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Music creator group CIAM calls for balancing of streaming royalty split between rights holders

By | Published on Tuesday 28 October 2014


A new report launched last week at a congress organised by the International Council Of Creators Of Music, or CIAM, called for a more equal distribution of streaming royalties between the respective music rights owners. It’s a formal demand for an overhaul of the streaming royalty system that’s been a long time coming, and a rally call that’s only likely to get louder as streaming becomes an ever bigger part of the music rights pie.

There are, of course, three separate copyrights in a recording of a song with lyrics – one in the words, one in the music and one in the recording itself. In the music rights game, the first two get lumped together as the ‘publishing rights’, repping by the music publishers, and the latter, the master rights, are generally controlled by record companies.

In the CD market, and the cassette and vinyl domain before it, the majority of the money made by selling records went to the record company because it took all the risk involved in releasing recordings, covering the upfront costs of making, releasing and marketing the music, and the logistics of getting physical product onto the high street. It varies from country to country, but the publisher’s cut was usually under 10%.

In the digital domain, similar splits have been adopted, despite some wrangling between the publishers and labels in the early days of iTunes, the former arguing that a label’s risk and upfront costs were less in the digital domain.

But over in the realm of public performance licensing, which covers things like radio, the split between the publishers and the labels has always been much more equal. And as we move from CDs to downloads and ultimately to streaming, and as streaming services add curation and programming into the mix, there is a strong argument that digital is becoming more akin to radio than it is the record shop.

Making it inevitable that the music publishers, and the non-performing songwriters especially, were, at some point, going to cry foul on the way streaming services are being licensed, in terms of royalty splits. And this issue is likely to become more hotly debated as all or any of the following trends come into play:

1. The music rights sector realises that music copyrights will never again be as lucrative as they were in the 1990s.

2. The rise of streaming starts to hit the profitability and therefore royalty income from music TV and radio.

3. Labels start to make an increasing amount of their new talent investments back through merch, brand partnership and direct-to-fan revenue streams, rather than straight monetisation of the sound recording copyright.

CIAM is a global body that sets out to “protect the rights and assert the cultural aspirations of music creators”, while its report also has the backing of CISAC, the global grouping of music publishing collecting societies, as well as Music Creators North America and Canadian collecting society SOCAN.

The report was written by Professor Pierre-E Lalonde, and it says: “The split in revenues between the different sets of rights holders is imbalanced. A combination of regulatory constraints, market imbalances and situations where major record labels negotiate with digital services for all categories of rights holders, has led to a significant disparity between the revenues paid to record labels and to creators”.

He goes on: “In the business of streaming, the split of monies from streaming platforms is geared more favourably towards record labels and performers vs songwriters and music publishers”, before recommending “a more equitable division of revenues between the various rights holders, with a 50/50 split between recording and composition”.

Some have previously noted that the big music rights companies, which own both sizable sound recording and publishing catalogues, will likely favour the current system, because corporate rights owners are usually obliged, under contract, to share a bigger cut of publishing income with songwriters than they are sound recording income with recording artists, so they’d prefer more digital money to come through their labels.

Which means the songwriters and standalone publishers will likely face an uphill battle to shift rights holder splits from streaming to 50/50, though it’s interesting that such a proposal has now been made in a formal report by an organisation like CIAM.

The same report also proposes that streaming services should give up more of their revenues to the music industry, and that there should be greater transparency on how the labels do their digital deals.