The following MBW blog comes from David Israelite (pictured), President & CEO of the National Music Publishers Association (NMPA). The NMPA is the trade association representing American music publishers and their songwriting partners.
Since 1941, the vast majority of songwriters who belong to ASCAP and BMI have been regulated by the United States Department of Justice (DOJ). Back then, the relatively new broadcast industry wanted help in securing deals to play music and the DOJ assisted them by putting parameters on how their rates were determined, taking away songwriters’ ability to negotiate in the free market.
Fast forward almost 80 years, and while the once-fledgling US broadcast industry is now one of the most powerful industries in the world – and most heavily consolidated – songwriters are still being forced to subsidize them, even as radio giants’ market power is massive and growing.
“The fact that Liberty Media may soon have the largest ownership percentages in SiriusXM, Live Nation and iHeartMedia does not bode well for creators’ ability to say no.”
This is particularly relevant today as the DOJ considers whether Liberty Media, which owns a vast portion of SiriusXM – which recently acquired Pandora – as well as a large chunk of Live Nation, can buy iHeartMedia, the largest radio broadcaster in the world. If allowed, this would constitute the greatest pooling of power between satellite, digital and terrestrial radio, concert promotion and even podcasts, in history.
Consumer rights groups have already cautioned against this plan, saying it will lead to less competition and higher prices across radio, streaming, satellite and potentially even live shows.
As the consumer groups warned, “Will anyone be surprised if artists, songwriters, record companies, and PROs that refuse to give in to Liberty’s demands on royalty rates find themselves shut out of access to Live Nation venues and Ticketmaster promotion? Will the new entity squeeze royalties even further for working artists and songwriters – piling on to the lost working-class music jobs seen in places like Nashville, where since 2000, the number of working songwriters has collapsed by 80%?”
Why else does this matter to songwriters? Currently the DOJ is also reviewing the regulations that music creators and composers who belong to ASCAP and BMI have been under since around World War II. Due to the ever increasing power of broadcasters and digital revolution, the rules that applied in the 1940s no longer make sense.
Even if this proposed Liberty Media acquisition does not happen, songwriters are still dealing with a heavily consolidated market under a small number of massively influential and wealthy players – think Google, Apple, iHeartMedia and the like. Why do these mega-companies need protection from songwriters? Shouldn’t songwriters be the ones who are guarded from their disproportionate influence?
Broadcasters have played both sides of the regulation fence for some time. They have resisted efforts to be regulated themselves in the form of a compulsory license that they say amounts to a subsidy for satellite and cable providers. In reality, they are simultaneously the beneficiaries of equally outdated regulations when it comes to securing performance licenses from songwriters.
“streaming radio gets a huge discount since they don’t have to license the rights they need in a free market – instead they get a judicially overseen rate for massive catalogs of music.”
So how can DOJ level the playing field now in the face of growing broadcaster influence and shrinking songwriter efficacy? One of the biggest issues with how songwriters are regulated by DOJ is that they must license all of their music – in all forms – through ASCAP or BMI if they are a member.
This means those Performing Rights Organizations (PROs) are responsible for how they’re paid by terrestrial radio, bars and restaurants, myriad other venues, and most critically: digital streaming. This amounts to streaming radio getting a huge discount since they don’t have to license the rights they need in a free market – instead they get a judicially overseen rate for massive catalogs of music.
Practically speaking, if you’re a songwriter, you benefit by using ASCAP and BMI to license to hundreds, if not thousands, of bars, restaurants and venues. This is hugely efficient.
Now imagine you can take out and separately negotiate the value of your songs to streaming services. These platforms are very different, so it makes sense that they would be negotiated and licensed on their own. This is how it’s done on the recording side – artists and labels negotiate directly with digital streaming companies like Spotify and Amazon Music. Isn’t it time for songwriters to have the same freedom?
While music publishers, songwriters and the PROs themselves all agree that getting rid of the consent decrees altogether might be too much of a disruption for the DOJ to allow, publishers are asking for a reasonable middle ground. If the regulations must stand, at least give songwriters the ability to withdraw the rights to their music just for digital streaming so that they can negotiate the true value of their work. They don’t belong in the same bucket as bars and restaurants and continuing to forbid them to do this means they will never get a fair price from the platforms that are undoubtedly the future.
“If the regulations must stand, at least give songwriters the ability to withdraw the rights to their music just for digital streaming.”
What we are seeing in the market is licensees – from the broadcasters to satellite to streaming companies – getting larger and more formidable when compared to songwriters’ shrinking ability to get a fair shake. The fact that Liberty Media may soon have the largest ownership percentages in SiriusXM, Live Nation and iHeartMedia does not bode well for creators’ ability to say no, and it’s time for songwriters to have a say when it comes to their streaming rights.
Songwriters, at their core, are small businesses. Right now there is a window to protect them against the ever-consolidating broadcast, digital and tech interests, and DOJ should take this opportunity to at least give them the rights to selectively withdraw some of their most valuable rights. This is a reasonable solution that will help balance the marketplace and give music creators the same rights that other property owners have always enjoyed.
As giant radio and tech interests continue to make inroads towards merging, the last thing songwriters should be subjected to is unfair regulation due to having too much market power.
Music Business Worldwide
