Business Interviews Labels & Publishers The Great Escape 2014

Q&A: Ann Tausis, Kobalt’s Neighbouring Rights

By | Published on Wednesday 30 April 2014

Ann Tausis

As part of the Maximising Music Rights strand at CMU Insights-programmed Great Escape Convention this year the focus will fall on ‘neighbouring rights’, the right to renumeration that record companies and recording artists receive when their tracks are played in public, usually collected by organisations like the UK’s PPL.

Although this is an increasingly important and rapidly expanding revenue stream for the whole record industry, it’s the fact that recording artists – including featured artists, session musicians and performing producers – are also due a cut of this money, by law, that is most interesting.

And with the system via which this money is collected and distributed being pretty complicated, certainly once you go global, an increasing number of musicians are rethinking the way they manage this revenue stream, many appointing agents to manage it for them. One such company is Kobalt Neighbouring Services, the MD of which, Ann Tausis, will join PPL chief Peter Leathem and Featured Artists Coalition co-CEO Crispin Hunt for our discussion on this topic next week. Ahead of all that, CMU Business Editor Chris Cooke spoke to Ann to get a bit of background information.

CC: The term ‘neighbouring rights’ is used a lot in the music industry these days, though I suspect a lot of people aren’t completely clear on what it is that we are talking about. So, just to be clear, what is it that Kobalt Neighbouring Rights is concerned with?
AT: The term ‘neighbouring rights’ refers to a form of copyright linked to commercially released recordings. Both the owner of those master recordings, which is usually a record label (referred to in copyright law as the ‘producer’), and the performing artists who appear on the recording (so any singers, instrumentalists and, if they play on the track, the studio producer) are entitled to a royalty when recordings they have contributed to are broadcast on the radio, on TV or are performed in public, for instance in restaurants, bars and shops. It is an ‘economic right’, in the sense that when recorded music is used in this way by people and companies to make money, performing artists and labels can claim remuneration.

CC: Legally speaking, where does this economic right stem from?
AT: Before singles and albums existed, bands and orchestras performed live on the radio and were paid for it. Once the record arrived, commercial broadcasters, restaurants and dance halls preferred using these to play music in public, so a need for a new kind of remuneration for those who created the sound recordings arose. The legal framework for this – The Rome Convention – was first signed in 1961 and has been implemented at different times in different countries. There is also the 1996 WIPO Performances And Phonograms Treaty, which deals with digital transmission. It’s an important distinction, because although the USA never signed the Rome Convention, it did sign the WPPT. This means that there is no neighbouring rights income generated in the US when music is played in restaurants, bars and shops etc, but when digital radio stations play music, this generates income for artists and labels.

CC: In the main, the record labels have formed collecting societies, like the music publishers, to collect this income, and they log their recordings with the societies to make sure they get their money. But the most interesting bit of neighbouring rights is that performers are due a share of the income too. But how does ‘the system’ know which studio producers and session musicians worked on a track so that they can claim their money?
AT: This is quite a complex process. Put simply, a rights holder needs to provide collecting societies information about participating musicians on a recording including which instruments each person played. The societies then use a set method – which varies from society to society – for calculating what  royalties are due to each performer based on the amount of airplay that has been reported to them by commercial broadcasters and others who play recorded music in public.

CC: Do studio producers and recording artists need to check their contracts to see if they inadvertently lost this income in the past?
AT: Yes, that would be a good idea. There is a much bigger focus on neighbouring rights nowadays and people may not be aware that they have appointed somebody to collect this income on their behalf in the past. Or it could be the opposite: that they haven’t ever signed up with anybody to collect this income on their behalf and there is money waiting to be collected.

CC: The neighbouring rights system seems most established in Europe, but do studio producers and recording artists enjoy neighbouring right royalties from income generated by recordings they are associated with beyond Europe?
AT: Yes, there are countries outside Europe who have signed the Rome Convention and/or the WPPT and who are therefore collecting and distributing neighbouring rights income.

CC: Overall, how much money are we talking about?
AT: According to the latest figures from IFPI, the worldwide collections for neighbouring rights in 2013 – so that’s including the revenue due to labels and performers – was $1.1bn, an increase of 19%. This represents 7.4% of the total industry revenues, so a small proportion overall, but still a significant amount of money!

CC: You mentioned the role collecting societies play in all this. Labels and performers can join organisations like PPL to get their renumeration. So why might those people appoint an agent like Kobalt to manage this income stream?
AT: Collecting societies have many clients on their books, often tens of thousands. It would take a lot of time, effort and cost to monitor each of these clients’ income around the world. Kobalt Neighbouring Rights looks after fewer clients – in the hundreds – and can therefore follow up and make sure each client’s repertoire is registered accurately on the societies’ databases and monitor the royalties received to ensure they have been paid accurately for all tracks that have enjoyed airplay. In addition, we collect directly from each society and pay the money through to our clients within 31 days of receipt, so the clients get their income a lot quicker than they would by going through the traditional society network.

CC: Kobalt is probably best known for helping songwriters administer publishing rights. When and why did the company move into neighbouring rights?
AT: Kobalt Neighbouring Rights was launched at MIDEM 2012 in response to demand from existing Kobalt clients for a one-stop shop in claiming and collecting their rights income.

CC: What about yourself – how did you find yourself working in this area?
AT: My background is in music publishing and having spent 20 years plus in that area, I felt that a change to another side of the business would be a great opportunity to broaden my knowledge and provide me with a few new challenges along the way. Neighbouring rights is an interesting area which is historically less developed than performing rights on the composer/author side, so there’s an exciting opportunity. By bringing Kobalt’s ethos, expertise and efficiencies to neighbouring rights, we’re helping the industry overall by bringing down costs and maximising revenue for rights holders. I have always been impressed with Kobalt’s vision of accuracy, transparency and focus on customer service, and I’m very pleased to be part of all that!

CC: It seems like neighbouring rights has become more of a hot topic in recent years – would you agree, and do you think there is still more to do to educate the artist and music rights communities about how they work?
AT: Absolutely. As record sales have declined over the years, there has been more focus on other revenues such as neighbouring rights, which is a very complex area due to the different rules and criteria applied by the different societies around the world. There is definitely scope for more education in this area as there are still many people out there who do not know that neighbouring rights exist and what they are.