For memory is a Billboard Deputy Editorial Director Robert Levine’s column analyzing music industry news and trends.
Last week at the annual Music Biz conference in Nashville, I heard about a company that has developed technology to instantly pay multiple creators shared royalties, either in traditional cash or cryptocurrency. Finally, artists will be able to collect their royalties immediately. That is, assuming they can agree on how to split the credits and find a company that wants to pay them instantly.
Technology is a wonderful thing, and this company seems to be able to provide the kind of infrastructure the music industry could use. At the moment, however, few creators are getting paid in the time it takes to send a check. The reasons have little to do with delays in sending money. Streaming data must be unraveled and combed through to detect fraud. Creators sometimes disagree about how to share credits and royalties. In the United States, the mechanical royalty rate set by the government is being appealed by streaming services, giving the chilling prospect that these services will claw back money from publishers, who in turn might try to recover some of the songwriters. When it comes to cryptocurrency, call me old fashioned – #fiatfan – but I still prefer to be paid in cash that will be worth what it was worth when I earned it.
Music Biz was full of such companies, selling services that might loosely be called calculators – tools to track the use of copyrighted works and allow rights holders to reclaim the royalties that are due to them and to collect them. Many of them are awesome – and the music industry can’t function properly without them.
Sometimes, however, the music industry also needs what might be called hammers – tools that can ensure that services that use music pay creators and other rights holders. The ability to track and collect royalties from YouTube is great, but creators can’t collect anything from Twitter because the company doesn’t pay for the music. (It operates under the Digital Millennium Copyright Act in the US, where some music may also qualify as fair use.) Besides, it may not be possible to raise money from YouTube in the first place – or Facebook or TikTok – so major rightsholders hadn’t used as much leverage as the law gives them. (It’s hard to know for sure, and it’s worth noting that YouTube pays creators of all sizes, but it’s hard to imagine that didn’t help.) Biggest hammer of all, at least in the States United States, is statutory damages, which gives rights holders some leverage – although in some cases this is counterbalanced by the DMCA.
It’s not a choice situation, of course – the hammers can’t make anyone pay with precision. But calculators alone won’t work either – they often don’t let anyone pay at all. What worries me is that, at least at Music Biz, all the attention has been on calculators because so many companies are developing them. During a panel on EU copyright, for example, Jim Griffin talked about Pex, a registry that allows rights holders to set the conditions under which their work can be used and to collect royalties; during a panel on “fair pay for every game”, Utopia COO Roberto Neri talked about his business. The emphasis was on “all”, however. As my colleague Glenn Peoples points out, the music industry has moved from a discussion of fairness to a discussion of accuracy.
Equity often requires a hammer – in the form of leverage to negotiate a market rate. (This often leads to complaints from both sides – platforms say they pay too much for music, while rights holders say they pay too little – but reprimand is often just a negotiation by other means.) And that hammer is often provided by the political world, in the form of legislation, legal precedents or public pressure. It doesn’t get as much attention because it’s not something start-ups tend to do. In fact, it’s something that start-ups tend to scoff at – who needs laws when we have code! But any start-up that tracks the use of works will benefit from the European Union’s Copyright Directive – which is probably why Pex wanted to showcase their system on a panel about it.
Companies like this would also get a boost from the SMART (Strengthening Measures to Advance Rights Technologies) Copyright Act of 2022, which would allow the Librarian of Congress to run a process to develop rules which will designate certain technical measures that the platforms should follow. to maintain their safe harbor against copyright liability – like YouTube’s Content ID filter for example. (Why the Librarian of Congress? Because since its inception, the Copyright Office has always been part of the Library of Congress.) Although tech companies tend to consider any kind of copyright enforcement as a barrier to innovation, this law would actually stimulate it by providing an incentive to better track the use of works online.
It’s important to know exactly how much creators should collect – and from whom. But the music industry still needs hammers, because there are still online platforms that don’t pay at all – Twitter still doesn’t pay for its use of music, Snapchat was recently sued by SUISA Digital for not not have paid for the use of certain music in Europe. After years of resistance, Twitch is finally paying for music. It will require sophisticated calculation tools to distribute the income it pays. But these tools alone could not have made him pay anything.