Are Performing Rights Societies Relevant Anymore?

For years performing rights societies have been the bastion bodies dutifully collecting performance payments for artists and publishers alike. In the 20th century, especially since the growth of the recorded music sector rights societies were quite often the only bodies that actually paid money through to artists.

More often than not history has proven that the great majority of signed artists have seen zilch from the labels they signed to despite these very same labels making millions of these same artists. TMV do believe a great research project would be analysing the earnings of the majority of signed artists since the fifties against earnings each label made of each artist.

The percentages charged as administration costs by societies to artists and publishers, has been a hot topic for many years now. What is even more interesting though – is the amount of money that stays in limbo due to incorrect administration by songwriters and or music publishers. Recent reports from Digital Music News and it’s questioning of Sound Exchange outline the large sums at stake.

Drilling down, societies have traditionally earned interest on this unpaid money and yet do not pay interest through to the songwriters or publishers. More interestingly, the waters have been further muddied, by the joining up of mechanical and performance rights societies and the major label conglomerates tightening grip of their activities.

Why is the question of control important? Quite simply because it has enabled these same conglomerates to dictate favourable deals with certain digital music services over and above others. This in TMV’s view is one of the key issues as it creates a non-level playing field for those services not part owned by record labels, who labels refuse to negotiate favourable licensing terms with.

Digging deeper there have been numerous technologies around for over a decade, which can provide transparent and accurate data on public performance of songs on radio and television in real-time. Yet societies have continued to drag their feet insisting on archaic monthly censuses, which are quite frankly not acceptable in the 21st century.

Before going further it is important to understand the dynamics and the vested interests involved in keeping the status quo. Firstly, the major labels and publishers do not want exact reporting as that would mean they receive less in payouts, the same goes for managers of larger artists as well. The key issue here is that accuracy would lead to more independent publisher, artists and labels receiving more in payouts from collection societies whilst major artists and there associated value chain would receive less.

Societies have been stalling on implementing technologies that provide what is to be expected in the 21st century. How do I know this? I was involved in a French started called AKA Media SRL in 2002 – 2004 and we were asked to tender for VPL’s business in using such technology. Back then they expected a 99.9 percent accuracy rating, which ironically their own antiquated systems still to this day do not provide. One just needs to look at the significant figures Sound Exchange has sitting in its unatributable income account. The same goes for PRS and reliable sources have confirmed this is the case is across the majority of performing rights societies.

Interestingly PPL/VPL approached one of my consultancy clients in 2010 about using the same aforementioned technologies. This particular client already had a deal in place with Australian radio group Fairfax Radio where 90% of radio advertisers use this service to deliver and detail; where, what time, what length of the advertisement and the average audience at that particular time the advertisement was broadcast in real-time. Radio advertisers and their agencies in Australia spent more than $1.8 billion Australian dollars in 2011. Whilst on the flip side APRA and AMCOS received less than $400 million in payments from these same radio stations in performance income. TMV are sure this example plays out in all key territories on a similar scale.

TMV’s point being that if advertisers spending billions of dollars each year on radio advertising are happy with a service as previously outlined, that is only 97.8 percent accurate, then why is it a problem for performing rights societies to jump on board? At one event I asked this exact same question and got an extremely disingenuous answer from the performing rights person on the panel. They stated that the key problem was what happens to the 2.2 percent of inaccuracy and payments to artists.

My response is firstly that current systems utilised by societies already produce even less accuracy. Secondly, these sums of unatributable income are currently placed into escrow accounts for a time when they can be distributed to the correct rights holders. So my question is why can’t the same be done with new digital systems? What is the difference?

Furthermore, such technologies would bring down administration costs whilst at the same time enabling more regular and accurate payments to rights-holders whether they are artists or publishers. Sure this would mean societies charging less in administration to their right holder clients. But the rest of the music business has had to deal with a lowering of margins, so why should societies be exempt? The key element is that a lowering of margins would not lead to less accuracy in fact it is probable that it would in actual fact ensure REAL accuracy.

Music publishing companies such as Kobalt already offer deals to artists where they can even be paid weekly. Societies should not be scared of new technologies they should instead be embracing them and the benefits that they can bring. Technology in the 21st century enables transparency and accuracy in reporting like nothing ever witnessed before and this is a good thing. The key problem is reactionary attitudes coupled with political agendas.

TMV can think of only one reason why people even discuss the relevancy of collection societies in today’s world and that is; because of the political and feathering ones nest agendas. Are performing rights societies relevant in the 21st century? Yes of course they are in TMV’s view. Rights societies ensure rights holders interests are managed and served properly and there will always be a need for such services no mater where the music business evolves to in the future.

Related posts:

1. Disruptive Competitor to Traditional Collection Societies Launches Dynamic Service
2. Non-exclusivity, direct licensing and the granting of digital composition rights
3. UN Report States Disconnecting Repeat File Sharers Is A Breach Of Human Rights
4. Disruptive Competitor to Traditional Collection Societies Launches Dynamic Service
5. Lawyer to Qtrax: “We’re Not Going To Take This Anymore!”

Posted by Jakomi Mathews on Jul 2 2012. Filed under featured, Labels. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.