Archive

Posts Tagged ‘Mike Huppe’

Fair Pay, Fair Fight: Will the Circle Be Unbroken for Artist Airplay Royalties?

January 31, 2019 Comments off

The Music Modernization Act brought fairness to pre-72 artists who waited 20 years for the government to confirm what everyone knew—that non interactive digital music services like Pandora and Sirius should be paying them performance royalties like everyone else.  Not that they didn’t try–Liberty Media’s lobbyists tried to administer an 11th hour beat down of old guys and dead cats in the Senate in the waning hours of the Music Modernization Act in an unholy alliance with Big Tech in that very special DC room of mirrors led by Oregon Senator Ron Wyden.

So what makes anyone think that we’ll get fairness without a fight after the merger of Sirius and Pandora announced this week, since parent corporation Liberty Media has now managed to consolidate its hold on 34% of LiveNation “…creates what the companies call the world’s largest audio entertainment company…Policy experts also say the merger empowers a company that’s aggressively fought to suppress royalty payments for artists and copyright holders.”

Now that the CLASSICS Act, as inserted in the omnibus MMA, confirmed that those pre-72 artists are entitled to their non interactive royalties, we can recognize that treating pre-72 artists fairly was just another fake concession dreamed up by digital services starting with Sirius and Pandora (and their lobbying group, the Digital Media Association) for something that should have never happened in the first place.  Now we can all turn back to the real test of fundamental fairness—terrestrial performance royalties.

Why wasn’t this fundamental right included in the MMA?  In the run-up to the initial version of the MMA (before CLASSICS and AMP were added to create the omnibus bill that passed), we were all told by the bill’s sales team to forget ever getting a terrestrial royalty.  It was something that was simply never going to happen because the lobbying power of the MIC Coalition was simply too strong.

Bunk.

If you’ve never heard of the MIC Coalition, it is a lobbying group that was assembled in 2015 for the purpose of stopping the Fair Play Fair Pay legislation introduced in the House of Representatives by now House Judiciary Chairman Jerry Nadler.  Google, of course, is a founding member of the MIC Coalition alongside Amazon, NPR, iHeart Media, Pandora, Salem Media Group, Cox Media Group, the NRB Music Licensing Committee, the American Hotel & Lodging Association, the National Association of Broadcasters, the National Restaurant Association, the National Retail Federation, the Educational Media Foundation, the Computer and Communications Industry Association, the Consumer Electronics Association (now Consumer Technology Association) and of course the Digital Media Association.

mic coalition first logo

Shortly after the MIC Coalition was founded, Amazon and NPR resigned from the organization and the Radio Music License Committee, the Brewers Association, and Wine America joined.  Then individual companies removed their logos and the public facing membership became only the trade associations.

mic coalition logo

It must be said, of course, that the MIC Coalition is a Goliath-like array of lobbying muscle.  But that’s kind of the point.  Even so, you’d be a fool not to take it very seriously.  Now for some of the Washington folk, this may seem like time to run up the white flag before Longshanks.  But I’m happy to say that the neither the I Respect Music campaign nor the MusicFirst Coalition have flinched, and I’m just Texan enough to call that a fair fight.  I fully expect that now-Chairman Nadler will want to revisit his Fair Play Fair Pay legislation in the coming days of the new Congress.  We’re behind him 110%.  I for one am ready for the fight and craving the fray.

This new battle was joined with A2IM CEO Richard James Burgess in an op-ed last November that summed up the status quo:

The musicFIRST coalition (A2IM, AFM, Recording Academy, Sag-AFTRA,
SoundExchange, RIAA), has been in negotiations with the NAB (National Association of Broadcasters) under House Judiciary Committee Chairman Goodlatte’s guidance. The objective was a consensus agreement, which the Chairman would enshrine in legislation. Legislation is essential to ensure that artists, musicians, singers, producers, and labels are not only paid for U.S. airplay but also from spins in the rest of the world. It is estimated that these U.S. creators and the U.S. economy are losing hundreds of millions of foreign-trade dollars each year because the NAB has so effectively blocked this legislation.  If such a law should pass, the U.S. would no longer be aligned with countries like North Korea, China, and Iran in suffering a radio industry that doesn’t compensate creators.

Sadly, NAB CEO, Gordon Smith, telegraphed radio’s true intentions on April 9 when he cited “Five Big Wins,” with number three being, “We again fought back attempts by the record labels to tax radio stations simply for promoting and playing the music listeners love to hear.”  In the same speech he boasted, “And, most recently, broadcasters were instrumental in securing $1 billion in legislation passed by Congress to reimburse radio and television stations for their costs during the spectrum repacking process, ensuring viewers and listeners don’t lose access to their stations.”

