Much is being written about the Songwriter Equity Act at the moment and one can understand why but what is it and, probably more important for regular readers, how will it affect songwriters?
In a nutshell, the Songwriter Equity Act is trying to redress the issue of royalty payments, with its main aim being to pay songwriters more money. If you are a songwriter, you are no doubt thinking this is good news, and you may well be right. However, there may also be problems in the future with this act, which we shall explore in a minute.
First of all, if you are new to songwriting or you are thinking of songwriting as a career and do not know a great deal about copyrights and royalties, we would like to recommend you head over to Tunecore and read Jeff Price's excellent overview entitled 'The Six Exclusive Copyrights That Drive The Entire Music Industry'. It contains everything you need to know about earning money as a songwriter and it's (relatively) easy to understand.
The need for the Songwriter Equity Act has come about because of two portions of the US Copyright Act, Section 114(i) and Section 115. It is being claimed by ASCAP that these two sections currently “prevent songwriters and composers from receiving royalties that reflect the fair market value of their intellectual property.” ASCAP also claims that “This inequity harms America's songwriters, composers and music publishers in the digital age.”
The most famous argument for a change in the way that songwriters are paid is to do with the music streaming industry. For example, a songwriter is paid 0.00009 cents each time his song is played on Pandora according to Ne-Yo, whose credits include Rihanna, Celine Dion and Beyonce. To put this in a way that better reflects the amount earned, that's $90 for 1,000,000 streams. Most reasonable people recognize that this is a pretty paltry sum of money.
So, this seems like a reasonable piece of legislation and in many ways it is, but there are also arguments against the act.
For a start, who is going to pay the extra money for the songwriters? This is a fair argument. If everyone is going to carry on earning the same amount of money and, let's be honest, who is going to voluntarily take a pay cut, then it means that the extra money must come from external sources. It almost certainly cannot come from services like Pandora, Spotify, or Rdio, which are all losing money. Further costs would make streaming music even less attractive as an investment than it is now.
There is also an argument that, while it is true that royalties for individual areas of the music industry may be small, when all the royalties are added up, the figures are considerable. BMI and ASCAP are both organizations that collect royalties on behalf of songwriters. Recently, BMI released a statement on its finances, stating that royalty collections added up to close on 1 billion dollars. ASCAP released similar figures for the same time period. That is a substantial amount of money for the small group of successful songwriters.
Do the above arguments suggest that the Songwriter Equity Act should be thrown out? The answer depends on your point of view. What the act is attempting to do is to allow songwriters to earn more money by having rates “based upon a fair market rate, or what a willing buyer and seller would negotiate, including looking to comparable rates and agreements, rather than “reasonable” rate based on factors other than market conditions.” This seems only fair.
Of course, music streaming services such as Pandora and Spotify could argue, that they already pay a huge amount in royalties and that anymore payments would make what they do unsustainable economically.
Whatever the final outcome, the one thing that is safe to assume is that whether the Songwriter Equity Act is passed or not, this debate will play on and on.
Tunecore - 'The Six Exclusive Copyrights That Drive The Entire Music Industry'
US Copyright Act, Section 114(i) and Section 115
ASCAP Petition to Urge Congress to Pass the Songwriter Equity Act