From Brussels with Love: The Creators Conference, February 20, 2013

BrusselsIt’s an incredible feeling being in a room full of music creators who have traveled from many countries around the world for a common purpose: Bettering the collective lot of music creators everywhere.

I am in Brussels, along with the S.A.C.’s Managing Director, Isabel Crack, attending “The Creators Conference”, hosted by the European Composers and Songwriters Association (ECSA).

Clearly, there is a shared understanding that making the world a better place for those of us who create music will not be easy. We have daunting problems and limited resources. We work in our respective continents and countries under very different regulatory and legal frameworks. Our continental European counterparts have “authors’ rights”, while we in North America and the UK work under copyright (an upcoming blog will go into the differences).

But there is also an understanding that as different as our situations may seem, they are increasingly similar. Global connectivity and large mergers are making the world an increasingly smaller and in some ways less diverse place.

Rather than many significant music publishers in various territories as there once was, there are now basically three global giants: Universal, SonyATV/EMI and Warner. These companies have enormous market share everywhere.

And of course Google, Apple and Spotify are all global concerns as well.

These massive companies would prefer not to deal with dozens of local laws and regulations. Increasingly they are pushing for global “harmonization” and “One Stop Shopping”, and prefer to deal directly with one another, thereby bypassing performing rights societies and other music collectives.

In a world where huge commercial interests negotiate directly with one another on a global scale, creators must form global alliances to ensure we have a voice in the process, that we are fairly compensated, and that there is transparency.

That is why this conference in Brussels, capital of the European Union, is so important.  And it is why “The Fair Trade Music Principles” which we are developing with music creator organizations in Europe, Latin America and Africa, as well as Canada and the US is a vital tool for us to establish a sustainable music industry for creators.

The Fair Trade Music Principles transcend our regional and cultural differences and give us a common platform for a proactive and unified approach in this new global environment.

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Fair Trade Music Principles for a Better Future

2012 was a ground breaking year for songwriters and composers worldwide. For the first time our organizations formed alliances both in Canada and around the world.

In Canada, the S.A.C. joined with the Screen Composers Guild and SPACQ, our counterpart in Quebec to form Music Creators Canada.

Music Creators North America was formed following a meeting with the Songwriters Guild of America (SGA) and Nashville Songwriters Association International (NSAI). We have also joined hands with our colleagues at the European Composers and Songwriters Association (ECSA), and the International Council of Authors and Composers (CIAM).

The work will continue in 2013 and beyond to strengthen these newly created relationships so that music creators around the globe can and will speak with a united and powerful voice.

But what will that unified voice say? Surely, with so many organizations from so many parts of the world involved, agreeing upon a common narrative will be difficult.

Well, we have good news on that front. Almost all of the organizations have agreed upon a set of principles: the Fair Trade Music Principles.

In the coming weeks, I will present each of the Principles and explain the thinking behind each one.

Here is the first:

We call for new (and existing) music business models built on principles of fair and sustainable compensation for music creators.

One only has to think of Apple, a company that transitioned from a niche computer manufacturer to the most highly valued company in the world. The transition was built on the incredible popularity of the iPod, which originally had one purpose: to play music. (The iPod of course led to the iPhone.)

In addition, we have Spotify, Rdio and Pandora, not to mention Google and Internet service providers, generating combined revenue streams in the billions of dollars annually.

Without music these businesses would not exist, and yet those who create the core element to this vast wealth, the music creators, are the beneficiaries of very little, if any of this massive value chain.

So we find ourselves in much the same place that Third World coffee growers were in before the Fair Trade Coffee movement, and this is a situation that music creators must and will work globally to correct.

It is time music creators were fairly included in these value chains based on our collected works. The fact that we are working together internationally to achieve this goal is a real step forward.

The Changing Landscape for Songwriters – Statement by Eddie Schwartz

As most of you are well aware, the music industry faces many challenges, and making a living as a music creator has not gotten any easier over the last decade.

One of the few good news stories has been the significant growth of revenue collected and distributed to songwriters and music publishers from performing rights societies, such as our excellent Canadian society, SOCAN. Revenues at SOCAN are up approximately 40% in recent years, and performing rights societies around the world now collect over $10 billion annually.

Just as importantly, songwriters and composers receive their performance royalties directly from SOCAN, and overhead has been kept to around 15%, so 85% of the money collected goes to music creators and publishers.

Unfortunately, the very success of performing rights societies may have created serious problems going forward. Please follow http://www.crainsnewyork.com/article/20121216/MEDIA_ENTERTAINMENT/312169998 to this interesting and important article which helps explain the enormous challenge to performing rights societies in the US and worldwide by the threat of direct licensing.

Please stay tuned for further posts and information from the S.A.C.. Given the enormous stakes and profound change direct licensing poses, this is not an issue songwriters can ignore.

Many thanks,
Eddie Schwartz
President S.A.C.
Co Chair Music Creators North America

31 Million. Anyone?

Soundexchange.

Perhaps you have heard the name and wondered who Soundexchange is and what they do.

In a nutshell, Soundexchange is the organization that collects royalties from digital and online sources, such as streaming services (Rdio, Spotify-coming soon to Canada, etc.), satellite radio, and cable music services, calculates how much each artists and recording company is owed in royalties for the performances of their work, and sends those folks a cheque.

Well to be precise, they send you a “check”, because Soundexchange is based in the United States, and that is where this particular royalty stream that is paid to artists and labels originates.

Keep in mind; this money goes to the artists and labels, as opposed to songwriters and music publishers who receive their US performance royalties through SOCAN, who is represented in the US by ASCAP, BMI and SESAC.

And yes, as a Canadian you can register your independent record or label with Soundexchange and receive payments directly from them. If you are an artist and/or label and have not done so already, may I suggest you go to http://www.soundexchange.com, and register ASAP.

After all, Soundexchange has already paid out over $1 billion in digital performance royalties, and the amount of royalties it distributes is growing every year.

If getting paid for the performance of your music online in the US isn’t incentive enough, how’s this? There is 31 million American dollars in Soundexchange’s bank account that it wants to pay to artists and record labels whose music has been streamed in the US. Problem is, it can’t find them.

So here’s the question: Are you one of those artists or record labels?

The good news is there is an easy way to find out. Just follow the link below and search the database of those that are owed money. Some unknown folks are owed as much as $100,000.

http://www.soundexchange.com/performer-owner/does-sx-have-money-for-you

Eddie Schwartz
President, SAC
Acting Co-chair, Music Creators North America

Changes to S.A.C. Funding Due To The Termination of the Creators Assistance Program (Letter from Eddie Schwartz)

Dear S.A.C. Members,

Re: The Termination of the Creators Assistance Program

Earlier this month, we were notified by officials from the departments of Heritage and Industry that one of the key sources of funding for the S.A.C., the Creators’ Assistance Program (CAP) will be terminated as of April 1, 2013.

There is no question that this decision by the current Canadian government represents a serious loss of funding for the S.A.C., and threatens many of the activities, programs and events that we have developed over the last 30 years to benefit songwriters and performers.

Along with our sister organizations, the Screen Composers Guild of Canada (SCGC) and La Société professionnelle des auteurs et des compositeurs du Québec (SPACQ), who will also lose significant funding, we have written a letter to the ministers of the two departments involved to voice our opposition to this terrible decision, and ask for the CAP program to be reinstated.

Unfortunately, we have been informed that there is very little if any chance that CAP funding will return.

The good news is that we have almost a year to secure other sources of funding, and make whatever adjustments are necessary to survive and prosper given this new reality.

Even more important, thanks to you, our members, the S.A.C. has never been stronger than we are today. We have grown tremendously in recent years, have more well attended programs and events, both live and available on the web, and have a wonderful staff who work hard on all our behalf under our terrific Managing Director, Isabel Crack.

The S.A.C. board and staff will be doing everything we can to identify alternative funding opportunities and aggressively pursue them going forward.  We look forward to playing a key role in supporting music creators for many years to come.

Cheers,
Eddie Schwartz, President

Bill C-11: A Backward Step For Music Creators

Here is a simplified list of key provisions in Bill C-11, the current revisions to Canada’s copyright law that are expected to be passed shortly, and a brief explanation of why they do little to improve the lot of music creators, and in some cases are detrimental to our situation.

1) Format and Time Shifting, Back Copies
The proposed legislation would permit reproduction of a work for private purposes where the work is a lawful copy—and not merely rented or borrowed—and where the individual making the copy did not circumvent a technological protection measure. A similar right for making back-up copies is also proposed.

The problem: Music creators and publishers will essentially lose two revenue streams thanks to Bill C-11. One is the private copy levy, which was not extended to mp3 players and similar devices in the new law. Since the levy only applies to recordable CDs, and sales of those are falling dramatically, it is only a matter of time before this revenue stream virtually disappears.

Secondly, music creators and publishers currently receive “broadcast mechanicals”, a royalty paid by broadcasters when they make copies of songs for broadcast purposes. Bill C-11 eliminates this revenue stream.

2) Anti-Circumvention Provisions
Bill C-11 would prohibit the circumvention of technological protection measures used by rights-holders to secure and control their digital content.