I find it fascinating that Smith has the gall to refer to a small royalty for the use of our music as a tax (a tax is paid to the government, not to property owners, for the use of their property). Then, in the next breath, he bragged about extracting a billion dollars from our government for the radio industry.

Music on the radio has enriched listeners’ lives and built empires for some radio station owners. We call on Congress to ensure that U.S. music artists and their funders are finally paid their fair share. Let us not enter a second “Century of Shame.”

And SoundExchange CEO Mike Huppe’s Billboard op-ed last December was another call to arms for fair treatment:

Efforts by the music industry to find a common ground of “fairness” with the broadcasters have thus far failed. That is why we need to heed Frank Sinatra’s call to organize and demand that Congress pass legislation to give creators royalties when their music is played on terrestrial radio.

Like the MMA, the terrestrial radio royalty will be a heavy lift in Washington, no joke–particularly after the consolidation of Sirius and Pandora.  And like the MMA, I suspect it will take everyone’s efforts to make it happen.  Unlike the MMA, it’s not an omnibus bill that cuts across our industry with something for almost everyone.  The only reason the MMA didn’t contain the terrestrial royalty is because the consensus view—not mine, but I went along with it—was that terrestrial was a bridge too far.  Now that everyone else got theirs with MMA, the question is who will remember that deal and who will forget their obligations.

We, of course, will be where we always are.  That’s not the question, though.  The question is what is the rest of the MMA coalition prepared to do?  I, for one, certainly know what my expectation of them is going to be, no flinching and no excuses.  We will be watching to see if the circle remains unbroken the next time we are called to stand up and be counted.

And if they don’t we’ll go it alone.

 

 

(A version of this post first appeared in MusicTechPolicy Monthly newsletter.)

@mikehuppe: Broadcast Radio Makes an Ironic Plea for Fairness — Artist Rights Watch

August 8, 2018 Comments off

SoundExchange’s CEO says it’s time radio starts paying all music creators fairly for their work.

On Monday, a group of radio broadcasters penned a letter in support of the National Association of Broadcasters’ (NAB) push for deregulation of the $14 billion radio industry. Their letter was based on the NAB’s petition to the FCC this past June, in which the NAB sought to allow expanded broadcaster ownership of radio stations (i.e., increased consolidation) throughout the country. The NAB’s justification: broadcasters must adjust their business model to the realities of the new streaming world.

As a representative of the many creative parties who help craft music, we are frequently on the opposite side of issues from the NAB. And while I can’t comment on NAB’s specific requests, I was delighted to find so much common ground in their FCC filing in June….

I agree with the NAB that the law should “finally adopt rules reflecting competitive reality in today’s audio marketplace” and should “level the playing field” for all entities in the music economy.

If radio truly wants to modernize, it can start by taking a giant leap into the 21st century and paying all music creators fairly for their work. Stop treating artists like 17th century indentured servants, just so radio can reap bigger profits. If radio wants to have rules that reflect the music industry of today, then that should apply across the board.

We should resolve this gaping unfairness to artists before we begin talking about allowing radio to consolidate even further.

 

Read the post on Billboard

 

A Guide To Music Performance Royalties, Part 3: An Interview with Mike Huppe of SoundExchange

February 11, 2014 Comments off

[Editor Charlie sez:  This interview first appeared in a 2 part series in the Huffington Post .  It is also available as a podcast.  This series continues the Guide to Music Performance Royalties Part 1 and Part 2.]

Background: As we developed in Parts 1 and 2 of this series, there is an important distinction between songs and recordings that is frequently lost on the public.  When you hear a recording of a song, there are actually two distinct copyrights involved, the song (also called a “musical work”) and the recording of the song.

When recordings are played on terrestrial radio, the writer of the song gets a royalty and the performer of the song on the recording gets nothing (neither does the record company). Almost every other country in the world besides the U.S. recognizes a performance right for recordings so that the artist does get paid for radio or internet airplay.  (See the “I respect music” campaign and petition and our interview of campaigner, recording artist and entrepreneur, Blake Morgan.)

U.S. law changed in 1995 to pay a royalty for digital transmissions of certain kinds (satellite and Internet radio), and SoundExchange collects those royalties. If you are a featured artist or sound recording owner you can register at www.soundexchange.com.

The following chart extends the chart we started developing in this series and adds the “post digital” column and digital royalty column.

