Cutting through the Noise: Music Royalties in the Digital Age

A ypoung in a meditation pose aittiing on a skate board while a number of people go about their business around him.

Photo by user Tina Leggio, Creative Commons

After Napster and file-sharing blew the doors off the Internet in 1999, the music industry changed. There’s been an ongoing debate ever since about piracy and fair compensation. Almost two decades later, we’re in the middle of yet another musical sea change with the proliferation of streaming services like Spotify, Pandora, Tidal, and Rhapsody (recently rebranded as, wait for it, Napster). To many consumers, the explosion of music delivery services is a non-issue because we’re so used to getting free content. We want to hear Taylor Swift's "Bad Blood" and we want to hear it now! In our car, at home, at work, on the subway. But to the music industry, musicians and labels alike, the digital transformation and the ease with which music is now delivered to listeners is a complicated, sensitive subject because a) there’s a lot of money involved, b) it’s incredibly hard to contain, and c) there are so many stakeholders.

Arguments abound about data and the proprietary nature of said data in an ever-growing struggle over licensing master rights (the sound recording), publishing rights (the composition), and the impossibly complex plan to offer the history of recorded music to listeners via an app on their smartphone. How should a musician be compensated for a piece of music they either wrote, performed, or both? This question opens up a Pandora’s box (no pun intended—okay, maybe a little) of questions and gray areas. There’s no uniformity when it comes time to pay-out and oftentimes musicians aren’t getting what they deserve for making the music. This begs the most important question of all: What is the actual value of a piece of music?

We talked with musician and activist Rosanne Cash and Kevin Erickson, national organizing director at the Future of Music Coalition (a nonprofit musician advocacy group), about some of these issues to try and understand how musicians can be fairly compensated in this brave new technological world.

