A new music trend can spark a pop culture movement or at least entertain us with shock value. On the business and legal side, a new trend can alter the way in which the entire music industry operates. The latest music business trend is no different, involving legal disputes over how artist royalties are calculated for music downloads sold via third-party distributors (i.e. iTunes) and music streaming.
Before the days of digital piracy and the proliferation of new digital music services, the traditional revenue-generator for labels and artists came from music sales, with royalty rates set based on the number of units soldâ€”artists typically received a 10-15% royalty on sales. But since the 2000s, music sales have been slowly declining. Accordingly, record industry economics are adapting to maintain the bottom line.
ASCAP. BMI. Pandora. SiruisXM. SoundExchange. Five parties. Three lawsuits. One issue: royalties. While artists, labels, and music services continue to explore ways to maintain healthy revenue streams within the music industry, recent music lawsuits have challenged the delicate marketplace equilibrium, once again pitting traditional music business models against new services.
SoundExchange v. SiruisXM
On the left, we have SoundExchange, the U.S.-based digital performance rights organization that collects and distributes royalties on behalf of sound recording copyright owners. On the right, SiriusXM, the world’s largest radio broadcaster by revenue. At issue, allegedly unpaid royalties for the public performances of certain pre-1972 sound recordings in rotation on SiriusXM stations.
This week, Billboard magazine celebrates the 10th anniversary of rapper Kanye Westâ€™s debut album, The College Dropout. No doubt that (for better or worse) Mr. West has significantly contributed to our culture lexiconâ€”Yeezy taught us. He is even the subject of a forthcoming academic textbook, The Cultural Impact of Kanye West, which explores â€śthe moral and social implications of Westâ€™s words, images, and music in the broader context of Western civilization.â€ť Not only has Kanye made his mark on the fashion, music and scholarly worlds, he has also added several pages to the growing volumes of U.S. case law. In honor of The College Dropout ten-year anniversary, I present a look back at ten years of Kanye West lawsuits:
Good question. I wish I had a simple answer, but I donâ€™t. As the 113th Congress eases back into its second session, I would like to propose an additional action item for their Copyright reform to-do list: add a substantive definition for non-interactive service to the Copyright Act.
Presently, there is no statutory definition for a non-interactive service found in the Act, which is a perplexing oversight considering: 1) â€śinteractiveâ€ť is a defined term in the Act; 2) the term â€śnon-interactiveâ€ť is mentioned nearly ten times in the Act; and 3) the significant distinction between (and ongoing discussion about) interactive and non-interactive services with respect to licensing and royalty ratesâ€”interactive services must negotiate private agreements and rates with copyright holder(s) to publicly perform sound recordings, non-interactive services are subject to statutory licensing and rates.
Our staring point for understanding what a non-interactive service is to understand its oppositeâ€”it is NOT an interactive service.
Reasonable minds cannot seem to agree on the real reason why total U.S. album sales declined in 2013â€”1.5 billion units in 2013, down from 1.6 billion in 2012 and 2011. If this were ten years ago, the blame would have been placed squarely on pirates (re: peer-to-peer networks). Â Although piracy is no longer an industry buzzword, a recent MusicMetrics report indicates that it may still provide a plausible explanation for the sales declineâ€”over 53 million music files were illegally downloaded through BitTorrent in 2013, representing about half of the difference in total sales between 2012 and 2013. Â Yet, todayâ€™s industry analysts suggest that the nearly 100 million-unit sales deficit in 2013 is the result of a consumer trend shifting to streaming and subscription services. This begs the question: does music piracy still matter?
Jay Zâ€™s partnership with Samsung was probably the most talked about music partnership this year. And, probably the most genius music deal the industry has seen in quite some time. The deal brings to mind the famous line â€śIâ€™m not a businessman, Iâ€™m a business man.â€ť In a time where the music industry quite frankly doesnâ€™t seem to be flourishing, Jay Z used his entrepreneurial mindset to adjust to the quickly changing music industry.