Note that the term “LOD” in the Record Producer box refers to the “Letter Of Direction” that artists sometimes send to SoundExchange authorizing the organization to pay a share of the featured artist’s performance royalties to a producer.  While individual producer rates will vary, the LOD is pretty typical “custom and practice”; the law only requires that performance royalties are paid to featured artists, non-featured artists and sound recording copyright owners.  The producer’s share percentage is negotiated by the producer as part of the producer’s engagement by the artist and is usually expressed as the producer’s royalty (say 4%) divided by the artist’s royalty, including the producer’s royalty (say 16%).  In this example, the producer’s LOD would provide for the producer to get 4/16ths or 25% of the artist 45% share of royalties collected by SoundExchange.  (Engineers, mixers or remixers who receive a royalty can also negotiate for a share of the featured artist performance royalties.)  The rate in the SoundExchange LOD typically tracks the producer’s share of flat fee income (e.g., master use fees).  See Record Producer Agreements: Accountings and Producer Letters of Direction.

Just to be clear, this chart and explanatory material does not come from SoundExchange.  It is something I created to help explain the high level division of royalties.

Post-digital income (Post 1995/1998)

Digital (non-interactive webcast, Simulcast)

Physical (CD, Vinyl)

US Radio/TV (OTA)

Ex US Radio/TV (OTA) For US Writer/Artist

MP/TV/Commercial

Songwriter Yes, PRO Yes, mechanical from publisher Yes, PRO Yes, PRO Yes, sync license from publisher
Music Publisher of Song Yes, PRO Yes, mechanical Yes, PRO Yes, PRO Yes, sync license
Recording Artist (“Featured”) Yes, SoundExchange Yes, from record company No No (unless qualified see PPL) Yes, master use from label
Featured Recording Artist if Sound Recording Owner Yes, SoundExchange Yes, from aggregator or distributor No No, unless qualified (see PPL) Yes, master use (often all-in fee)
Session Musician/Vocalist Yes, SoundExchange Yes, from union No No (unless qualified see PPL) Yes from union
Record Producer Yes, artist share from SoundExchange (if LOD) Yes from artist No No (unless qualified see PPL) Yes from artist
Record Company Yes, SoundExchange Yes from sales or license No No (unless qualified see PPL) Yes, from master use

To help you understand more about the performance royalty for sound recordings and the role of SoundExchange in collecting and paying , we were able to interview Mike Huppe, the President of SoundExchange.

MTP:  Tell us a little about SoundExchange.  I think a lot of artists and musicians are unclear about what SoundExchange does, so perhaps you can explain how the digital performance royalty for sound recordings in the U.S. came to exist and what is involved.

Huppe: SoundExchange has been collecting performance royalties for sound recordings since 1995. To give a little background, most people in the U.S. are aware of entities like ASCAP, BMI and SESAC. For decades those groups have collected performance royalties for musical works [or songs] — the actual musical notes and lyrics that a songwriter creates. Until 1995, the sound recording side of the business, meaning the recording most people would recognize on the radio or on the internet, did not have performance rights in this country.

In 1995, for the first time ever in the U.S., the Congress established a performance royalty and a statutory license for the sound recording for certain types of digital transmissions. SoundExchange was entrusted with the collection and payment of those performance royalties. We administer a statutory license under the U.S. Copyright law, which means if a service like Pandora or iHeart Radio wants to stream a sound recording digitally, they can either obtain individual licenses from 5,000 rights owners or take advantage of a government license. According to federal law, that service would then simply file a two-page paper with the Copyright Office, meet the terms of the statutes, and then send their royalties and data every month to SoundExchange.

MTP:  Just to give some perspective, how much money has SoundExchange distributed?

Huppe: To date, SoundExchange has distributed more than $2 billion in total. In 2013, SoundExchange distributed approximately $590.4 million in royalties — that’s enormous growth since our distribution of $20 million in 2005.

We’ve had tremendous growth over the past 3-4 years as a result of a variety of factors which include an increase in the rates in 2006-2007 and a radical shift in the way people consume music. More and more people are accessing music through digital devices, mobile devices and through streaming content rather than downloading it. We’ve seen explosive growth–comparing 2005 to 2013, total payments increased over 2000%.

MTP:  I still run into artists who have never heard of SoundExchange, what do you do to encourage artists and sound recording owners to register?

Huppe: That’s a great question and you are absolutely right. SoundExchange’s name recognition and brand is certainly more recognizable now than it was 10 years ago, but you are correct there are people who don’t know who we are or confuse us with some of the other performance rights organizations, not recognizing that these other groups collect for a completely different right — for the song instead of the actual sound recording.