The problem: Since little or no music is protected by these measures, and has not been for years, this provision will do nothing to reduce the billions of songs that are file shared every year and for which music creators receive no compensation. The SAC believes the monetization of music file sharing is the only sensible approach in any case. The model we propose is available at http://www.songwriters.ca/proposalsummary.aspx

3) Changes to Fair Dealing
Bill C-11 expands the existing categories of fair dealing exceptions to include dealings for the purpose of parody or satire as well as for education purposes.

The problem: Because the definition in Bill C-11 is so broad, this provision will almost certainly lead to years of costly litigation to determine what is “fair dealing” and what is not. Bottom line: Huge legal costs and less revenue for music creators

4) Changes to Statutory Damages*
Non-commercial infringers of copyright would face considerably less exposure to statutory damages. The range of possible statutory damages would be reduced to $100 to $5,000 per infringer and cover all past infringements.

The problem: This provision limits damages to an amount so small that suing will not be economically viable, except for those with the deepest pockets. Again, the SAC does not favour litigation as a policy against music file sharing, but we understand litigation may be the only recourse in certain extreme situations. In other words, if legitimate damages are in excess of the proposed limits, why shouldn’t creators and right holders be able to sue for the full amount of the loss?

* We have had further legal opinion on this matter that creators and right holders can opt out of statutory damages and seek legal remedy for full actual damages. The question remains whether statutory damages are set at appropriate levels.

5) Limited Liability for ISPs and Search Engines
The government has proposed limiting the liability of ISPs and operators of Internet search engines for the copyright infringements of their subscribers, in that they act as mere conduits on the Internet.

The problem: ISPs already have “safe harbour” protection in law and have claimed for years they are only “dumb pipes”. Without getting into whether this is true or not as many assert, it does create a situation where Internet service providers have little incentive to work with right holders to address the issues.

So Bill C-11 legislates less revenue for music creators, imposes more expenses in holding on to the revenue we do receive, and more confusion as to what are rights as creators are.

It is worth noting that members of the SAC board, as well as other right holders, have gone to Ottawa many times to deliver the message to government that this bill is not a good one for Canada’s music creators.

Bill C-11 makes it clear our advocacy work to improve the legal and business environment for our creative community is far from done.

Many thanks,
Eddie Schwartz
President, S.A.C.

Click Here to read Bill C-11.

Does Spotify Make Cents for Creators?

There has been a lot written about Spotify in recent days. As of now Spotify operates in Europe and the US only, but there are very similar services in the works here in Canada, and the discussion below may well apply to them as well.

Some of the attention Spotify has received lately is because a growing number of independent record labels have stopped allowing Spotify to stream the music of their artists. The central complaint has been that the revenue stream from Spotify is so miniscule that it provides virtually no compensation for music creators and indie labels, while undermining sales of physical product such as CDs, which pay considerably more.

Spotify has responded by announcing that it has paid the music industry roughly $150 million over the 3 years it has been in business.

That may seem like a lot, but for those of us who write and perform music there is both much more to the story, and unfortunately, far less.

Let’s begin with the $150 million figure. Since that revenue was paid out over 3 years it averages $50 million a year. Keep in mind that although Spotify has only operated in Europe for most of that time, the music it streams originated with creators from all over the world, and so that $50 million must be split between creators and right holders in the US, Canada, France, Australia, the UK, Ireland, and many more countries around the world.

Now let’s compare revenue from other sources to get some perspective.

In Canada, our excellent performing rights society, SOCAN, collects about $250 million a year from radio, TV and other sources. BMI, ASCAP and SESAC, the US performing rights societies, collect an amount between $1 and $2 billion a year. Worldwide performance revenues are billions more. This all sounds like a great deal of money. But when it is divided among all the creators and right holders in the world it amounts to modest payouts to the vast majority. SOCAN’s average royalty payment to songwriters is in the area of $500 annually.

So the $50 million a year from Spotify when divided among the world’s creators and right holders amounts to payments that are far below other uses such as performing royalties, and in fact are microscopic for creators and right holders.

Some argue that this kind of comparison is unfair to Spotify because it is still relatively new and in time it will reach many millions more subscribers and pay a reasonable amount to those who write and perform the music.

Maybe. But after 3 years, Spotify has only 1.6 million paying subscribers in Europe, or less than one half of one percent of the population. That does not bode well for Spotify eventually reaching the size of audience that it would need to fairly compensate creators.

So the situation comes down to this: Music creators are being asked to subsidize a model that pays them very little now, and may never pay a reasonable royalty for the use of their work.

As we have seen with a number of independent record labels, some are just saying no.