Exploration Weekly - US Bill Would Allow Indie Artists Negotiations with Streaming Services, AI Companies / US Recorded Music Grew 9.3% in H1 2023 / SoundExchange Paid $498M in H1 2023

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In this newsletter:

• Proposed US Bill Would Allow Indie Artists to Negotiate Collectively With Streaming Services, AI Companies
• Premium Streaming and Vinyl Continue to Power Growth in US Recorded Music Market
• SoundExchange Paid Out $498M to Artists and Labels in the First Half of 2023
• Songwriters Head to Congress to Set AI Rules
• BMG Inks Global Publishing Deal With the Sex Pistols’ Steve Jones, Paul Cook, and the Sid Vicious Estate

The Protect Working Musicians Act of 2023 bill would give independent music creator-owners the ability to negotiate collectively over payments from streaming services, and over the use of their works by AI algorithms.

The RIAA has published stats for the US recorded music market in the first half of 2023 - retail revenues grew 9.3% to $8.4 billion, in no small part powered by ongoing growth in premium streaming and vinyl.

US performance rights organization SoundExchange distributed USD $269 million in digital royalties to creators in the second quarter of 2023 which marked a 17% YoY increase from the same period last year.

Now, the details...

Exploration Weekly - September 22, 2023
Compiled by Ana Berberana

Proposed US Bill Would Allow Indie Artists to Negotiate Collectively With Streaming Services, AI Companies

A bill introduced in the US Congress would give independent music creator-owners the ability to negotiate collectively over payments from streaming services, and over the use of their works by AI algorithms. The Protect Working Musicians Act of 2023, introduced on Tuesday (September 19) by House Rep. Deborah Ross, a North Carolina Democrat, updates an earlier bill introduced in 2021 by Rep. Ted Deutch, a Florida Democrat. That bill focused on the relationship between indie artists and music streaming services; the new bill also includes AI companies. The updated bill, which has gained the endorsement of the American Association of Independent Music (A2IM) and the Artist Rights Alliance (ARA), “will help give small, independent music creators a level playing field, empowering them to stand together for fairer compensation and giving them a voice in important negotiations that will determine the future of the music industry,” Rep. Ross said in a statement. “Working musicians and small independent labels face urgent challenges to their livelihoods posed by the market power of streaming platforms as well as the explosion of AI applications that use their work without licensing or pay.” Indie artists typically get their music onto digital services platforms (DSPs) like Spotify via music distributors like TuneCore or DistroKid, which negotiate licensing deals with the DSPs, or rely on agreements negotiated by digital rights music licensing network Merlin. On user-generated content platforms like YouTube, indie artists can generally upload their own content, but must abide by the platform’s terms and conditions. Typically, these platforms have a lot of leeway in terms of how much they pay to artists, and under what conditions. The bill would create an exemption to US antitrust laws that would allow music creators to come together to jointly negotiate licensing deals with a “dominant online music distribution platform or a company engaged in development or deployment of generative artificial intelligence.”

Premium Streaming and Vinyl Continue to Power Growth in US Recorded Music Market

Revenues from the sale of CDs and vinyl in the US were up 5% in the first half of this year, meaning that physical product sales were at their highest level since 2013. However, it was really the ongoing streaming boom that resulted in US recorded music retail revenues at large growing 9.3% to $8.4 billion between January and June this year, with streaming accounting for 84% of total income. Wholesale revenues - so the monies that flow from the digital platforms and retailers to the record industry - grew 8.3% to $5.3 billion. This is according to the latest stats pack published by the Recording Industry Association Of America. The trade group's CEO Mitch Glazier says: “This report describes a thriving, growing music ecosystem that continues to reach new heights and shape our culture”. “And”, he adds, “it reflects the creative human genius and hard work of all the artists, songwriters, labels, publishers and services who make the music happen, and meet fans and audiences where they are in today's forward-looking and innovative music community”. More than 75% of streaming revenues - and nearly two thirds of total recorded music revenues - come from premium streaming services. The RIAA reports that in the first half of this year "total revenue from paid subscription services grew 11% to $5.5 billion, compared with 6% growth for the number of accounts”. Given subscriber growth is slowing, it's important for the industry that the average revenue generated by each paying user increases, which is why the recent price increases at the streaming services have been so widely welcomed.

