Major vs. Indie

The terms “major” and “indie” (independent) can be applied to many different entities in the music business. While we most often think of the words in the context of artists and record labels, they can also refer to publishing, distribution services, radio stations, and virtually any other sector. “Indie” has even become its own music genre. Our guide has been written to make clear what ‘major’ and ‘independent’ actually mean when used in the context of different sectors of the music business.

In this newsletter:

The US Copyright Office has ruled that streaming services must pay late fees on royalty payments in connection with the Music Modernization Act’s blanket mechanical license.

PRS For Music has extended its Nexus programme, with a new initiative to ensure songwriter and composer information is linked to recordings prior to release.

The boss of BMI has issued a statement in response to all the speculation about the US collecting society's shift to becoming a for-profit enterprise and a reported imminent sale to private equity outfit New Mountain Capital.

Now, the details...

Exploration Weekly - September 7, 2023
Compiled by Ana Berberana

Streaming Services Must Pay Late Fees on Mechanical Licenses, US Copyright Office Rules

On Tuesday (September 5), the US Copyright Office issued a ruling confirming that songwriters and publishers are owed late fees when digital music providers do not pay royalties to the Mechanical Licensing Collective on time. Late fees have been hotly debated between music publishers and streaming service providers since the Music Modernization Act was passed in 2018. The Music Modernization Act (MMA) went into effect on January 1, 2021. It changed how streaming services licensed music to a blanket mechanical licensing system instead of a piecemeal “song-by-song” approach. At that time, digital music providers had to go to the newly-created Mechanical Licensing Collective (MLC) to obtain a blanket mechanical license to continue to use licensed music on their platforms. “The Office concludes that the statute’s due date provisions are unambiguous,” says the Copyright Office in its ruling on Tuesday. “The statute’s reference to ‘due date for payment’ clearly refers to the date on which monthly royalty payments are required to be delivered to the MLC.” The law stipulates that mechanical payments are due “45 calendar days after the end of the monthly reporting period.” Streamers must pay out royalties owed to the MLC, which then pays the writers and publishers monthly. Payment not received on time is considered late and subject to additional penalties outlined in the MMA. Per the Copyright Royalty Board judges, the current period of Phonorecords IV (2023-2027) specifies that a streaming service must pay the late fee of 1.5% per month or the highest lawful rate, whichever is lower, for any payment owed to the copyright owners that was not paid on time. Late fees accrue from the due date until the copyright owner receives compensation.

PRS For Music Expands Nexus Data Programme to Speed Up Royalty Payments

PRS For Music has extended its Nexus program, with a new initiative to ensure songwriter and composer information is linked to recordings prior to release. With tens of thousands of new recordings uploaded to streaming services daily, music creators and publishers face a constant challenge to identify where and when their works have been used. PRS said the problem is complicated because metadata identifying the work – both the composition and lyrics – is rarely provided to streaming services by those uploading recordings. It can take months, and sometimes even years, after release for songwriters and composers to be matched to a recording of their works. Supported by CISAC (the International Confederation of Societies of Authors and Composers), PRS For Music’s initiative aims to solve this problem by allowing those releasing music to instantly generate a unique identifier for the work. Establishing the link between the identifiers for the recording, the International Standard Recording Code (ISRC), and the work, the International Standard Works Code (ISWC), is the most effective way of tracking where and when a work has been used online. By giving those uploading music a simplified way to include an ISWC, alongside the existing data they already provide to streaming services, will significantly streamline the process of collecting and paying royalties. The new technology, delivered via an online tool extending the current CISAC system, will help PRS For Music to more quickly and cost-effectively maximize the value of members’ works online. PRS For Music CEO Andrea Czapary Martin said: “This pioneering initiative is designed to solve a worldwide issue and revolutionize how songwriters are paid. Linking ISWCs to ISRCs at the point of release is crucial and has long been an obstacle for music creators. We are committed to driving the entire music industry towards a single and unified data strategy, a common rail which is built on transparency and trust. This is why we launched our Nexus programme, which is aimed at moving the industry from merely discussing its data problems to solving them.”