So what are the basics of the deal? Well, Samsung purchased one million copies of the â€śMagna Carta, Holy Grailâ€ť album to give away for free to the first 1 million Samsung Galaxy S3, Galaxy S4 and Galaxy Note 2 owners who download an app. Not only were the device owners getting the album for free, but they were getting it early. Samsung paid $5 million for this free, early album downloads.
But what does this deal really say about the current state and the future of the music industry. Times are changing; that much is evident. Artists arenâ€™t selling music the way they were before. Most artists are barely making money selling singles via iTunes, so the thought of making a substantial sum of money through album sales, more likely than not, seems far reaching. Itâ€™s time for artists, record labels, and any other player in the music industry to think of innovative ways to do everything form making music to selling music. Itâ€™s time to capitalize on the changes on the American society and the American consumer. First and foremost, the industry needs to come to terms with the vast growth of the digital age and adapt accordingly.
The last few years have seen the growth of the digital, technological age. More and more consumers depend on the Internet and social media to learn about and access new music. With more and more consumers heavily depending on digital access to music and no longer purchasing physical copies of CDs or even purchasing music in general, this deal has shown multiple artists a new way to provide consumers with music and still make a living through their art. Jay Z and Samsung simply found a way to capitalize on the changing times on a grand scale. Giving away music the way the Samsung did with the â€śMagna Carta, Holy Grailâ€ť album wasnâ€™t a first but the mere scale of this deal was what really changed the game. The deal set a brand new standard. Now itâ€™s all a matter of artists seizing the opportunity and building on it.
Welcome to the digital music age!
The 2013 Nielson-Billboard report is in and even BeyoncĂ© couldnâ€™t stop digital music from moving to the left. Â Sage wisdom from Mr. Carter teaches us that men lie, women lie, but numbers donâ€™tâ€”so what do the numbers tell us about the year-to-year trends in the U.S. music industry? What impact will the 2013 trends have on the music industry this year?
A 360 View of The â€ś360â€ť Deal
Lets Face It Folks, The Recording Business Is Dying
The industry that once reported overall revenues of 40 billion dollars just a decade ago, can now only claim about one third of that success, raking in just 16 billion dollars in 2012. Billboard. Many industry soothsayers blamed the increases in illegal downloading; others blamed MTV and other mediums for which current music could be accessed; some even went to far as to blame the artists themselves for trying to make a quick buck from releasing a single, instead of the traditional notion of a cohesive album. I say itâ€™s a combination of all of the above – but whatever the cause may have been, the effect was quite certain â€“ record label executives were left scratching their heads, and wallets, desperately seeking a change so drastic that it would restore prestige to the once booming industry.
Crowdfunding is the collective effort of people who pool their money, usually by means of the internet, to support a purpose or goal. Crowdfunding circumvents traditional forms of investment. The typical examples of crowdfunding are political campaigns, disaster relief, and charities. In recent years crowdfunding has started to pour over into the creative world. More and more creators are starting to turn to crowdfunding platforms such as Kickstarter or Sellaband in order to raise money to cover the costs of their artistic endeavors. As advances in technology continue to make the cost of creating movies or music cheaper, the internet has not only provided a means for creative to market their works, but also a way to raise money for their projects.Â A good example of this is Kickstarter.
Some may have thought when they first heard Puff Diddyâ€™s-â€ś Iâ€™m Comin Outâ€ť, Kanye Westâ€™s- â€śGold Diggerâ€ť or even Jay-Zâ€™s- â€śHard Knock Life,â€ť that they were original works by the artists themselves. In fact, when I first heard â€śPuff Daddy- Ill Be Missing You,â€ť a song I was a huge fan of, the thought didnâ€™t even cross my mind that the chorus wasnâ€™t Puff Daddyâ€™s creation for his tribute to the late Notorious B.I.G., but it was from an original track by â€śThe Police.â€ť
â€śTHE CHORUS IS MY FAVORITE PART, AND ITS NOT EVEN HIS?!â€ť –was my initial reactionâ€¦
However, I quickly began to appreciate this art of sampling as a way to help introduce me to the older generationâ€™s music. But also, it became a creative and lucrative method of not only bringing young artists onto a bigger platform, but helping reignite older artistâ€™s careersâ€™ and legacies as well.