SoundExchange Paid Out $498M to Artists and Labels in the First Half of 2023

US performance rights organization SoundExchange distributed USD $269 million in digital royalties to creators in the second quarter of 2023. The distribution marked a 17% YoY increase from the same period last year, SoundExchange said in a press release. This resulted in H1 2023 distributions reaching $498 million, up 7.1% from $464.9 million in the first half of 2022. SoundExchange, the sole entity authorized by the US government to oversee the Section 114 sound recording license, is responsible for the collection and equitable distribution of non-interactive digital performance royalties to musicians and rights proprietors. Since its establishment in 2003, SoundExchange says it has disbursed over $10 billion directly to a global community of more than 650,000 music creators. In addition to monetary distributions, SoundExchange also offers a suite of services aimed at streamlining the music industry. These services include regular monthly distributions, flexible mobile payment options, and an administrative fee which it describes as “the lowest” in the industry. In 2022, the organization collected $1.017 billion in digital royalties from over 3,600 streaming platforms on behalf of around 600,000 artists like Ludacris and Billie Eilish. “In doing so, the company crossed the $9 billion threshold for distributing royalty payments since its inception in 2003,” President and CEO Michael Huppe said in July. At the time, Huppe attributed the increase to the resurgence of live music last year, and to the organization’s efforts in advancing fairness for creators in the US Congress.

Songwriters Head to Congress to Set AI Rules

Hit songwriting and production duo Jimmy Jam and Terry Lewis (Janet Jackson, Mary J. Blige), Jermaine Dupri (Mariah Carey, Usher), Matthew West, and Cirkut—who co-wrote Katy Perry‘s No. 1 hit “Roar”—are some of the songwriters meeting with elected officials on Capitol Hill for the annual American Society of Composers, Authors & Publishers (ASCAP) Stand with Songwriters Advocacy Day. ASCAP chairman of the board and president Paul Williams, along with board members Desmond Child, Bob Bruderman, Jimmy Webb, Marti Cuevas, Sharon Farber, Dan Foliart, Ree Guyer, James M. Kendrick, Evan Lamberg, Michelle Lewis, Alex Shapiro, and Jonathan Singer, will also join the group of advocates on Capitol Hill. “True music comes from deep within our souls; it’s human-first, heart songs, revealing and often healing our human condition,” said Williams in a statement. “Now we need Congress to put humans first, stand with songwriters, and protect our rights to our own musical works. Don’t give them away to AI.” Elizabeth Matthews, CEO of ASCAP, added “Artificial intelligence is moving at the speed of light and we need lawmakers to act now. We fully embrace innovation but only innovation coupled with regulation that protects the rights of creators.” In their meetings on Capitol Hill, ASCAP members will urge policymakers to enforce the six key, creator-centric principles for AI, which were recently adopted by the ASCAP Board of Directors in 2023, and include: prioritizing rights and compensation for human creativity; protecting the right to decide whether one’s work is included in an AI training license; making sure creators are paid fairly when their work is used in any way by AI; giving credit when creators’ works are used in new AI-generated music; transparency in identifying AI vs. human-generated works and retaining metadata; and an even playing field that values intellectual property across the global music and data ecosystem.

BMG Inks Global Publishing Deal With the Sex Pistols’ Steve Jones, Paul Cook, and the Sid Vicious Estate

The Bertelsmann-owned music company formally detailed the publishing administration pact with 68-year-old Jones, 67-year-old Cook, and the estate of Sid Vicious today. Focusing mainly on the cultural impact of the Sex Pistols, the corresponding release notes that the newly inked deal extends to the mentioned professionals’ “portion of the legendary rock band’s songwriting catalog.” Jones and Cook co-wrote the entirety of 1977’s Never Mind the Bollocks, Here’s the Sex Pistols, among them especially well-known songs like “Anarchy in the U.K.,” “Holidays in the Sun,” and “God Save the Queen.” Vicious, for his part, received songwriting credits on the middle track and “Bodies.” Of course, the comparatively substantial overall consumption of catalog music, generally referring to works released at least 18 months back, has been noted in a number of recently published reports and datasets. Meanwhile, regarding the contemporary reach of the Sex Pistols in particular, the almost five-decade-old act currently has 1.46 million monthly listeners on Spotify, with nearly 200 million cumulative streams between both “God Save the Queen” and “Anarchy in the U.K.” Addressing today’s agreement, BMG VP of music publishing Michael Howe said: “Steve, Paul, and Sid’s works with Sex Pistols are among the most important cultural and creative music of the last half-century. “Their impact on society and the performing arts is orders of magnitude greater than the group’s incredibly brief lifespan and recorded output would suggest. The band’s influence resonates as deeply today as it did in 1977.”

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