BLOOMBERG – Hollywood Torrent: Music’s broken system

Good afternoon from Los Angeles, wherever you may be.

But first… the Trump administration just sided with some of the world’s biggest rock stars in their dispute with the largest U.S. radio stations, a major twist in a legal fight over the way artists are paid.

So wait, what happened?

The U.S. Department of Justice voiced its support this week for Global Music Rights, a group that represents songwriters such as Drake and Bruce Springsteen, in its lawsuit against the Radio Music Licensing Committee, an organization representing most major radio station groups.

Music copyright. Court cases. Songwriters. Snoozefest, am I right?

Not if you care about musicians getting paid. Music copyright law is arcane and needlessly complex, but this case could change how radio stations and streaming services pay songwriters.  

Radio stations pay songwriters rates that are governed by consent decrees created in 1941. At the time, he government sought to limit the power of ASCAP, which represented most of the biggest songwriters, and so it created the decrees as a form of antitrust protection. GMR is arguing the radio stations now have too much power.

So, what do radio stations pay musicians?

Radio stations don’t pay recording artists at all, and they pay songwriters a couple percentage points of their revenue.

Wait what… radio stations pay musicians?

Radio stations have positioned themselves as promotion, just as MTV did back in the day. 

Do streaming services pay more than radio stations?

A lot more. Spotify pays more than 60 percent of its revenue to music rights holders (labels, publishers, and performing rights groups like ASCAP), and the same goes for Apple Music. YouTube shares 55 percent of advertising sales on music videos with rights holders, and also pays similar rates to Spotify for its paid service. Even Pandora, once the bane of the music industry’s existence, pays a lot more than terrestrial radio.

So what’s the solution?

That’s up to the court. GMR says a win for them is a win for songwriters. Radio stations say a win for GMR could be dangerous, upending decades of antitrust law. Allowing GMR to score higher rates for a handful of artists may not be the answer. It is, however, shining a light on an issue that needs addressing.

The initial regulation protected the fledging medium of radio, allowing it to flourish, and empowered BMI, a real competitor to ASCAP. But we can all agree regulations that governed music in 1941 don’t make a ton of sense in 2019. The DOJ has said it wants to review the decrees, but there’s no guarantee that process will produce results.

As it stands now, radio stations pay infinitesimal rates under the guise of “promotion,” all while most young people discover music on streaming services that pay a much higher rate.  – Lucas Shaw