CMU Daily 22.10.21: Streaming services push for pre-2018 song royalty rate in US Copyright Royalty Board proceedings, PETA urges Coldplay to make eco-tour vegan

Streaming services push for pre-2018 song royalty rate in US Copyright Royalty Board proceedings
The US Copyright Royalty Board has published what the streaming services think should be the song royalty rates they pay under America's compulsory licence from 2023 to 2027. The lengthy and partly redacted documents confirm that there is quite a battle brewing. Spotify and Amazon are basically pushing for a top level rate of around 10.5%, which is just over half what the music publishers are proposing. And also basically the pre-2018 rate.

US copyright law provides a compulsory licence for the mechanical copying of songs, with the rates paid by those entities making such copies set by a panel of judges called the Copyright Royalty Board. A stream actually exploits both the mechanical rights of the song - subject to the compulsory licence - and the performing rights - licensed in the US by the collecting societies like BMI and ASCAP. However, the CRB nevertheless sets a top level rate for the song, from which any performing rights royalties paid through the societies is then deducted.

Prior to 2018, that top level rate was 10.5% of each service's revenues. That meant that the song royalty rate in the US was lagging behind the rate paid in many other markets where there are no compulsory licences covering streams, and where some societies and publishers had got the rate up as high as 15%. However, when setting the rates for 2018-2022, the CRB ordered increases each year during that five year period, so that by 2022 the US compulsory rate would also be up to 15%.

Most of the streaming services - Apple being the notable exception - appealed that decision, and last summer an appeals court in Washington sent the whole thing back to the CRB for more consideration. Which is presumably why - now that submissions are being made for the 2023-2027 period - Spotify and Amazon's starting point is the pre-2018 rates not the 2018-2022 rates. Because you can't really reject the 2018-2022 rates and then use them as your starting point here.

The submissions are complicated because the compulsory licence is complicated. For starters, in addition to the top level percentage of revenue rate, there is another percentage based on what rate is being paid to the labels on the recordings side, and there is a minimum rate per subscriber. Usually the rate paid is whichever of those is the highest. And on top of that, there are some variables for all the different kinds of specific subscription packages a streaming company could be providing.

However - while both Spotify and Amazon are also proposing some changes to the way royalties are calculated - the standout proposal in both their submissions is that the top level rate should stay more or less around the 10.5% figure that they paid pre-2018. Apple, meanwhile, can continue to present itself as the more songwriter-friendly service in the US, as it's pushing for an albeit simplified version of what the CRB originally decided on for 2018-2022. Although even that proposal will put Apple in conflict with the music publishers in this latest CRB review.

Because - not only have the music publishers been consistently scathing of Spotify et al's appeal of the 2018-2022 rates - but, for 2023-2027, they are pushing for a further increase, so that the top level rate would be more like 20%. Unsurprisingly, the US National Music Publishers Association was speaking out strongly against all the streaming services' proposals even before their submissions were made public by the CRB.

Recognising that the publishers - and the songwriters they work with - will make sure that this CRB review is much more in the pubic spotlight than with past proceedings, the Digital Media Association (DiMA, for short), which reps the streaming platforms, has already gathered together all of its arguments for why its members' proposals are fair into one handy document.

They are all arguments the publishers and songwriters have heard - and rejected - before, but DiMA is hoping that they might influence the media, the political community, the CRB judges and the good old general public.

Those arguments include that it was streaming that took the record industry back into growth after fifteen years of decline, and sparked the recent flurry of big-bucks deals in which investment types are buying up music rights, both of which are true.

Also, DiMA stresses, the real dispute here is actually between the record labels and the music publishers over how streaming monies should be shared out between the recording rights and the song rights, which is also true. And finally, DiMA reckons, songwriters are mainly struggling today because of the increase in competition, the increase in consumer choice, and the increase in the number of collaborators per song. Which is partly true.

Summarising all that, DiMA boss Garrett Levin says: "The current proceeding comes at a time of sky-high valuations for all forms of music rights, more creators delivering more music to fans at the push of a button, and an increasingly vocal conversation throughout the world about the most equitable allocation of streaming royalties between recordings and songs. That is the broader lens through which this proceeding – and the interconnected nature of today's music industry - should be considered".

None of that is going to help positively spin a 10.5% top level rate though. Nor will any talk of "growing the pie" and "promotional value" - probably the most contentious of the commonly used excuses from a songwriter perspective - both of which are mentioned in Spotify's submission.