Cutting through the Noise: Music Royalties in the Digital Age Rosanne Cash: Someone said to me, “Well, I’ve bought plenty of albums where there are only two good songs, and the rest was just trash, so I feel like I should get music for free.”  Wow, so you bought an apple. It was bad, so now you’re entitled to steal apples for the rest of your life. The Zeppelin by the Blue Dot Sessions up, under Adam Kampe: That’s musician and advocate, Rosanne Cash. Fair pay has long been an issue in the music industry, and now with the explosion of streaming services—from Google Play to Tidal—it’s once again at the fore. Alongside other artists like David Byrne, David Lowery, and Taylor Swift, Rosanne Cash has been speaking out to make sure songwriters and performers are properly compensated for their work. Rosanne Cash: And to be clear, the streaming services, those big companies, they’re not music companies. They’re tech companies, and they’re making their fortunes off the backs of musicians, and there is no semblance of fair market value being paid to musicians. Kevin Erickson: As new technologies emerge or new labor contexts emerge, there's different kinds of negotiation that have to happen. Adam Kampe: Introducing Kevin Erickson of the Future of Music Coalition, a non-profit dedicated to research, advocacy, and education for musicians. Kevin Erickson: The ways that music gets to the listeners’ ear have got more complex and, as a result, the process of tracking how the money gets from point A to point B also has gotten more complex. But there are also things that are less complex. Musicians are workers and we believe that labor needs to be compensated, that the work that musicians do has value. That's true whether they’re performers or whether they’re songwriters. Rosanne Cash: It’s a big conversation. You know, the source of inspiration, the function of art in society, what happens to a society if we devalue art and artists. What happens to us? It’s like a coldness develops at our center and priorities get skewed. “Impossible” by Pleasant Grove Adam Kampe: Today, terrestrial, satellite, and web-based music services deliver music to listeners in their car, at home, at work, or walking the city streets … via an app on their phone in their pocket. Whatever delivery mechanism you're thinking about – whether it's AM/FM radio, SiriusXM, Spotify, or a physical disk, an LP record or a compact disc – every piece of recorded music embodies two kinds of copyrights simultaneously. There's the sound recording and there's the musical composition. Typically, the revenue that goes to the sound recording is separate from the revenue that goes to the composition. So to figure out how compensation works in any of these environments, you have to remember to keep those two pools of money separate in your head. To underscore the enormity of this distinction, let’s turn the clock back to 1966. AM/FM radio tuning static Adam Kampe: Rosanne Cash. Rosanne Cash: Here’s something that kind of simplifies things, too, that is a shocking story. So Percy Sledge, who recorded one of the greatest soul records of all time, one of the greatest American recordings of all time, “When a Man Loves a Woman.” He never received any royalties for either songwriting, because he didn’t write it, or performance. He never received a performance royalty on that song from any medium. Kevin Erickson: What that means is performers and record labels have never been paid for the use of their music on AM or FM radio. Satellite radio pays both the performer and the songwriter. Pandora pays both the songwriter and the performer. Spotify, iTunes, physical media they all pay both. It's only FM and AM radio and it's increasingly only in the United States. Adam Kampe: That’s one piece of the compensation puzzle that’s yet to be solved. Now, let’s fast-forward to the digital age of satellite and streaming services. “Mississippi Turn Around” by Nick Jaina, under Kevin Erickson: People talk about streaming music. But streaming music can encompass so many different kinds of business models. It's true that as these services are growing in popularity, the overall revenue is going to increase. But that doesn't necessarily mean that it's going to increase proportionately for everybody that way. The reason for that is the way that these services payout is on a pro-rata per-stream basis. They use play count as a proxy for value. Rosanne Cash: Another thing people don't understand, they say, “Well, if you’re so against this, why don't you just pull all your music from Spotify?” Well, there’s a very good answer: I’m not the sole rights holder to my work. Taylor Swift could pull all of her music from Spotify because she’s clearly the sole rights holder. I’m also not a Luddite, you know. I know that this is the future. This is now. These are the delivery services that we have and it’s easy and it’s great for consumers. I mean, a couple of things could happen, which is one, the free tiers could disappear. That would help things quite a lot. You know, we get into the weeds there. It gets really complex. “Catch me Falling” by Ketsa, under Kevin Erickson: You’ve got services like Pandora or Sirius XM, which are non-interactive services because you don't get to choose the music that you're listening to, the specific track. In contrast, things like Spotify or Apple Music are interactive services where you actually do get to pick the particular song that you want to hear. “Seven-Year Ache” by Rosanne Cash under Kevin Erickson: And the way that compensation happens in those two categories of services, non-interactive and interactive, are very, very different. And the issue there is that neither a percentage of revenue or simple dollars to sense comparison of a CD sale or a download to a stream really tells you the whole story. Adam Kampe: The whole story gets weedy and wonky, fast. When you break the royalties down—from downloads to streams to live concerts—it’s