The Problem with (and Solution to) Royalty Payments in the Music Industry
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Rufus Darwall
Media Analyst at Wavo
Wavo Blog: This series shares information that’s most relevant to music marketers around the globe.
“As much as $655 million in unpaid royalties accumulate every year. ”
Context
Copyright is how songwriters are paid for their work. Therefore, songwriters need to establish how much of a song they claim the copyright for. That copyright can take the form of both composition and recording royalties, which you can think of as “the song itself” and “the recording of the song.” Composition copyrights often involve other writers or collaborators, and how that copyright is split determines who gets paid how much for their work.
That sounds straightforward enough, right? Well you might be surprised to discover MBW reports that as much as $655 million in unpaid royalties accumulate every year.
So why is so much money failing to reach songwriters? This is often due to songwriters failing to adequately identify which copyrights they are entitled to. After all, copyrighting music can be confusing and sometimes songwriters’ information slips through the cracks. With the amount of bureaucratic red tape facing them, the reality is that oftentimes songwriters are not paid what they are owed due to minute errors or omissions in the paperwork.
The solution to this problem? Technology.
“The music industry needs a tool that supports songwriters copyrighting their music without having to do all the admin on their own.”
Strategy
What the music industry needs is an easier way for rights holders to catalog their songs, tie those catalogs to releases, and directly receive payments relating to their work. With a tool like this at their disposal, songwriters can copyright their music without managing all the admin. Plus, by capturing song information and data at the point of creation, songwriters can be reassured they will be adequately compensated for the music.
That’s why I felt so encouraged to hear about the new project from Bjorn Ulvaeus (of ABBA), Max Martin and Niclas Molindar.
They believe they have a fix to undelivered royalties with their startup, Session Studio: a service that allows songwriters to cohesively catalog their songs; release them on streaming services; register tracks around the world; communicate with publishers & societies; and, most importantly, collaborate with other songwriters/artists/producers to establish copyright & royalty shares.
Session have secured investment from Spotify and YouTube and unveiled a partnership with Soundcloud which allows songwriters to connect their Soundcloud accounts to their Session profile. A great first step.
“Whether it’s Session, blockchain solutions, or something new - we need a way to track copyright and pay rights holders directly.”
Key Takeaway
I think an entity like this could lead to a brighter future for songwriters. Let’s imagine songs are uploaded to DSP’s like Spotify, YouTube, and Apple Music complete with all the essential copyright information that determines royalty splits and connected directly to the bank accounts of rights holders. Session might represent a big first step towards a future like this, and it’s “free” for users, which should increase accessibility.
Next I want to see Session prioritize creating partnerships with streaming services beyond SoundCloud. That’s how a solution to the problem of unpaid royalties can be scaled effectively.
Then we need to go further, because it’s not only copyright rules that’s outdated in the streaming era. We need to change how songwriters are paid altogether. Songwriters often have to wait months to be paid for their music, even in the best case scenario. Collecting societies and publishers are responsible for claiming royalties on behalf of songwriters before paying them individually. That’s not efficient. Whether it’s Session, blockchain solutions, or something new - we need a way to track copyright and pay rights holders directly.
Written by Rufus Darwall, Media Analyst at Wavo
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