Online music is starting to sing licensing agencies' tune. The American Society of Composers, Authors and Publishers (ASCAP) says it collected over $1 billion in royalties for the first time last year and distributed a record $883 million, much of it for songs streamed over the internet. Even so, a system that often pays artists less than a penny per play needs a rewrite.
A century ago, ASCAP helped its members earn money from their work by selling blanket performance licences and passing along the proceeds. In 1941, trustbusters clipped its power to set rates. But the system worked well enough for ASCAP and rival BMI until internet streaming came along, changing how people listen to music and prompting the two to demand higher fees.
Broadcasters and some digital services acquiesced, but internet radio firm Pandora and others did not. Last March, a federal judge denied ASCAP's request for sharply escalating rates, keeping Pandora's payments slightly above those of radio stations. BMI is making similar arguments in another court, but a different outcome is unlikely. The upshot is that songwriters may continue to earn on average 8 cents for a tune streamed 1,000 times, according to ASCAP.
The soaring popularity of Spotify, Rhapsody and other streaming services accounts for much of that increase. But ASCAP also identified over 1.3 million different songs played on those services - 30 times more than in 2013 - and paid nine times as many writers for their work. As a result, fees collected in the US increased 6 per cent, and those gathered overseas rose 5 per cent.
Music rights holders may get more good news next week when a US Senate subcommittee considers lifting some of the 1941 limits to allow certain ASCAP members to strike their own deals for higher fees. The Department of Justice is contemplating similar changes.
Shifting negotiating power toward composers and publishers makes sense. But ASCAP's improved performance suggests artist consortiums can avoid going the way of disco in a Spotify era.
A century ago, ASCAP helped its members earn money from their work by selling blanket performance licences and passing along the proceeds. In 1941, trustbusters clipped its power to set rates. But the system worked well enough for ASCAP and rival BMI until internet streaming came along, changing how people listen to music and prompting the two to demand higher fees.
Broadcasters and some digital services acquiesced, but internet radio firm Pandora and others did not. Last March, a federal judge denied ASCAP's request for sharply escalating rates, keeping Pandora's payments slightly above those of radio stations. BMI is making similar arguments in another court, but a different outcome is unlikely. The upshot is that songwriters may continue to earn on average 8 cents for a tune streamed 1,000 times, according to ASCAP.
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The news, however, is not all bad. The licensing organisation is getting much better at keeping track of when a song is performed - live, online or over the radio - and a payment is owed. It reported 500 billion performances in 2014, double the number for the previous year.
The soaring popularity of Spotify, Rhapsody and other streaming services accounts for much of that increase. But ASCAP also identified over 1.3 million different songs played on those services - 30 times more than in 2013 - and paid nine times as many writers for their work. As a result, fees collected in the US increased 6 per cent, and those gathered overseas rose 5 per cent.
Music rights holders may get more good news next week when a US Senate subcommittee considers lifting some of the 1941 limits to allow certain ASCAP members to strike their own deals for higher fees. The Department of Justice is contemplating similar changes.
Shifting negotiating power toward composers and publishers makes sense. But ASCAP's improved performance suggests artist consortiums can avoid going the way of disco in a Spotify era.