The rise in streaming services has helped to boost real growth in music industry revenues for the first time in almost twenty years, as reported by the Recording Industry Association of America (RIAA) in late September. While this recent good news seems to have left record labels laughing all the way to the bank, songwriters and by extension, music publishers, have voiced their displeasure at being cut out of the profits due to the current regulation of streaming.
Lax and antiquated laws put in place by the U.S. government, along with the payout format for streaming music have been blamed for the disparity. In the first instance, groups in support of music publishers and songwriters, including the National Music Publishers Association, and performance rights organizations such as ASCAP and BMI, suggest that the “consent decrees” signed into law in 1941 have no place in the modern era of doing business in music.
Additionally, the way how digital services, including Spotify, Apple Music, and Tidal, issue revenue payouts (mostly for music that is played by subscribers (content costs), rather than to music creators) is also blamed. In fact, it has been pointed out that only about 4 percent of payouts is trickled down to publishers and songwriters. Furthermore, considerations during negotiations for the Digital Millennium Copyright Act in the mid-1990s seem to tip the scales in favor of record label owners.
Labels are able to negotiate rates from streaming services, because they don’t earn from broadcast radio, while songwriters can’t, because they already earn performance royalties from music that is played on same radio. However, the publishing and songwriting community is contending that far more people are using streaming services now compared to listening to the radio. On the other hand, record labels point out that their operations derive much bigger overhead costs and, as such, deserve every penny they make.
With recent legal showdowns between music creators, legislators, and streaming services, including YouTube, the debate seems far from being close to an amicable solution. At the same time, some songwriters seem to be saying that they just want to earn enough to live comfortably, while others want the entire system to be revamped and made ‘fairer.’