Amazon, Google and Pandora have joined forces with radio stations, restaurants and other music distributors to push back against an effort by musicians, publishers and record labels to charge more for the use of their songs.
The launch of MIC Coalition in Washington on Wednesday raises the stakes in a battle over music industry economics that companies such as Pandora and Spotify say threatens to put some of the most popular services of the streaming age out of business.
The coalition brings together online services, AM and FM radio broadcasters and other commercial music users which claim that the debate over licensing rights and access to music has been dominated by big record companies and publishers, such as Sony, Universal Music and Warner Music.
“The next 24 months are pivotal for music, with big decisions coming from the Department of Justice, the Copyright Royalty Board and Congress that will have the potential to determine how and where music is played and what costs consumers and users will bear,” MIC Coalition said.
The DoJ is reviewing the second world war era antitrust exemptions that still govern how much publishers can charge for song performance royalties, while the CRB is expected to announce revisions to digital royalty rates in December.
Music publishers and record labels argue that copyright reforms are needed to ensure that songwriters and artists are fairly compensated for their works.
“Streaming giants like Pandora have long exploited these archaic regulations to use songwriters’ work while paying them almost nothing,” said David Israelite, president of the National Music Publishers Association. “Sadly, it’s no surprise that they are joining other tech and streaming giants to fight the songwriters and artists who made them.”
Ted Kalo, of the musicFirst coalition, which represents artists and record companies, dismissed the coalition as “little more than some of the world’s biggest and wealthiest corporations — and the trade associations they fund — hiding behind a new website and a gauzy mission statement as they continue their campaign to deny fair pay to working musicians.”
Streaming services such as Pandora and Spotify contend that they already pay out more than half of their revenues in royalties, and that being forced to pay higher rates still would hamstring their operations or even put them out of business altogether.
Spotify said that if it were forced to pay the same to publishers as it pays record labels, it “will be paying out more than 100 per cent of its revenues to rights holders, which is clearly unsustainable”. At present, it pays out 70 per cent of its revenue as royalties in the US, according to a submission to the Copyright Office.
Pandora has produced just two profitable quarters in its 10 years of existence mainly because of its high royalty payouts. Despite boasting 81m listeners, its royalties bill was approximately half of its $1bn total revenues in 2014.
Concerns over fair payments have led some high-profile performers to counter the current system. Last year, Taylor Swift withdrew her songs from Spotify’s “freemium” service and Jay Z launched Tidal, a new star-led streaming service that aims to provide more money to artists.
Such moves have not slowed the growth of established streaming brands such as Spotify and Rhapsody and Sirius XM digital radio. Last year, streaming revenues overtook CD sales in the US, and they are set to overtake downloads as the industry’s largest single source of revenue.
“You’re not going to be able to persuade consumers that streaming is not the future,” said Peter Stabler, an analyst at Wells Fargo. “The genie is not going back into the bottle.” [Financial Times]