deals from happening in the future.

While most artists wouldn’t dream of taking their music off their PRO, the possibilities for direct licensing are becoming easier with new technology. In a few years, big record labels and publishing companies may have these functions in-house.

For more information on this topic, check out these two articles from Digital Music News (article 1, article 2).

With all this conflict in the streaming industry, there is little room for improvement and progression. Streaming companies are fighting rights holders and rights holders are speaking out against unfair royalties. Not to mention, the lawsuits are creating a further rift between modern artists and the copyright law, serving as a confirmation to many that copyright law is not caught up with modern society.  This battle between the law, the streaming services, and the musicians does not equate to a healthy industry. Streaming companies will stagnate if they refuse to grow with artists, and artists will lose out on opportunity if they insist on shutting streaming services down their early in the game. Surely we can move forward and find a solution together?

What are your thoughts on music streaming? Should artists be concerned about taking their music down? Does the exposure make up for the small royalties? Can this ever be a healthy industry?

There has been a lot of hype this past week about Pandora and their unfair payments to artists. Both sides in this argument are  skewing the facts in their favor, and therefore creating mass misunderstanding, leaving consumers and other musicians with music on Pandora utterly confused.

I cannot help but make the connection to the Pandora’s Box myth. Pandora used innovation and creativity to lead the way to a redefined music industry, one where consumers had access to millions of songs anywhere, but unleashed conflict. This finger-pointing environment is not healthy for innovation and progression in the music industry. We need to try to learn all the facts, look at the situation from both sides, and find a way to move forward together. As we move forward, musicians cannot deny the value in online radio – it enables music to reach millions of consumers and potential fans – and streaming companies would not exist without the music. Along with all the bad things, Pandora’s Box also held the spirit of hope.

Here’s a quick recap of a few of the major finger-pointing events that occurred this past week:

* On Monday 6/24, David Lowery posted a piece where he showed he made $16.89 on over 1 million Pandora plays. Never mind that the song actually grossed over $1300, David wished to make his point by highlighting his songwriting revenue only. The issue gets muddled when you realize he only pointed out his songwriting share, not his publishing share as well, and that his take is only 40% of the writing, which he can’t blame Pandora for. David didn’t hide this skewing of the data, but his headline-generating writing style got respected blogs like Gizmodo and AV Club to write articles making it sound like that’s all the money he made. This forced a round of retraction articles later in the week. I can get behind the reasoning David made in the article (to stop Pandora from suing PROs to lower rates) but by obscuring the issue, he weakened the overall position.

* On Wednesday 6/26, Tim Westergren had to acknowledge the growing blogstorm and post a response about how much they do indeed pay and how they are not trying to reduce rates. Tim also chooses words carefully to make Pandora appear more altruistic than they’ve been. By saying that Pandora has not advocated an 85% rate decrease, it makes it seem that they’ve not positioned for lower royalties. But what (former) Pandora CEO Joe Kennedy did do was advocate in front of Congress for the Internet Radio Fairness Act. In a summary by bill sponsor Senator Ron Wyden, the bill “would treat Internet Radio, for purposes of establishing royalty rates, in the same way that satellite and cable radio are treated.” Currently, satellite radio is paying 7.5% of revenue to royalties. Pandora has claimed they currently pay over 50% of revenue. Cutting 50% of their revenue down to 7.5% is an…85% rate decrease. While this bill may be dead, that doesn’t mean the 85% reduction is the result of an RIAA misinformation campaign.

* On Thursday 6/27, David Israelite, the President and CEO of the National Music Publishers Association (NMPA), entered his opinion about the misinformation campaign by Pandora. He cited figures from both the Lowery argument and an event the NMPA held the previous year highlighting the paltry royalties the songwriters are getting. As he puts it: “By any standard, this is unacceptable.” That’s not entirely true because all this suggests is that Pandora is not paying a fair rate instead of a fair market rate, which is a different beast. By not comparing Pandora’s royalties to anything, these rates will naturally appear low. But you need an apples-to-apples comparison to know if anything is truly fair or not.

OK, so what is the truth of this argument? We need to have this so we can move forward with actual intellectual discussions that are as fair as possible to all sides.

To read the full post, visit Hypebot.

According to this article from Digital Music News, Maria Pallante, the US Register of Copyrights, is looking to move US law towards the full payment of performance rights.  This means that radio broadcasters, who historically have not paid for their use of the sound recording, may be required to do so in the future.  While this statement is certainly not a guarantee of action, the fact that the topic is being openly discussed by US officials represents progress for the issue.

