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Swedish songwriters call for more clarity and fairness over digital royalty distribution

By | Published on Tuesday 17 February 2015


Swedish songwriters, including some of the country’s champion pop makers, have followed the lead of their UK counterparts in going public about what they see as the unfair and unsustainable way in which royalties stemming from streaming services are being shared between different stakeholders.

As previously reported, earlier this month the British Academy Of Songwriters, Composers And Authors launched a campaign called The Day The Music Died which stated that as the recorded music industry has shifted from CDs to downloads to streams, “songwriters and composers are now finding their livelihoods under dire threat”.

Echoing that statement, in an open letter published in Swedish newspaper Aftonbladet ahead of a meeting between the Swedish Society Of Songwriters, Composers And Authors, Spotify and some key record labels, 133 songwriters yesterday said that, unless the current situation changes, “very few songwriters will be able to afford to create music other than as a hobby”.

Streaming services, of course, need to secure licenses from and pay royalties to the owners of both song copyrights and recording copyrights, the former belonging to music publishers and songwriters, the latter to record labels and recording artists. Although the exact figures are never revealed, and will vary from digital service to digital service, and from rights owner to rights owner, on average the streaming services hang on to about 30% of their revenue after tax, passing on the other 70% to the rights owners.

Of that 70%, the majority will go the labels, so that they see about 55-60% of revenue overall. The labels will then share that loot with their artists according to their record contracts. The remaining 10-15% of revenue then goes to the songwriters and the publishers, who may well split the money equally between themselves, though that too may vary according to publishing contracts. Which – while we must stress that those figures are averages and estimates – is pretty straight forward.

Though there are added complications. For starters, rights owners, aware that new streaming services will likely have revenues of zero at the start, will ask for minimum guarantees (which will differ depending on subscription type). And, as some digital services never get off the ground at all, they will also seek an advance to justify going to the effort of negotiating a deal and supplying all of their content. Meanwhile with start-ups, the labels in particular may also ask for equity, aware that the single biggest payday may come when the new digital service is sold for the first time.

And on top of all that, on the song copyright side there are added complications, in that a stream requires that a song be both ‘reproduced’ and ‘communicated’ (or ‘performed’) to the public. The publishing industry has always licensed these two different elements of the copyright differently, the former generally controlled by the publisher, the latter by a performing right organisation usually picked by the songwriter. Which means streaming services need licences from both publishers and PROs, and songwriters may receive half of their royalties from the former and half their royalties from the latter.

Add in the fact that the music industry’s digital deals are usually NDA-ed to the sky, and you can see why artists and songwriters are confused. And in much the same way that the artist community was calling for more transparency last year, that is a core gripe being shared by the increasingly vocal songwriters this year.

Referencing their performing rights organisation, the Swedish songwriters wrote: “STIM and other collective rights organisations are forced to sign confidentiality agreements, which prevent them from revealing – even to their own members – what the splits of the revenues are. The music industry may be the only business in the world where the subcontractors – the songwriters – aren’t allowed to know how much they get paid for their products, the songs”.

Though, even if the specifics of how streaming income is split between stakeholders was revealed tomorrow, it wouldn’t alter the already known fact that the majority of the money is going to the record companies. The labels would likely argue that each stakeholder is receiving today pretty much the same cut of the pie as they did in the CD age; the real problem is that the value of recorded music is two thirds of what it was in the CD-selling heyday, so everyone’s share equates to less money. Though the labels have possibly provided themselves with a handy buffer thanks to the aforementioned advances and equity.

And, say the songwriters, while that may be true, recording artists have other revenue streams, and labels increasingly share in those. But non-performing songwriters can’t be “compensated in any other way for the loss of income experienced due to the digital market. The unavoidable result is that the record labels and other music industry players risk sawing off the branch they’re sitting on, as very few songwriters will be able to afford to create music other than as a hobby”.

Expect this one to run and run. Meanwhile you can read the take of Guardian journalist, jobbing songwriter and signatory to this letter Helienne Lindvall here.