Thursday, 30 July 2015

Are the record labels scoffing all of the Digital Pie?

Dr Rolf Budde, President of the German Music Publishers' Association, has called for parity between record labels and music publishers (recording artistes and songwriters) in the split of the digital streaming pie. Comparing the respective royalties received by the record labels and the German publishing sector's collecting society GEMA from key streaming services, he told Billboard: "A comparison shows that the earnings of labels in the ad-supported segment of Spotify are up to as much as eight times as high as the payments made to GEMA, which 61,000 copyright-owners and 4700 music publishers are expected to be content with. This is absolutely disproportionate, and is unfair to the authors and publishers".

The other main criticism aimed at record labels is of course that they take an unfair share of the revenues that do flow for the streaming of sound recordings - leaving artistes with little. Now Frances Moore, head of the IFPI, has tried to answer this saying that the  IFPI's independently verified research "found that while payments to artists have declined over the past five years, the decline was substantially smaller than the reduction in corresponding sales revenue. This means that artist remuneration has actually increased as a proportion of record companies' revenues in the last five years". But is it fair and reasonable? with record labels taking less and less risks, and with the reduction in costs associated with digital downloads and streaming when compared to physical product - it seems unlikely - especially when coupled with the valuable shareholdings gained by the likes of Universal and Sony in services such as Spotify and Vevo.

Sony is facing a landmark royalties lawsuit from Simon Fuller’s 19 Entertainment. One of 19’s allegations is that Sony’s stake in Spotify (believed to be around 6%) is unfair on artists; essentially, 19 argues, artists are being paid poorly from streaming services, while building the value of Spotify - and thus Sony. and more on the Sony-Spotify leak here and here

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