Meanwhile, within the CRB proceedings themselves, there's the fact that all the services talk in their submissions about the obligation under the 2018 Music Modernization Act for the CRB judges to consider what rates would likely stem from hypothetical 'willing seller, willing buyer' negotiations on the open market.

Except, of course, that standard doesn't have to be hypothetical, given such open market negotiations are happening all the time in other countries. And the outcome of those negotiations was a slow increase in the song royalty rate to 15%.

Which, of course, possibly suggests that all parties ultimately expect the outcome of the 2023-2027 proceedings to be in the 15% ballpark, and that the way to achieve that is for the services to go in low and the publishers to go in high.

We will see I guess. But expect lots of contentious debates along the way.

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Jhene Aiko signs to Warner Chappell
Warner Chappell has signed Jhené Aiko to a new publishing deal, eighteen months on from the release of her third studio album 'Chilombo'.

"Jhené's star power only continues to rise, and it's been exciting to see her become one of the industry’s most influential acts", says Warner Chappell's President of A&R US, Ryan Press. "With each new release, she reveals a different side of her musical talent and captivates listeners with her artistry and lyrics. She's established herself as the defining voice of her generation and of modern R&B, and we're so proud to be working with Jhené".

Aiko adds: "I've known Ryan Press for a long time now and have so much love and respect for the work they're doing at Warner Chappell. They treat their songwriters like family, and it's great to be on this new journey together".

Most recently, Aiko released 'In The Dark', a collaboration with Swae Lee for Marvel movie 'Shang-Chi And The Legend Of The Ten Rings'.

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IMPALA publishes its first diversity and inclusion report
IMPALA - the pan-European organisation for the independent music community - has published its first annual report on diversity and inclusion, a year on from the publication of its diversity and inclusion charter, which was launched last October.

Outlining its own efforts and achievements in relation to diversity and inclusion over the last twelve months, IMPALA lists various initiatives, including: offering diversity and inclusion training for its members, launching its #20MinutesWith podcast, launching a diversity and inclusion survey, and appointing diversity advocates on its committees. The report also notes that there are no 'one size fits all' solutions to tackling diversity challenges across the whole of Europe and that, therefore, it has "relied upon national associations to advise us on their priorities".

Keith Harris, who is an adviser to IMPALA's diversity task force, says of the report: "This first annual report outlining the measures that have been undertaken over the last fifteen months or so shows that there is a serious wish to make sure that the measures taken are irreversible, and that IMPALA members across the board have bought into them".

"If I have one small area of concern, it is that many of the measures proposed, and implemented, are mainly gender focused", he goes on. "This is a much easier conversation to have than one about disadvantages due to ethnicity, but I am confident that IMPALA will not shy away from those difficult conversations and solutions over the coming years".

Also, IMPALA's Executive Chair Helen Smith adds: "As an organisation, IMPALA has defined itself through its work to promote cultural diversity and access to market for members irrespective of size, origin or type of music. Last year, we adopted a more structured approach on diversity and inclusion, and we know we have a long way to go to achieve systemic change in the sector. This report is part of a process of being transparent about progress. Our task force will take on board Keith's recommendations over the next twelve months".

You can download and read the full report here.

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PETA urges Coldplay to make eco-tour vegan
Animal welfare charity PETA has published an open letter to Coldplay, urging them to ensure that only vegan food is served in venues on their world tour next year.

Coldplay, of course, recently announced that they would be returning to touring in 2022, having said two years earlier that they would not do so until they had found a way to make playing concerts around the world environmentally "beneficial". Earlier this month they revealed a long list of things they will do on the 2022 tour to make it as eco-friendly as possible.

Most of the methods being used to improve the environmental impact of the upcoming dates are technological, although they will also plant a tree for every ticket sold. A glaring omission from that list, however, was any announcement on what food would be available.

"Like many people around the world, we were excited to hear about your goal to make your 'Music Of The Spheres' world tour as sustainable and eco-friendly as possible", writes PETA Director Elisa Allen. "To that end, we have a suggestion that we're sure will strike the right chord: ensure that only vegan foods be served during your concerts".

Now, Coldplay have said that they will send a "sustainability rider" to each venue on the tour, detailing ways in which activities in the building outside the band's direct control should be made more sustainable. It is entirely possible that this has stipulations on the type and origin of food sold to punters and served elsewhere. The band have not said whether that is the case, but it would seem like a bit of an error not to, if this tour is to be truly beneficial to the planet.