US copyright law protects two separate copyrights – the composition and the sound recording.  Additionally, copyright law grants exclusive rights in the public performance of the composition, and of the sound recording via digital transmission.  Missing from this equation is the payment of the public performance royalties to the sound recording owner for non-digital performances.  This means that if you hear your favorite song on Pandora, both the composition and sound recording owner will be compensated, but if you hear that same song on terrestrial radio, only the composition owner receives payment for the performance.

Similar to the US, most other developed countries do not specifically grant public performance rights to sound recording owners, but the rights are assumed via neighboring rights.  This means the US is one of the few countries not paying their sound recording owners for public performances.

This illogical exclusion is perhaps one of the most frustrating and baffling aspects in US copyright law – it remains relevant in today’s society simply because it has always been.  In the past, broadcasters avoided payment to the sound recording owner (usually the record company) by arguing that their services provided free promotion.  This precedent has remained to this day despite terrestrial radio’s diminishing significance, especially regarding indie musicians.

The movement towards the full payment of sound recording owners most likely found its roots in Pandora’s recent litigation attempts to lower their public performance fees.  Pandora argued that the disconnect between the fees paid by terrestrial radios and the fees required of Pandora put them at an unfair disadvantage.

While this is most likely not the outcome Pandora litigators wanted or expected, most would agree that it is necessary for the US to drop old, irrelevant precedence and enter the modern age of copyright law.

Gotta love it.

James Taylor is suing Warner Bros over digital royalties seeking $2m in compensatory damages from his former label for past MP3 sales.

The Guardian reports that singer-songwriter James Taylor has filed a multimillion-dollar lawsuit against his former label, Warner Bros, claiming they have underpaid millions in royalties on downloads of his songs. As in similar cases brought by Eminem and the Temptations, the principal issue is the royalty rate for downloads or ringtones among artists who signed record contracts prior to the advent of digital music sales.

I reported on this situation in the Huffington Post here a while ago with Musicians may be owed billions in unpaid digital music royalties.

All of this stems from a landmark ruling in 2010, when a company representing Eminem’s publishing rights won a case against Aftermath Records. The label was ordered to pay royalties on downloads and ringtones according to the rate for licensing, not sales. Since then, a wide range of acts have pursued their labels for compensation.

Lots more to come.  The leveling of the playing field.

In this economy, it’s hard to imagine anyone making thousands of phone calls trying to give money away. But that’s exactly what is happening as Sound Exchange contacts musicians who have earned, but not yet claimed, digital performance royalties.  And they are building their database fast, by tapping into the cloud of musician profiles available online. How cool is that?

Sound Exchange is a performing rights organization undertaking a massive education campaign about the fact that the rights and revenue exist, and how to go about getting the money.  In the past few months alone, thousands of artists have been contacted.

When sound recordings are streamed on the Internet, played on digital satellite radio, or used on cable music channels, the performers on that recording accrue a small royalty. Those digital performance royalties are collected by SoundExchange, who processes logs from services and distributes the payments to artists. Unlike other royalty societies, who collect and distribute only to their members, SoundExchange collects royalties for all performers, then has to locate and register artists so they can be paid.

If you want to get paid, you have to register with them at Sound Exchange. If you think your music has been played on Sirius-XM Satellite Radio, Internet radio such as Pandora, Yahoo, Live 365.com and AOL, or on digital cable and satellite TV services like Comcast’s “Music Choice” and DirecTV, you can collect.

The data being collected by today’s digital music companies is being knitted together to connect the dots between online listeners and the copyright holders.  By partnering with CD Baby, ReverbNation, SonicBids, Nimbit and others, Sound Exchange is tapping into the long tail of the market, and rewarding musicians who have online profiles – with cash.

CD Baby says they were notified by Sound Exchange that many of their artists were owed money.  They matched their databases and found that thousands of artists had not registered with Sound Exchange and therefore were not receiving their payments. CD Baby then reached out to these members with the good news.

According to iLike founder Ali Partovi, a database matching effort for artists that had uploaded their information onto iLike found more than $8 million for more than 8,000 artists. According to Partovi, the $8 million was just a first-run effort, and a broader initiative involving MySpace Music remains forthcoming. “MySpace has a much larger database, so we’ll be unlocking even more money.”

To stake your claim visit Sound Exchange, or to send an email to info@soundexchange.com