We do a lot in our effort to reach artists and rights owners. Every month, we get reports from people that we’ve never heard of, and who have never heard of us. Outreach is an ongoing effort, but the money comes to us, and it’s our job to find and ensure these individuals to sign up.

On first impression, we sometimes hear from those that haven’t registered that SoundExchange royalties “sound too good to be true.” Understandable, but we have a dedicated team of staff who are focused solely on tracking down performers and labels to get them to claim their money. We try to track and contact them through a variety of methods to get them to register, including: regularly placing ads in print and online news outlets; targeting individuals via social media channels like Twitter, Facebook and YouTube; speaking on panels; sponsoring events or exhibiting at tradeshows. We host regular “how to register” webinars; and have even coordinated with music conferences, like at SXSW, where we put up large banners and hand out flyers with band names asking them to register.

In addition, we’ve partnered with various industry organizations such as AFM, SAG-AFTRA, MySpace, CD Baby, HFA, among others to match their lists against ours and conduct email, mail campaigns — all with the message: “Do any of you know these people? If so, can you please contact them?” We are perfectly open to those third-parties doing the branding and getting the benefit of finding money — we just want to ensure the creative community gets paid for their work. We executed over 150 matches in the past few years resulting in tens of thousands of emails to various folks sharing that SoundExchange has money for them. We are quite confident that we are doing more than our fair share of reaching out and contacting those we owe money to, because it’s the right thing to do.

The real reward is when we register that individual or band where the money truly makes a difference. Approximately 80% of the checks SoundExchange sends out are for less than $5,000. We often hear from artists who express gratitude that we found them or those who might have registered with us, and forgot until they receive a check in their mailbox.

MTP: How many services use the statutory license and how many people does SoundExchange pay royalties to?

Huppe: Currently, we collect digital performance royalties from more than 2,000 services that send SoundExchange monthly reporting logs and payments. We take the data from all those services, clean it up, match it across various algorithms, sort it across numerous payees and then every quarter send out anywhere from 18,000-25,000 checks to all the registrants who come through SoundExchange to collect their money. As of today, we have more than 100,000 artist and record label accounts. When the money comes in, 50 percent of money goes to record labels or whomever owns the master and the other 50 percent goes to the performer — 45 percent goes to the feature performer and 5 percent to non-featured. We pay performers directly, regardless if they are recouped through their record label.

[MTP: That last point is very important because artists, particularly artists who are no longer signed, can be unrecouped and might not be entitled to royalties under their recording agreements. SoundExchange pays the statutory royalty to these artists without regard to whether they are recouped under their old or current record deals.]

MTP:  Where do you see SoundExchange in the next 5 years?

Huppe: I am very excited about where SoundExchange is going. We are a very interesting and unique organization — certainly unlike any other in this country. We’re optimistic about where the music industry is headed and see opportunity for SoundExchange to help digital music services thrive.

SoundExchange is currently one of the top digital revenue sources for most record labels in the U.S. We are growing fast because of all the ways music usage is changing. What we do is increasingly being relied on as a revenue stream for performers and record labels alike. SoundExchange checks have become a very real source of income, and it’s exciting to hear from those who are grateful for what we do.

Although we squabble over royalty rates with the service providers, we view ourselves as partners that enable music service to do what they do best — creating new ways to listen and discover music. In the long run, we want them to succeed. It’s in their best interest, our best interest and the best interest of the consumer to have a very full and vibrant webcasting market. We want them to create new business models, new ways of listening to music and we feel that SoundExchange enables all of that. We are the back office to a lot of these new business models emerging on the web.

In the next five years, we see ourselves growing, providing an important role in some of these business models and we hope to continue to increasing digital royalty payments (remember we went from $20M in 2005 to $590 million in 2013). One of our main responsibilities is fighting for the long-term value of content — a battle we will never shy from. We believe that content is critically important, it is the backbone of many music services and what they provide. Content is the blood and sweat of the performers and the investment of the record labels. We are constantly fighting to maximize the value of content so that those folks can get paid for all the revenue they bring to services.

We will also have an authoritative repertoire database in place that will not only be a resource to the industry so that people can go and find out about the ownership of sound recordings, but also to improve the tracking of collections and more timely payments. We are also in the process of rebuilding our technology and distribution platform in order to scale better and handle the explosive growth. Once we complete that platform I believe there are many other services SoundExchange can provide to the industry beyond processing this license. The possibilities are endless.

We are very excited about where we are headed and what we can do for the industry. And again, the fact that we are a non-profit, the fact that our board represents artists, unions, independent labels and major labels really makes us uniquely positioned to do these things for the greater good of the industry.

%d bloggers like this: