Friday, September 13, 2013

Why Clear Channel's Deal with WMG is Bad News for Artists

Clear Channel this week announced its first terrestrial and digital performance royalty deal with a major label - WMG. Many mainstream media outlets declared that the agreement as a big win for artists, but I disagree.

In fact, this and similar direct master performance rights deals benefit both major labels and broadcasters largely at artists' expense.

As an auditor with many major recording artist clients, some of the problems I see with such direct master performance licenses are as follows:
  1. Small indie labels - and artists thereon - are entirely cut out of the terrestrial royalty pie because they lack leverage to land such a deal
  2. Artists on those labels with enough clout to negotiate broadcaster deals do not get a fair share because direct deals preserve the scheme under which major labels’ foreign offices collect BOTH the American artist and label shares (since these deals will not unlock reciprocity with foreign performance royalty societies)
  3. Labels are very unlikely to split with artists all of the different kinds of compensation they receive from broadcasters - especially non-cash consideration such as equity stakes and promotional airtime, which is basically payola to benefit new artists at the cost of catalog artists
  4. What labels share with artists will be subject to recoupment (i.e., unrecouped artists will receive nothing, whereas payments from Sound Exchange are not subject to recoupment)
However, unless artists miraculously manage to organize and lobby lawmakers to create a statutory terrestrial master performance right, broadcasters and major labels have few reasons to stop making these direct deals that disfavor the artist and fend off any action from Congress.  As such, I expect to see many more direct performance licenses between labels and broadcasters.  Sadly, only artists with very strong contractual language and/or leverage have a shot at collecting their fair share through audits of their record companies.

Sunday, July 7, 2013

How to Increase Performance Royalty Income

  1. Register your works - Make sure your works are registered with the Library of Congress, the PROs in each territory and/or major licensees, including subpublishers
  2. Get a bigger slice of the pie - Did you know that writers can negotiate with US PRO's or join an authors' society such as SACEM, which offers a 2/3 share to writers for performances?
  3. Record outside the USA - This is how American recording artists can most easily capitalize on neighboring rights
  4. Audit the system - Compare TV and foreign theatrical activity reported by PROs to synch license transactions reported by publishing and record company partners. Require synch licensees to submit cue sheet data to PROs and explore use of services such as TuneSat (SEASAC reports performance royalties based on TuneSat).  Follow-up on unreported cues or underreported receipts.  You may need to hire a pro auditor, especially if your publisher licenses rights direct (e.g., Sony and Wind Up license digital rights direct).
  5. Bet on the right rates - Consider likely exploitation in selection of PRO, since they pay different rates for any given use.
  6. Support performance rights - Consider testifying before congress to expand sound recording performance rights and think twice about abandoning the collectives
  7. If you own pre-1972 sound recordings - Notice Pandora on state copyright infringement