important to remember it’s an economy of scale. Are you an arena rock band on a major label or are you a self-published DIY punk band? Kevin Erickson: I think the scale element is really important in all of these music revenue discussions. You have to look at individual artist's experiences and see how the distribution of that revenue happens and is changing over time before you can really judge whether the growth in an overall industry, to see how that growth translates to different artist's experience. And, typically, the outcomes are diverse, which is why these issues are so complicated often. Adam Kampe: Then, there’s YouTube, which is actually the largest streaming mechanism on Earth. YouTube is less a “service” and more a digital library filled with of endless hours of music and videos, much of which is not posted legally. Rosanne Cash: I have two sons-in-law who are musicians. One of them is in a punk band, and one of his songs had some millions of views on YouTube. He’s never received a penny. Ever. Kevin Erickson: To be able to effectively license large volumes of music, you have to be able to get accurate data about who owns that music so you can take the revenue that you're generating and direct it in the right place. Rosanne Cash: You can’t take another artist’s copyrighted work, use it to sell advertising dollars for yourself, pat the artist on the head and say, “Oh, we’re giving you exposure.”  You know, you wouldn’t call your electrician and say, “Hey, if you do a good job, I’ll tell other people you’re really good.” At what point do you pay your rent with exposure dollars? It’s a hall of mirrors. The thinking is that at some point, somebody will buy the record. Well, at what point does that happen? Rosanne Cash: You know, Mike Doughty, who was with us on Capitol Hill a few weeks ago … Adam Kampe: She’s talking about Mike Doughty of the band, Soul Coughing. [I googled “Circles,” their late 90s hit playing in the background and it’s all over YouTube with hundreds of thousands of views. Only 551 of which are on Warner Music Group’s channel. The band’s label.] Rosanne Cash: … he made a great analogy. He said that they say they can’t track down who to pay, but if a bare human breast goes up, they track that down and get it off immediately, right?  They have the software to scrub those things. They have the software to find out who sang a song and pay that person. And they don't. This is one reason that several hundred of us signed a petition, which we sent to Congress for them to revise the DMCA, the Digital Millennium Copyright Act so that these huge tech companies wouldn’t have what’s called safe harbor, so that when you issued a takedown notice to them like, “Hey, my song’s on a pirate site. You’ve got it up for free,” that takedown would mean stay down now, so the DMCA was written in the ‘90s and things have exploded since then. It’s irrelevant at this point and actually, the glitch protects pirates. “Trickledown” by Podington Bear, under Adam Kampe: One thing that seems to gets lost as we walk around in circles talking royalties and intellectual property is the importance of the art itself, the music. Without it, radio, no matter which format, wouldn’t exist. Last month, super producer T. Bone Burnett spoke about this very thing on Capitol Hill along with Rosanne Cash. Rosanne Cash: He was so eloquent on this issue in his editorial in The Washington Post earlier this year. He’s going to share that eloquence this morning. Please welcome T. Bone Burnett. “Memory Wind” by Podington Bear T Bone Burnett: Beneath the subatomic particle level, there are fibers that vibrate at different intensities, different frequencies like violin strings. The physicists say that the particles we are able to see are the notes of the strings vibrating beneath them. If string theory is correct, then music is not only the way our brains work – as the neuroscientists have shown – but also it is what we are made of, what everything is made of. These are the stakes musicians are playing for. Rosanne Cash: People like me and David Byrne and T. Bone Burnett, we all work really hard for these causes and for advocacy and for fair compensation, and all of us realize that we’re in the process of planting a garden that we may not see, or at least we may not see much of it, and also, all three of us are fine. We’ve made our careers. We make a good living. We can, you know, we’re okay. This is for the next generation of musicians and for young musicians who are up now. It’s heartbreaking because the next generation of musicians and artists is disappearing. Every day I hear about a young musician who quits because they can’t pay their rent and they’re – some of them, you know, are put on this earth to do that very thing that they can’t do anymore, and that's a loss to everyone. “Triste” by Podington Bear, under Adam Kampe: Special thanks to Kevin Erickson, Ted Kalo, Danny Kahn, Rosanne Cash, and the record labels and publishers who approved music for this piece. And of course, thanks to the musicians themselves. A full listing of the featured music can be found in this story’s transcript on the NEA’s site: For the National Endowment for the Arts, I’m Adam Kampe. Music Credits: “Seven-Year Ache composed and performed by Rosanne Cash, from the album, Seven-Year Ache, used courtesy of SBME Special Markets / Sony Music Entertainment and by permission of Chelcait Music obo Downtown Music Publishing (BMI). “Impossible” by Pleasant Grove used courtesy of the Needle Drop Company “Mississippi Turn Around” by Nick Jaina, used courtesy of the Needle Drop Company. “The Zeppelin” by Blue Dot Sessions, used courtesy of WFMU’s Free Music Archive. “Catch Me Falling” by Ketsa, used courtesy of WFMU’s Free Music Archive. “Trickledown, Memory Wind, and Triste” by Podington Bear, used courtesy of WFMU’s Free Music Archive. Audio Credit: Excerpt of T. Bone Burnett’s speech used by permission of Ted Kalo.