BMI Boss Responds to Speculation Over Reported Private Equity Sale

The boss of BMI has issued a statement in response to all the speculation about the US collecting society's shift to becoming a for-profit enterprise and a reported imminent sale to private equity outfit New Mountain Capital. That speculation has involved some "mischaracterisation" and "misunderstanding" according to CEO Mike O’Neill. This may be true, although he still hasn't publicly answered any of the questions put to him by a consortium of songwriter groups, which might be why people are starting to assume the worst. BMI - which is owned by a group of broadcasters - shifted to a for-profit model last year. Most of the music industry's collecting societies around the world, including BMI's main competitor in the US - ASCAP - are member-owned not-for-profit organizations. Debate in the songwriter community about BMI introducing a profit margin increased after Reuters reported in July that the society was considering selling itself to a private equity outfit. Subsequent reports say that New Mountain Capital is now a preferred bidder. Prompted by that increased debate, the Black Music Action Coalition, the Music Artists Coalition, Songwriters Of North America, the Artist Rights Alliance and American performers union SAG-AFTRA together sent a letter to O'Neill asking a series of questions about the impact of the profit margin on the commissions BMI charges on the royalties it processes; who will profit from any sale; and how having a private equity owner will change the business. O’Neill quickly responded to that letter, but declined to answer any of the questions, instead insisting that the decisions being made by the society's board and management team are totally in the interests of its songwriter members. The same approach is taken in the statement published on BMI's website yesterday. "There’s a lot being said recently about BMI and our future", he writes, "some of it is speculation, some of it mischaracterisation, and some that reflects a clear lack of understanding about BMI’s mission, our priority and our path forward”. Seeking to "set the record straight", he goes on: "Our mission has been and always will be to serve our songwriters, composers and publishers and grow the value of your music. This responsibility is at the very core of what BMI has always been about”. "We are the most successful performing rights organization in the world with the highest distributions of any PRO in the world", he then brags, and that is "because we always have your best interests top of mind. We didn’t get there by simply sitting back and resting on our laurels - relying on the past has never sustained a business for the future, especially in a rapidly changing industry like ours”.

Streaming Officially Dominates the French Recorded Music Industry — Now 77% of H1 2023 Revenues

The French music industry generated €397 million ($424.7M) from digital and physical music sales & streaming. Streaming accounted for a whopping 77% of that total, rising from 71% in 2021 and 75% in 2022. SNEP says that French listeners streamed around 60 billion tracks in the first half of 2023, a figure that represents a growth of 17% compared to the same period last year. 49 billion (81%) of those streams were from paying subscribers, with paid subscriptions accounting for 59% of revenues. While the growth remains on an uptick, SNEP says the pace is “too slow compared to the massive adoption of the paid market in other major historical recorded music markets.” The IFPI noted that France fell out of the world’s top five recorded-music markets this year—replaced by China. SNEP also revealed some interesting stats about the French music industry as a whole. The 200 most listened-to tracks in paid audio streaming accounted for 10.5% of the total number of paid streams. Those top 200 tracks streamed in H1 2023 accounted for around 3.8 billion streams from paid subscribers. The entire top ten best-selling artists for H1 2023 in France were all local acts. 17 of the Top 20 best-selling album in the country were also made by local acts, while 75% of the Top 200 were French productions.

Apple Acquires 50-Year Old Classical Music Label BIS Records

Apple is making further strides into the classical music industry, following the launch of Apple Music Classical earlier this year. The company has now acquired BIS Records, a 50-year old Swedish record label known for its focus on early and contemporary classical music. Founded in 1973 by Robert von Bahr, the record label is headquartered in Akersbaga, Sweden. Von Bahr said the label has been known for nurturing emerging classical artists and promoting contemporary composers while preserving classical musical heritage. The 80-year-old founder said the decision to join Apple came after “much careful consideration” and a desire to expand the global reach of classical music. “We thought long and hard on how to maintain and build upon our prestigious history and looked for a partner who would further our mission, as well as an increased global platform to bring classical music to new audiences all over the world,” von Bahr said in a statement on its website announcing the deal with Apple. “Apple, with its own storied history of innovation and love of music, is the ideal home to usher in the next era of classical and has shown true commitment towards building a future in which classical music and technology work in harmony. It is my vision and my sincerest dream that we are all a part of this future,” he added.

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