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We Should Support Music Streaming Services

Thursday, October 16, 2014
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Read Eric Baptiste’s blog (CEO of SOCAN) on music streaming and fair compensation to creators:

You might find this surprising: I welcome music streaming services of all types, and stand ready to support Canadian-based and international services so that they may thrive here in Canada.

On one key condition: they must fairly compensate all of the creators and other rights holders responsible for the music that is the very lifeblood of their business.  Yes, all creators and rights-holders, including authors, composers and music publishers, as well as the record companies and the artists they represent.

For both individual consumers and businesses, music has value. As ASCAP President Paul Williams so well noted, “Literature, music and art have value to individuals, to businesses and to countries. They open our hearts and minds. They inspire. They teach. They comfort. They drive economic growth and innovation. They define our time; they define our cultures; they bring us together.”

Copyright supports that value. Copyright helps music creators as they work to make an honest living writing songs or composing music for lyricists and AV works for film and television. Copyright is what allows songwriters to earn money for the public performance of their music. Copyright allows SOCAN’s members to sustain a career in music creation, maybe even flourish . . . and, most importantly, continue writing.

But today when music is streamed online – the increasingly preferred format for listeners – songwriters are vastly underpaid for the music they create. We’ve all read news stories about songwriters earning some thousandth fraction of a penny for each streaming play, or making only a pittance for a million or more plays.

There are many reasons for this. In Canada, one reason is that, despite best efforts to establish a general framework that might have allowed their earlier entry into the market, streaming services have been slow to arrive. Remember also that streaming services require a number of different rights to operate legally in any country. In Canada we have two things that pose challenges to streaming: ISP usage caps that no longer exist in other countries, or are much lower here; and bandwidth costs that are much higher than in comparable countries.

Other factors are not specific to Canada and reflect the relatively small economic size of emerging streaming services when compared with radio and television stations, which were established decades ago.

Whatever the metric, these new services are dwarfed by many orders of magnitude by traditional media such as TV and radio. The only metric in which streaming services might excel is market valuation, and this is not one against which we can apply royalties. This is a big concern for the future.
Many people don’t realize that when a radio station in a major market plays one song (“a spin”), that spin may very well have hundreds of thousands of listeners at the same time. The economic value of such a spin, reaching so many people simultaneously, cannot simply be compared to the value of one stream, reaching only one person. This is a key point that is almost always overlooked.

Finally, the split of royalties between rights holders tends, in most countries, to disproportionately favour record companies, and to a lesser extent, performers over music creators and their publishers. In many cases that split is 80% to 20%, respectively.

While I sympathize with Re:Sound and Music Canada about the low value assigned to their rights by the recent Copyright Board of Canada’s “Tariff 8” decision, the Copyright Board was quite correct to continue its longstanding approach, which has been confirmed by the courts, that the relative values of the rights of creators and their publishers on the one hand (“authors’ rights”), and of the record companies and performers on the other hand (“neighboring rights”), are generally equal. In the music ecosystem, the source of music is represented by two separate yet equally important groups: the authors, composers and publishers who are at the origin of music; and the performers and record companies that play a major role in bringing it to the market. More and more people are agreeing with this apt description of the manner by which music makes its way into society.

We should all want fair compensation for all of those who are involved in the creation and performance of music. We want to work together, with the labels and the streaming digital platforms that wouldn’t exist without the music created by members of music rights organizations worldwide. We want to create a win-win-win-win situation for those who stream music, those who create it, those who record it, and those who listen to it.
Fair compensation for streaming will eventually be established. After all, we’ve successfully licensed the rights of every new music delivery system that has ever been invented, from radio and television, to cable and satellite. Online streaming is just the newest kid on the block, and we’ll need to work toward fair compensation with them, as we have with other media before. Current problems will eventually be solved, as they have been before.

However, the eventual economic success of streaming services is out of our control. The number of paying subscribers matters. The size of the ad revenues they’re able to collect from “free tiers” matters. These revenues are very small today and, even with the best splits between all right -holders in the world, and the application of higher rates to the revenues of streaming services, the total compensation paid to rights-holders will remain low unless their fundamental economic metrics improve.

Fair compensation for online streaming is a top priority everywhere. The livelihood of music creators depends on finding solutions that allow them to earn a fair living for their work from the streaming businesses whose essential product is their music. Songs and compositions are the engines that drive huge revenues for these big streaming businesses, so music creators must be compensated fairly.

Technological innovation should be supported, but we can only fully embrace such progress when it allows music creators to thrive alongside the businesses that provide new platforms for distributing their works.

About Eric Baptiste
Eric Baptiste is the CEO of SOCAN. In this capacity, he leads the close to 300 staff members coast-to-coast, who connect the 115,000 Canadian composers, songwriters and music publishers who are direct SOCAN members, and their more than three million colleagues worldwide, with more than 125,000 Canadian businesses that depend on music to enhance their activities. A native of France, before joining SOCAN in 2010, Eric led CISAC, the World Federation of Authors Societies for 12 years, had an eight-year stint in radio as COO of Radio France International and then CEO of a Paris commercial station. Eric has chaired music and radio trade associations in France, currently serves on various boards of organizations such as CISAC and the CPCC, and chairs the ISAN International Agency based in Geneva, as well as Radio Neo, a French non-commercial radio network dedicated to emerging artists. As a graduate of École Nationale d’Administration who started his early professional life at the Conseil d’État in Paris, he could have become a government official or even a lawyer, but this is a different story, in a parallel universe… Eric lives in Toronto and music (of course), good food, fine wines and science fiction are passions he’s ready to acknowledge.

This blog was originally posted here:  http://www.socanblog.ca/en/we-should-support-music-streaming-services/