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Middle Class Living Reduced to Value of a Pizza

By:Eddie Schwartz | Published:7/2/2015

On June 19, 2015, S.A.C. President Eddie Schwartz spoke at the Alai 2015 International Congress in Bonn Germany.  ALAI is The International Literary and Artistic Association founded by Victor Hugo in 1878 to promote the international recognition of the legal protection of authors for their intellectual work.  This is Eddie's speech on the current reality for music creators. 

Good afternoon, my name is Eddie Schwartz and I am a songwriter, artist and record producer from Canada. I am honored to be here speaking with you today, and especially to members of an organization founded by a creator, Victor Hugo.

Full disclosure before I go on: my mother’s fondest dream was that I become a lawyer. In that regard I failed her utterly. However, as some small consolation, I have had the honor of writings songs and/or producing artists such as Joe Cocker, Pat Benatar, The Doobie Brothers, Donna Summer, Carly Simon, Robert Palmer, Rascal Flatts and others. So copyright has been fundamental to my life in the most real and concrete ways imaginable. It has allowed me to dedicate my life to the creation of music.

Currently, I am increasingly involved in the activities of organizations that represent music authors. One of them is the International Council of Authors of Music also known as CIAM, which operates under the umbrella of CISAC, the International Confederation of Authors’ Societies. And I volunteer for this work, because I am deeply concerned about future generations of music creators. Their opportunities to make a living creating music as I have been able to do are quite simply being extinguished. And this ironically at a time when music is a fundamental element in a value chain that generates billions annually.

At the dawn of this century, the Internet and digital technology offered huge potential – the promise of a new “Golden Age of culture and creativity”. 

While now that may seem like a distant dream, I believe that promise is still within our grasp, and I’ll get to more on why I believe that, in a moment.

But first a few words about the reality on the ground for music creators. 

In Nashville Tennessee, also known as “Music City USA”, where I have lived and worked for the last 18 years, 80% of the professional music creator community has disappeared. And given the almost 100% drop in the revenue received by creators from online sources, it’s certainly not hard to understand why.  

Let me take a moment to explain this catastrophic drop in creator revenue. In the latter part of the 20th century, if for example a song of mine sold a million copies, I would received about $45,000.00US in mechanical royalties, and I was awarded a platinum record. 

Today, a major music service pays me an average of $.000035 per stream, or about $35.00US for a million streams, thus reducing a reasonable middle class living, to the value of a pizza. We’ve heard a lot about monetization here. But that’s the kind of “monetization” that creators are actually experiencing.

So at current per stream rates, I would need not only every human being on Earth to stream my music, but life forms on other planets, and galaxies far, far away, creatures from other dimensions would need to stream my work before I could earn a small fraction of just the bonuses that CEOs of major streaming services pay themselves. So, yes, this is a “Golden Age”  – for some.

Now indulge me while I do a quick “back of the envelope” calculation of how big this value chain that pays me .000035 per stream is. 

If we take that million streams that earns me the prodigious sum of $35.00, and if we assume for a moment that those million streams represent a million unique internet accounts, those million accounts would generate something like $600 million US dollars annually in ISP access fees alone. On top of that, there are also device and mobile access fees, monthly subscriber and download fees, advertising and data mining revenues, and a whole dark portfolio of other hidden fees, advances, equity stakes etc.. 

So even this quick exercise exposes an undeniable truth: Music is part of a huge value chain generating billions of dollars annually and consumers, and creators alike are paying hugely. And yet some are still propagating this myth of “free”. Sure, music wants to be free, but only when it serves to extract massive fortunes for CEOs and shareholders. 

Despite all this, as I mentioned earlier, I for one am hopeful. I see signs that we are now at the beginning of what could be a significant turning point to a better and more balanced digital future. Here in part are my reasons for optimism.

To start with, light is beginning to shine into the dark shadows of the digital value chain. The recent revelations regarding Sony Records’ 2011 agreement with Spotify are a perfect example. We now have proof that tens of millions are being paid by digital services to record labels, in a manner that appears to be designed to hide those revenues from artists and songwriters so those revenues don’t have to be shared. 

Non-disclosure agreements are clearly also a big part of the problem. How do you know if you are receiving 50% if you can never know what 100% is?

What we don’t know will indeed hurt us, and transparency must come and is coming to the music value chain, and that is a crucial first step if creators are ever to be fairly compensated.

Also, safe harbor legislation, intended to protect the so called “dumb pipes” is today abused by “not so dumb” major multinational entities because it allows them to amass huge profits, while providing access to our creative works for virtually nothing.

Creators are now calling for updates and reforms of this legislation, which in essence is currently protecting the rich and powerful from the digitally disenfranchised.

On another front, and one I am personally very excited about, CIAM is uniting music creators from Africa, Latin and South America, Europe and North America, and more recently creators in Asia. This global creator unity has never existed before, and I wish to thank Lorenzo Ferrero, Chair of CIAM, and Gadi Oron, Director General of CISAC for their leadership and support.  

Through CIAM, music creators from all over the world are developing a broadly based non-governmental initiative called Fair Trade Music. You can learn more about it at DSPs and other intermediaries would be certified as Fair Trade compliant if they worked with creators to implement best practices towards a fair, transparent and sustainable music eco system from consumer to creator and everyone in between. 

Last and certainly not least, in my work with young music creators, I see a new generation coming into their own that are not as dazzled by technology as my generation may have been. They care about sustainability and ethical behavior, whether at Wal Mart, or MacDonald’s or garment workers in Bangladesh, and most assuredly for the music creators whose work they love and want to support. 

They are a generation that understands that our humanity and our technology can and must find a balance, and that if music is allocated a fair, transparent and sustainable share of the enormous value chain it contributes to so significantly, we will attain that “New Golden Age of Culture and Creativity” in this 21st century.

And as creators we look to you as decision makers here in Europe and everywhere around the world to help us attain this worthy goal.

Thank you