"As you may know, animal agriculture contributes to many of the serious environmental problems the planet is facing", Allen continues. "By some estimates, the industry emits more greenhouse gases than the aviation and automobile industries combined, which is why University Of Oxford researcher Joseph Poore concluded that going vegan is 'the single biggest way' we can reduce our impact on the planet. Farming animals for their flesh also requires massive amounts of water and grain, both of which are scarce in much of the world, and 80% of all deforestation in the Amazon is linked to raising cows for meat".

"It's little wonder, then, that the United Nations states that a transition to vegan eating is urgently needed to prevent the worst effects of the climate crisis", she goes on. "And this can be as simple as swapping beef burgers for bean burgers. With so many delicious vegan options available worldwide, it's never been easier to eat vegan. Best of all, making the switch to vegan eating reduces a person’s food-related carbon footprint by up to 73% – and also spares around 200 animals per year a miserable life and a terrifying death".

"We hope you'll agree that cutting damaging animal-derived foods from concert venues is a no-brainer", she continues. "We'd be happy to connect you with world-class vegan chefs, should that be of use".

Whether or not the band will take them up on that offer remains to be seen, or maybe they reckon their big dancing-powered battery is enough. Either way, they have just added a fourth night at Wembley Stadium in August as part of the tour. Tickets for that are on sale now.

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DHL partners with Universal Music on virtual shows and digital collectibles
Delivery firm DHL Express has announced a partnership with Universal Music which will see it collaborate with artists on creating "unforgettable music moments" and some "exclusive merchandise".

And before you think that's just so DHL has more merch to deliver, much of the "exclusive merchandise" will be digital. This is an eco-friendly initiative, see. Though there will be some limited edition physical stuff for DHL drivers to drive to a fan's home. But maybe in one of the firm's eco-friendly electric vans. Depends where the fans live, I guess.

The US-based partnership - aka DHL Fast-Track - will kick off with R&B-pop duo Emotional Oranges, who will perform a virtual show at Universal's Capitol Studios in LA.

Fans will also be able to access a free Instagram or Snapchat AR filter to 'wear' during the virtual show, and enter a competition to win "a hyper-limited version of the digital garment". Some fans will also win "limited-edition physical garments produced from sustainably sourced materials and hand delivered by DHL". Lovely stuff.

Say Emotional Oranges: "Thanks to the team at DHL Fast-Track for helping us produce such a special virtual show - and our first one yet! We had the opportunity to collaborate with some very special artists at the iconic Capitol Studios in our hometown of Los Angeles".

Mike Parra, CEO of DHL Express Americas & Global Head Of Sponsorships, adds: "We are very excited to be launching the first-ever pieces of digital merchandise by Emotional Oranges in partnership with Universal Music Group. DHL has a strong legacy in both music and sustainable fashion, so it’s great to connect the two in a progressive and innovative way for fans".

And finally, Universal's Global Head For Brands, Richard Yaffa, says: "We are constantly innovating beyond music with our partners, which made it especially exciting to the enter the world of AR fashion with DHL Express, who share our commitment to supporting emerging artists globally".

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Google cuts its commission for in-app subscription fees
Google has announced changes to its app store commissions, which will see it charge subscription services that take transactions through their Android apps 15% on all income. Currently it charges 30% on first year subscription monies.

The commissions charged by the Apple and Google app stores - and accompanying app store rules - have been controversial for years, of course, but are now increasingly subject to litigation and regulatory investigations. As a result, both the tech giants have started making some concessions.

Spotify - which directly competes with Apple Music and Google's YouTube Music - has been particularly vocal on all this, of course, it accusing its bigger rivals of anti-competitive behaviour.

Although it has mainly welcomed the recent concessions, ultimately Spotify wants to be able to totally circumvent the Apple and Google transaction systems within its apps, thus avoiding paying any commissions at all. Which means Google's latest announcement probably isn't a huge help to the likes of Spotify.

It will, however, help plenty of other app makers. Currently Google - like Apple - charges a 30% commission on in-app subscriptions for the first year, which then drops to 15% after the first twelve months. From next year, it will charge 15% across the board.

In a blog post yesterday, Google's VP Product Management, Sameer Samat, stated: "Digital subscriptions have become one of the fastest growing models for developers but we know that subscription businesses face specific challenges in customer acquisition and retention. We've worked with our partners in dating, fitness, education and other sectors to understand the nuances of their businesses".

