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German publishers up the ante in digital pie debate

By | Published on Thursday 30 July 2015

Digital Pie

Ah, the digital pie debate. If I had a pie for every time I’ve written or spoken about the digital pie debate this year, I could open a pie shop. Well, a pie stall. Well, I could have a one-off pie party. For nineteen people. But nineteen people who really liked pies.

Anyway, this is an interesting development, because while songwriters and publishers have been getting increasingly vocal about digital royalties this year – hitting out at digital platforms and the record industry, which both take a bigger cut of streaming income than the songs sector – few have gone as far as to say, on the record, that the label/publisher split should be 50/50. But now the Germans have.

The German publishing sector having had a good moan about digital royalties at MIDEM earlier this year, an alliance of trade groups representing publishers, composers and lyricists in Germany is now demanding for a repositioning of the way streaming royalties are split between the owners of the respective song and recording copyrights, both of which streaming services exploit, of course.

As previously reported, traditionally the record label takes the lion’s share of CD sales income (songwriters and publishers seeing less than 10%), but when it comes to income from things like broadcast and public performance a 50/50 split is much more common (if anything thing, those revenues usually tip in the publishers’ favour). There are myriad reasons for this – and premium subscribers can read this analysis of the digital pie debate here using the password in this week’s CMU Digest – but what you need to know now is that something more akin to the CD model has been applied to both download and streams.

Which Dr Rolf Budde, President of the German Music Publishers’ Association, thinks is wrong, wrong, wrong. 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”.

For their part, off the record the labels insist that they continue to take most of the risks, and do most of the legwork, in getting recordings of songs onto digital platforms, and therefore should continue to see a much bigger share of resulting income. Though few in the record industry want to get into this debate in public, hoping that – as the digital pie grows – songwriters and publishers will start to see their income from recorded music increase again, and that’ll shut them up, even if their percentage share remains relatively low.

Though, with the recorded music market still pretty stagnant in terms of overall revenues, and with the German publishing sector now going big on this debate, that hoping strategy is unlikely to work out.