• Congress Needs To Dig Deeper In Music Licensing Hearing

    It has become routine for billion dollar corporations seeking to gain competitive advantage through government to push out the “little guy” as the face of their campaign. That is precisely what the major record labels and recording industry corporations are doing in their attempts to game the system and drive up royalties rates — a move that will bring millions to their coffers while hurting consumers.

    Power in the music industry is consolidated in basically three multi-national corporations: Warner Music, Universal and Sony. These three companies also own the three corporations that make and distribute the majority of music. It is no coincidence that these three corporations also own the three music publishing corporations that controls almost every song that then assign licensing authority to three Performance Rights Organizations that effectively control 100% of all musical compositions.

    These mega corporations and their industry representatives in Washington like Recording Industry Artists of America (RIAA) are pushing legislation that would pad their corporate bottom lines under the guise of helping individual artists and songwriters.

    Songwriters are often held hostage to these companies who have a long history of being less than honest and generous with the talent the represent. That tradition continues to this day. As consumers increasingly turn to digital and streaming platforms to listen to music, the corporations have found ways to keep from paying artists and songwriters what is rightfully owed them. It seems it’s the artists that get shortchanged, but never the labels or publishers.

    The House Judiciary Committee is holding a hearing today to examine music licensing as part of a comprehensive review of copyright laws. Congress should dig past the corporate rhetoric and examine the relationship between artists or songwriters being used to justify action and these corporate behemoths that would profit the most. It’s time to peek behind the curtain.

    For example:

    Over the past 5 years, what percentage of the royalty money collected by SoundExchange has actually been distributed to the deserving artist, and who gets the interest earned on undistributed royalties?  

    SoundExchange, the collective for the recording industry distributes royalty fees. However, SoundExchange has had difficulties locating some royalty recipients – including, according to press reports, the Mormon Tabernacle Choir.   What happens to the undistributed money, and the interest accrued from late royalty distributions?

    Do the major record labels have an ownership stake in Spotify? And when Spotify pays royalties to the major record labels, do the labels pay their artists the full 50% as required for other services like Pandora?

    It has been reported in the press that the major labels own up to 25% of Spotify. If this is true, the labels have even more leverage over Spotify’s royalty rates. Spotify is not under a statutory licensing regime, so there is no statutory requirement that the labels provide their artists the full 50% of royalty payments. Are the labels equally dividing royalties from services like Spotify?

    There are many factors that are responsible for changing revenue models for artists and songwriters. Not the least of which is an outdated industry model that has been propped by crony “inside the beltway” legislation rather than evolve with consumer demand.

    The recording industry is asking Congress to make changes based on the plight of the individual artists but perhaps it’s the corporate executives that should be making the changes.

    Roberto Escoban

    Roberto Escoban is the pen name of a conservative activist who spent 20 years working in Washington including a decade on Capitol Hill.

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