"Our current service fee drops from 30% to 15% after twelve months of a recurring subscription", he added. "But we've heard that customer churn makes it challenging for subscription businesses to benefit from that reduced rate. So, we're simplifying things to ensure they can. To help support the specific needs of developers offering subscriptions, starting on 1 Jan 2022, we're decreasing the service fee for all subscriptions on Google Play from 30% to 15%, starting from day one. For developers offering subscriptions, this means that first-year subscription fees will be cut in half".

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DEALS

BTS are ending their distribution deal with Sony Music's Columbia label and distribution division The Orchard, and are shifting to a new partnership with Universal Music's Geffen label and distribution business Ingrooves. It's not a massive surprise, as the group's label and management firm Hybe has been working ever more closely with Universal since the beginning of this year, including setting up a joint venture label with Geffen to launch a new K-pop boyband.

South Korean rapper and singer CL has signed a new management deal with TaP Music. "CL is one of the world’s most compelling superstars, with a diverse body of work that has kept us all wanting more and a fiercely independent spirit that’s well matched to our own", says TaP's Global co-President Wendy Ong. "As a fellow Asian female leader in the music industry, I am proud and honoured to welcome CL to TaP Music and look forward to helping her expand her global fanbase".

Toro Y Moi has signed a new record deal with Secretly Group's Dead Oceans to release a new album in 2022. "I'm excited to begin this next chapter with Secretly/Dead Oceans", says the musician. "Throughout the years they've continually maintained a conscious eye on the state of independent music and are pushing the boundaries of popular music".

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APPOINTMENTS

Spotify has promoted Sulinna Ong to Global Head Of Editorial. She was previously Head Of Music for the UK and Ireland.

The UK's Association Of Independent Music has elected five new board members: Soundway's Alice Whittington, Dirty Hit's Jamie Oborne, Jackson Rackham of [PIAS], Beggars Group's Ruth Barlow, and Stella Reid from Rough Bones.

Yvan Boudillet has joined Utopia Music as Head Of Policy. "I am truly THRILLED to join Utopia and contribute to fulfilling the bold vision of delivering a better world for music", he says. "I cannot be more excited to join such a talented team led by [COO] Roberto [Neri], all of whom share the same values and passion".

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ARTIST NEWS

The love story of Ozzy and Sharon Osbourne is being turned into a feature film, just like you wanted. "Our relationship at times was often wild, insane and dangerous but it was our undying love that kept us together", says Sharon Osbourne, who is producing alongside her children Jack and Aimée through their Osbourne Media company. "We're THRILLED to partner with Sony Pictures and Polygram to bring our story to the screen".

Franz Ferdinand have announced that drummer and founder member Paul Thomson has left the band. "Paul is leaving the band", they say in a statement posted on social media. "It was a bit of a shocker for us when we found out, so it probably will be for some of you too". He is replaced by Audrey Tait, who made her debut with the group at a performance in France last month.

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RELEASES

Olivia Rodrigo has released the video for 'Traitor' from her 'Sour' album.

Flo Milli has unveiled new single 'Ice Baby' with a Colors performance of the track.

Health have released a new song featuring Poppy, titled 'Dead Flowers'. This and their recent collaboration with Nine Inch Nails, 'Isn't Everyone', will appear on the duo's upcoming collaborations album, 'DISCO4 Part 2'.

Idles have released the second part of their video for 'The Beachland Ballroom'. Their new album, 'Crawler', is out on 12 Nov.

Elkka has shared new single 'Voices', from her upcoming 'Harmonic Frequencies' EP, which is out on 19 Nov.

P Money and Desperado have released new single 'What's Good'.

Obongjayar returns with new single 'Message In A Hammer'. He's also announced UK tour dates in April next year.

Dream Nails are back with new single 'They/Them'. "This song is a rage-fuelled love letter to non-binary people everywhere", says vocalist Leah Kirby. "As a non-binary person, or enby, living in the UK, I am constantly mis-gendered and often feel invisible. This is a banger for the fat enbys, the black enbys, the neurodiverse enbys, the disabled enbys. The enbys that don't fit mainstream narrative of what genderqueer is. We refuse to be palatable and to fit into binary terms of 'male' and 'female'. After hearing this song, I dare you to call me girl again!"

