What is Music Distribution?

In 2017, paid audio-streaming subscriptions increased by 45.5% worldwide. Additionally, digital revenues accounted for over half of all revenue from recorded music. This indicates an important trend: listeners increasingly value access to music online over ownership of physical records. A new generation of listeners is finding their music on the internet through streaming services. Despite a steady decrease in physical record sales over the past two decades, though, they still generate approximately 30% of total revenue from recorded music.

Distribution is the process of making music publicly available in any and all digital and physical media - what happens in between its creation in the studio and the listener’s hearing it. It is vital for anyone attempting to create or license music to understand the ways in which music reaches a listener.

In this newsletter:

Back in April, songwriter organizations called on the Copyright Royalty Board to accelerate the finalization of the Phonorecords III ruling that it had handed down in July of 2022. Now, the three-judge CRB has officially issued its final determination for the five-year stretch at hand.

UK licensing firm PPL has released its recent diversity statistics, indicating positive advancements in narrowing gender and ethnicity pay disparities.

SoundExchange has initiated legal action against SiriusXM to reclaim unpaid royalties and late fees related to sound recordings used on the satellite streaming service.

Now, the details...

Exploration Weekly - August 18, 2023
Compiled by Ana Berberana

13 Months Later, the CRB Has Officially Finalized Its Phonorecords III Determination

Notice of the CRB’s long-awaited Phonorecords III decision was just recently published, after the aforementioned songwriter groups signaled that the determination signoff could free up somewhere in the ballpark of $800 million in owed mechanical royalties. For background, Phonorecords III encompasses a 43.8 percent rate boost for on-demand streaming across 2018 and 2022. The nearly 44 percent hike refers specifically to an increase from 10.5 percent to 15.1 percent, with the latter representing the rate for 2022. However, this headline rate was phased in under Phonorecords III, with preceding rates of 11.4 percent (2018), 12.3 percent (2019), 13.3 percent (2020), and 14.2 percent (2021). Needless to say, given the CRB’s recent approval of rates for a half-decade period that’s already passed – proceedings formally initiated on January 5th of 2016 – the determination was slowed by legal disputes and pushback from leading streaming platforms (except Apple Music). To be sure, an appellate court in October of 2020 overturned multiple components of the CRB’s existing Phonorecords III determination, prompting a reversion to the Phonorecords II rates. Additionally, the “total content cost” portion of the CRB’s determination was among the areas with which the appellate court found fault. In another testament to the highly complex nature of the years-running Phonorecords III process, the CRB went ahead and included with its final determination north of 100,000 words’ worth of “supplementary information.”

PPL Makes Progress in Reducing Gender and Ethnicity Pay Gaps

UK licensing firm PPL has published its latest diversity data, revealing progress in reducing the pay gaps for women and non-white employees. The mean gender pay gap in favor of men is now 5.4%, down from 11.7% in 2022. However, PPL said that if it's (male) CEO is excluded from the calculations, the mean gender pay gap is 0.3% in favor of men. The company also said that its workforce is now 62% male and 38% female, although its senior leadership team is 49% male and 51% female. PPL’s mean ethnicity pay gap has reduced from 39.8% in favor of white employees in 2022 to 30% now: progress, but with more work to do. People declaring any ethnicity other than white are now 30% of PPL’s workforce, up from 27% a year ago. “Striving to become an ever more equitable and inclusive company is not only the right thing to do, but it is also good for business; PPL is stronger for better reflecting our membership and society at large,” said chief membership and people office Kate Reilly. “Although we are continuing to do everything in our power to make PPL a fair, welcoming place to all, we know there are no short-term fixes.”

SoundExchange Sues SiriusXM

SoundExchange has filed a lawsuit against SiriusXM, in order to “recover substantial unpaid royalties and late fees owed under the Copyright Act for the use of sound recordings on the satellite streaming service,” according to an announcement from the organization. SoundExchange alleges that SiriusXM has withheld more than $150 million in unpaid royalties over the past several years, in their estimation. SoundExchange is also seeking other unpaid royalties that they claim were revealed in an audit showing that SiriusXM had taken certain “improper deductions to reduce its calculation of satellite radio royalties.” “It is extremely unfortunate that we must bring this action on behalf of creators against SiriusXM,” says Michael Huppe, President & CEO of SoundExchange. “In recent years we have viewed SiriusXM as a willingly lawful and compliant company that shares our desire for a robust streaming marketplace. But SiriusXM has and continues to wrongfully exploit the rules to significantly underpay the satellite royalties that it owes. It is only because our repeated efforts to resolve this dispute have failed that we are forced to litigate on behalf of artists and rights owners upon whose hard work SiriusXM has built its business.” In a statement shared with MusicRow, SiriusXM shared, We were surprised to see the press release from SoundExchange that it had filed a suit against SiriusXM this morning in the United States District Court for the Eastern District of Virginia. SiriusXM has always respected the rights of creators and artists, and over the past ten years has paid SoundExchange royalties of over $5 billion dollars. Today, royalty payments from SiriusXM represent over 80% of the statutory royalties that SoundExchange distributes to record labels and performers.

BMG Strikes Publishing Deal for Chemical Brothers' Catalogue

BMG has revealed that UK electronic music pioneers the Chemical Brothers have decided to consolidate their entire publishing catalog at the company. The Chemical Brothers recently announced that their 10th studio album, For That Beautiful Feeling, will be released on September 8. The deal means the duo’s first seven albums, beginning with 1995’s Exit Planet Dust, now move to BMG, including No.1 singles Block Rockin’ Beats and Setting Sun, plus major hits Galvanize and Hey Boy Hey Girl. The latter is their most-streamed track with 117 million Spotify plays. The switch of the catalog (previously with UMPG) builds on BMG’s work with the Chemical Brothers since it signed a futures deal with them in 2015. The relationship began with their album Born In The Echoes, which charted in 15 countries, reaching No.1 in the UK and including the hit Go, currently their third most-streamed track. They followed that with 2019’s No Geography. BMG SVP Publishing UK Hugo Turquet said: “The Chemical Brothers are among the most successful, influential and best loved electronic dance music artists the UK has ever produced. To progress from a futures deal to winning the opportunity to represent their entire body of work is a significant vote of confidence and we look forward to justifying their faith in us.”

Grammy U Membership No Longer Requires College Enrollment

In an expansive change for its Grammy U membership, The Recording Academy has removed the college enrollment requirement and opened membership to anyone aged 18-29 pursuing a music career. Launched in 2006, Grammy U is an avenue for college students seeking music careers to achieve their dreams. As of August 15, the Recording Academy membership program will no longer require college enrollment in its application guidelines, extending the eligibility to anyone aged 18-29 looking to work in the music industry. “For many years, Grammy U has invested in the development of emerging young music creators and professionals by providing resources and a supportive ecosystem committed to helping them thrive in the music industry,” said Harvey Mason Jr., Recording Academy CEO. “With this expansion, Grammy U is ensuring that membership will be more inclusive and accessible for the next generation of music creators and professionals,” he continued. “No matter their career path.” “As a student member of the first Grammy U membership class in 2006, I have had the opportunity to watch the program grow over the years and see the impact it’s made on the music community,” adds Jessie Allen, Senior Director at Grammy U. “With this new eligibility change, we are thrilled to support even more professionals and creators on their journey into the industry.”

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