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Discovery, Netflix and Epidemic Sound in the spotlight as the debate around audio-visual royalties gains momentum

By | Published on Wednesday 18 December 2019


There has been lots of chatter in recent weeks about the way songwriters and composers get paid when their work is used in TV programmes, prompted – in the main – by moves at the Discovery Network to change the way it licenses music for its US telly channels. Netflix’s deals with music-makers have also been debated, while yesterday songwriter groups in Europe hit out at the innovative production music company Epidemic Sound.

When TV producers, film studios, gaming companies and advertising agencies want to use music in their productions they basically have three choices: license commercially released music (ie sync deals), commission some original music or utilise a production music library.

It’s the latter two options that are part on the current debate. The question is, when a producer commissions some original music for a specific project – or a production music library commissions music to subsequently license to third-party producers – who owns the copyright in that music? Plus, when and how does the songwriter get paid?

With music rights, of course, nothing is simple. First of all, if a writer/musician both writes and records a piece of music for the producer or library, there are both recording rights and song rights being created, which copyright law treats separately.

Then, on the songs side, the music industry has traditionally distinguished between the ‘mechanical rights’ and the ‘performing rights’. From an audio-visual perspective, the former is exploited when music is synchronised into the video, and the latter every single time the resulting product is broadcast, screened or streamed.

Now, the writer/musician could seek to retain all elements of all the copyrights they are creating and then license them to the producer or library. That licence would allow the producer or library to use the music in certain ways for a certain fee, but the musician would also be free to monetise their music in other ways with other parties.

However, because the aim of the production music business is to simplify licensing for the producer, libraries usually seek to own as many elements of the copyrights in the music they commission or buy as possible. As for original commissions by TV, film, gaming and advertising firms, there has long been a trend for those companies to also try to negotiate rights ownership from the music-makers they work with.

However, when libraries and producers seek to take ownership of the rights in the music they commission – what the songwriting community tends to refer to as ‘buy outs’ – there is usually a limitation. That being that the library or producer gets the recording rights and the mechanical rights of the song, but the performing rights of the song are not part of the deal.

This means the songwriter or composer receives an upfront fee for composing the music (and possibly recording it to, if they are involved in that), but will also receive additional royalties every time the finished product is broadcast, screened or streamed. That performing rights money will be collected through the collective licensing system.

It’s the latter payments that Discovery Networks – which operates the Discovery Channel, Animal Planet, HGTV and Food Network – is seeking to remove by changing the deals it does with the songwriters and composers that it works with.

Variety reported last week: “Discovery has informed many of its top composers that, beginning in 2020, they must give up all performance royalties paid for US airings, and that they must sign away their ability to collect royalties on all past shows on its networks”.

Amid widespread criticism of that move in the songwriter community, the Discovery Network sought to defend itself, albeit in somewhat vague terms, by telling reporters: “Our 8000 hours of original programming a year drives enormous economic value to the global music community. We compensate countless composers and musicians for their valued contributions, and will continue to do so”.

The news of Discovery Networks seeking to change its music-maker deals followed another report in Billboard that Netflix now has a template agreement for songwriters and composers that also ensures no future royalties will be due beyond the upfront buy-out fee. Although Netflix insists that its songwriter agreements are negotiable, and signing up to a full buy-out arrangement is not mandatory if a music-maker wants to work with the company.

Technically, outside the US, most songwriters and composers would not be able to sign a deal that assigned the performing rights in their work to the library or producer, and/or which excluded the future payment of performing right royalties.

Because most songwriters and composers will be a member of a collecting society and – in most countries – when writers join such a society they actually assign all their performing rights to that organisation. Which means those writers are not in a position to include any performing rights and/or to exclude future performing right payments in any deals they do with a music library or a TV, film, gaming or advertising company.

The US is different because when songwriters join the collecting societies there – so ASCAP, BMI, SESAC or GMR – they do not grant those societies any exclusive rights over their work. So while the societies are still empowered to license each and any of the works their members create, their involvement in any licensing arrangement is not mandatory. Which is how a songwriter can do a direct deal with a library or producer that covers all future broadcasting, screening and streaming of the music in return for a one off fee.