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AWARDS

More winners have been announced for this year's Artist & Manager Awards. Little Simz will rightly be named Artist Of The Year, while Metallic Inc's Grace Ladoja will receive the Entrepreneur Award.

That's not it for MMF and FAC's big awards bash. The shortlist for Breakthrough Artist has also been announced. They are: Ashnikko, Becky Hill, Celeste, Central Cee, Easy Life, Griff, Headie One, KSI, Rina Sawayama and Sault.

But, hey, it's not just called the Artist Awards, is it? No, there are managers in there too. And so, the shortlist for Breakthrough Manager is out as well. Up for that are: Bello, Ben Blackburn, Charlie Owen, Harry Knyt, Ian Tunstall & Rian Zoll-Khan, Jess Monroe, Kayleigh Thorpe and Matt Dodds.

Check out our weekly Spotify playlist of new music featured in the CMU Daily - updated every Friday.

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NFT group bought Wu-Tang's single copy album for $4 million
Back in July, the US government sold the single physical copy of Wu-Tang Clan's 'Once Upon A Time In Shaolin' album, which it had seized from previous owner Martin Shkreli. And, at that very moment, we all wondered who'd bought it, didn't we? Even if only briefly. Like, for five seconds, maybe. But five seconds of wondering nevertheless. Well, wonder no more! Or start wondering again and then stop. Because we now know it's owned by a group of those amusing NFT collectors.

Controversial hedge fund manager Shkreli, of course, purchased the only copy ever made available of the Wu-Tang album for $2 million in 2015. It then became part of the whole saga that is Shkreli's life, including his 2017 conviction for fraud, which saw him banged up for seven years and ordered to hand over $7.4 million. Shkreli only had a mere $5 million in his bank account, so authorities seized various other assets to make up the shortfall, including the Wu-Tang CD.

In July, the US government announced that it had not only sold the disc, but also that in doing so it had cleared Shrekli's outstanding debts. Exactly how much was raised and who had bought it was not disclosed, however. Until now. Because a collective of NFT collectors called PleasrDAO has revealed that it purchased the record for $4 million - double what Shkreli originally paid for it.

Sounding somewhat more benevolent than the album's previous owner, Pleasr describes itself as "a collective of DeFi leaders, early NFT collectors and digital artists who have built a formidable yet benevolent reputation for acquiring culturally significant pieces with a charitable twist".

As well as buying up NFTs, Pleasr also sells them, with its specialism being selling more affordable shares in a piece of digital art, rather than an item having one single owner.

You've probably noticed by now that 'Once Upon A Time In Shaolin' is not, in fact, an NFT. It's an actual physical thing that someone can actually physically own. And if NFTs were actual physical items, Pleasr would now merely possess a screwed up piece of paper in a bin somewhere saying, "Hey, if anyone asks, you totally own this. Just don't try to touch it or do anything with it, OK?"

But no, with Pleasr in actual possession of Wu Tang's compact disc and its lavish case, they can do whatever they want with it. And what they want to do with it, seemingly, is to use it to create a load of NFTs. See? It all comes round in the end.

"We want this to be us bringing this back to the people", Jamis Johnson, Pleasr's Chief Pleasing Officer (yes), tells Rolling Stone. "We want fans to participate in this album at some level".

Of course, when I said that - by being in actual possession of the compact disc and its lavish case - Pleasr can do whatever they want with the Wu Tang album, I wasn't being totally honest. See, the disc comes with a contract that places numerous restrictions on what the owner can actually do with it. However, NFTs weren't a thing when that contract was drawn up, which may mean that Pleasr can get on with selling off shares in the album while still actually owning the album itself.

In a blog post Johnson says: "We believe the next chapter in the incredible story of this album should be Web 3.0 native. Although we are bound by the legal agreement underpinning this work of art and may not be able to duplicate and share the music digitally, we firmly believe there are ways to share this musical masterpiece with the world".

Exactly how they'll divide up a $4 million album into pieces that are affordable but still seem exclusive and cool is unclear. Earlier this year, Pleasr purchased the original Doge meme as an NFT for $5.5 million. It then split it into 16,969,696,969 shares, selling off 20% of those at auction last month.

"A lot of things in life are temporary, fleeting, impermanent", concludes Johnson. "But remember this - just like our blockchain, Wu Tang is forever".

If you're still a little confused about all of this, Pleasr have made a video showing them acquiring the album, which will leave you none the wiser, but is quite fun anyway.

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