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Radio should pay & no consensus on Spotify: Impressions from day 1 of the Future of Music Summit

Future of Music Summit 2013Fighting off as-yet-undiagnosed intermittent internet issues I still managed to watch a good portion of several Monday sessions from the Future of Music Summit in Washington, DC. While I cannot report substantially on any one session, I can give my overall impressions of the day.

It seems like there were three major recurring themes:
1. Terrestrial radio should pay performance royalties
2. There is not enough transparency is what and how artists are paid
3. Things always come back to Spotify

Indeed, there seemed to be something darn close to unanimity on #1. I didn’t even hear broadcast attorney and Broadcast Law blogger David Oxenford raise any serious objection to the idea (though, it’s possible I missed it when my stream buffered).

That agreement even reaches to the federal government. During the morning presentation on “Federal Agencies and Copyright,” Shira Perlmutter from the Patent and Trademark Office and Jacqueline Charlesworth from the Copyright Office discussed a “green paper” from the Department of Commerce Internet Policy Task Force (PDF). In that paper the task force unequivocally supports requiring AM and FM broadcasters to pay for the right to air sound recordings.

There’s nothing new with #2, and, of course, that remains a problem that gets only more complex in the digital world. There was, however, spirited debate about who is responsible and what to do about this lack of transparency. Some folks blame record labels, while others blame the streaming services for failing to give enough information in their reports. Plenty were willing to blame both parties.

But there did seem to be agreement that efforts to sidestep the organizations that collect and distribute royalties to artists–like ASCAP and SoundExchange–threaten to be steps backward for transparency. Such efforts include [the deals Clear Channel has struck with record labels](http://www.nytimes.com/2013/09/13/business/media/clear-channel-warner-music-deal-rewrites-the-rules-on-royalties.html) in which the broadcaster agrees to pay royalties for music played on its terrestrial stations in exchange for lower rates for its online iHeartRadio streams.

One solution to promote transparency proposed by music industry veteran Jim Griffin is that every recorded song should have a globally unique identifier so that it can be accurately tracked. You see, just minor differences in spelling and even punctuation in song and album titles can lead to fits when rights organizations are correlating information of sales and plays. The hope is that having a single ID for each track would cut down on this sort of problem, leading to more accuracy in artist payments.

Finally, it seemed like every conversation that dealt even a little bit with royalty payments and artist income always veered back to Spotify. On this there was nothing close to any sort of unanimous opinion, though the discussion and debate was respectful. While people’s opinions are heartfelt–it does deal directly with artists’ livelihoods–panelists and audience members made reasoned arguments.

I heard the most spirited discussion during the day’s final panel on “Making Sense of New Platforms for Music.” David Macias, president of music marketing and distribution company Thirty Tiger, spoke in support of Spotify, noting some of the points he raised in a Billboard Op-Ed he authored back in July. In particular, he said that Spotify pays rights holders 70% of income generated from subscriptions and advertisements, which is the same that iTunes pays. He said that streaming services have been “a plus for artists, a plus for consumers.”

Emily Smith of the Whitesmith Entertainment talent management firm reflected that when she uses a streaming service like Spotify, “Isn’t it cool that Merge (records) and Arcade Fire will get paid every time I listen to their new single over and over again?”

Spotify is based in Sweden. As a result Macias said that the company makes up a bigger portion of the music business in that country–serving 15% of the population–and generates 70% of all prerecorded music revenues. However, at the same time some Swedish artists are threatening to sue Universal and Warner Music over the royalties they are receiving from Spotify play. While the artists are not threatening Spotify directly (yet), the net benefit for artists is still unclear even in Spotify’s home country.

Some audience members were less sanguine about Spotify, with one person saying that his statements from the company don’t give him all the information that he would like. Another person questioned the accuracy of Macias’ payment stats.

White responded that “if you’re not seeing the money you think you should get, go yell at your label.”

Watching the summit from the other side of the country I wished I could join the evening’s social events so that I might listen in to some of the passionate exchanges that will erupt after a few drinks. I look forward to what I may learn from Tuesday’s sessions, including an appearance by FCC Commissioner Jessica Rosenworcel.


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