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Ivors Academy calls for action to tackle the £500 million a year streaming black box

By | Published on Monday 16 August 2021

Ivors Academy

UK songwriter organisation The Ivors Academy has published a new study estimating that £500 million in streaming royalties per year are affected by bad music rights data worldwide, meaning those monies can get stuck in the system or are ultimately paid to the wrong people.

The study collates and reviews the available data regarding the processing and payment of streaming royalties to music publishers and songwriters in order to conservatively estimate the tangible impact of bad music rights data, a problem raised by organisations like The Ivors Academy during the recent Parliamentary inquiry into the economics of streaming.

This problem begins with the disconnect between recording rights and song rights. Streaming services obviously make available recordings of songs, but they license the different music rights through separate deals, with recordings licensed by record labels and music distributors, and songs by music publishers and collecting societies.

Labels and distributors then provide tracks to the streaming services complete with the data that allows the industry to identify each unique sound recording, that being the ISRC.

However, labels and distributors do not provide the data that allows the industry to identify each unique song, that being the ISWC. Meaning the streaming service doesn’t know what song is contained in any one recording, let alone who controls the copyright in that song, which may well be co-owned by a combination of songwriters, music publishers and collecting societies.

As a result, every month each streaming service sends all of its licensing partners on the songs side a complete usage report with ever track streamed identified by its ISRC. Each licensing partner must then identify what song is contained in each recording, if it controls that song in that market, and – if so – what elements and percentage of the copyright it controls. Then it invoices for its royalties.

There is plenty of room for error in that process. An ISRC might not be matched to an ISWC. Or it might be matched to the wrong ISWC. Or different publishers and societies might match it differently. Even is a song and recording are accurately matched, in any one country it might not be clear who controls the copyright in the song. Or only 80% of the song might be claimed. Or, worse, 120% of it might be claimed by competing publishers and societies.

All of these factors can result in monies that the streaming services know they owe to the music industry – and which are ultimately due to music publishers and songwriters – not being accurately allocated to the specific songs that have been streamed.

These unallocated monies are often referred to as the streaming black box. In some cases the unallocated money stays with the streaming service, in other cases it is passed to a collecting society that then has to decide what to do with it. It is often then shared out across the industry based on market share.

It’s not entirely clear quite how much money ends up in the streaming black box in this way, but the new Ivors study reckons that £500 million a year is a decent if conservative estimate.

Ivors CEO Graham Davies says: “As streaming has grown to become the dominant method of listening to music, we have also seen the growth of the song streaming data gap. Poor, insufficient and conflicting data has created a massive global challenge for the music industry and the size of the problem will continue to grow”.

“We urgently need a new industry workflow based on new technologies and education of songwriters to close the data gap and ensure the right people are paid for their work”, he adds.

The Academy proposed revisions to that workflow in its submission to the recent streaming inquiry undertaken by the UK Parliament’s culture select committee.

Summarising its proposals this morning, the Academy calls on the music industry to “use technology to enable the attaching of authoritative creator metadata to recordings at the point of creation in order to facilitate correct creator credits and accurate, timely music royalty payments”. To achieve that, it adds, there needs to be “industry-wide consensus on the minimum standards of metadata required before a music recording can be distributed and streamed”.

The added complexities around the way song rights are licensed and song royalties paid in the streaming domain was previously highlighted in the ‘Song Royalties Guide’ published by the UK’s Music Managers Forum and CMU Insights in 2019, which was also cited several times in the recent parliamentary report.

That guide called for full transparency from the music publishing sector regarding what monies are not accurately allocated to songs that have been streamed and what policies are employed in distributing black box income.

It also urged collecting societies and music publishers to clearly explain to songwriters how song royalties are processed, including sharing information on the ‘royalty chains’ that money flows down as it goes from a streaming service to a writer, explaining what delays, deductions and potential data issues occur at each link on the chain.

MMF CEO Annabella Coldrick has welcomed the new study on this issue from the Ivors Academy. She says: “The MMF published the ‘Song Royalties Guide’ over two years ago illustrating the serious structural issues with song royalty chains and the data problems, deductions and delays that the current system perpetrates. The division of this enormous ‘black box’ of unallocable royalties by market share creates little incentive for the big players and societies to seriously reform this opaque system”.

“The MMF has spent the last two years trying and failing to map these song royalty chains so a writer can know how much money from their overseas streams should be making it back to their account so they can ask the right questions if it doesn’t”, she adds.

“There is absolutely zero transparency for writers. Alongside the DCMS recommendations, we welcome this release from the Ivors and its proposals which echo our own. We need to see the industry and societies urgently take action rather than continuously kick it back to writers to sort out their own data whilst benefiting from them not doing so”.

You can download the new Ivors study here.