The European societies in particular would argue that the system outside the US is crucial for protecting songwriters and composers from being forced into signing what many in the music community see as being unfair total buy-out deals.

It’s unfair, they argue, because of the economics of writing music for TV, films, games etc. Those music-makers who are prolific in this space, it’s argued, rely on the future performing right royalties, on top of any upfront fees, to ensure that they have a viable living.

That’s particularly true when working on projects with relatively modest upfront budgets, but which turn out to be hit shows or movies that get repeat airings for years and years. The songwriter or composer can take a more modest fee upfront, in line with the project’s budget, knowing that if that project is then a success, they’ll get their reward down the line via the royalties collected for them by their collecting society.

While music industry conventions outside the US and, sometimes, copyright law itself, in theory protects songwriters and composers from the kinds of total buy-out deals being proposed by Discovery Networks and Netflix, there is a fear in Europe that – with the rise of global video streaming platforms – the American tech and media giants will seek to force the US system on everyone else.

Elsewhere in Europe, the European Composer And Songwriter Alliance – which unites songwriter groups across the continent, including the UK’s Ivors Academy – yesterday hit out at Epidemic Sound, the Swedish production music company.

It, among other things, has become a key source of music for online creators, who find the complexities of music licensing incredibly confusing. And who are generally seeking a one-stop-shop licensing solution that even traditional music libraries are unable to offer, because of the performing rights complication.

For Epidemic Sound to be able to provide such a solution to online creators, as well as traditional broadcasters, the music-makers it works with have to sit outside the collective licensing system entirely.

That wouldn’t work for those music-makers who have other projects on the go, or who are also frontline artists performing their own music. However, some argue, for some songwriters and composers the Epidemic Sound model really works, and why should industry conventions and/or copyright law seek to interfere with that?

ECSA, however, takes issue with the model, for both economic and moral reasons. “[Epidemic Sound] uses 100% buy-out contracts – where music creators sell their rights to a piece of music in exchange for a lump sum – and therefore [the company] claims that it entirely owns ‘its music'”, it said in a statement. “It even often substitutes the name of music creators with the company’s name in the credits”.

The latter criticism relates to the songwriter’s moral right to attribution for their work, which sits in the Berne Convention copyright treaty and therefore most copyright systems around the world (although so called moral rights are actually waivable under UK law – plus in production music some music-makers choose to release their tracks under a pseudonym).

ECSA also criticises Swedish Public Service TV for licensing music from Epidemic Sound that is then credited to the company rather than the music-makers who wrote and recording it. “Any company should refrain from collaborating with an entity which disrespects authors and their basic economic and moral rights”, it then states.

And, it goes on, “all our fellow music authors should refrain from signing any agreement which results in giving up all their economic rights forever, while not even being given credit according to his/her right by law”.

Responding to ECSA’s statement, Epidemic Sound boss Oscar Höglund told reporters yesterday: “We were surprised to find out that ESCA has publicly condemned Epidemic without engaging with us or – to our knowledge – any of our musicians. But it is not so surprising that they took this viewpoint as they come from the more traditional part of the industry, which we’re disrupting”.

“Our door is always open”, he went on, “and we’re happy to sit down with ESCA to bring them up to speed on how our model is perfectly suited to the distribution of music in the digital age, and for them to hear first-hand from our musicians about how our team and business model supports them both financially and creatively”.

There is, of course, no one-size-fits-all model for music-making, or rights allocation, and the ideal scenarios for original commissions from producers are possibly different to when a music-maker is creating production music. And maybe licensing music for online creators should be different to licensing music for conventional broadcasters.

But either way, as with the world of streaming, things are in flux for the songwriter community in the audio-visual domain too. The challenge for the music industry is ensuring that legacy models and conventions don’t stop new opportunities from being exploited. But, at the same time, there’s obviously a need to ensure that it’s the opportunities being exploited, not the songwriters.