“This bipartisan bill helps create a more level playing field when music is played on various platforms. By doing away with Big Radio’s subsidy that rips off artists and labels, helping streamline producer payments, fixing the pre-’72 loophole to help legacy artists get paid, and finally bringing SiriusXM’s antiquated rate paid to music creators into alignment with its competitors, this bill is much-needed legislation made to fit today’s modern music industry. We thank Reps. Nadler, Blackburn, Conyers, Issa, Deutch, and Rooney for their leadership on these important issues.”

The post RIAA COMMENT ON RE-INTRODUCTION OF FAIR PLAY FAIR PAY ACT appeared first on RIAA.

The news noted that price increases will mean more money for artists and labels.  That is certainly true.  But the reports did not explain that the increase in royalties is blunted by a government license that grants SiriusXM below-market royalty rates for music.  The result over time?  Hundreds of millions in royalties lost because of an outdated below-market rate standard.

SiriusXM has had impressive success growing both its subscriber base and total revenues.  The number of subscribers to the service has grown steadily, up 47% over the last five years, closing in on 30 million:

The company’s total revenues grew as well – up 62% over that same period to $4.6 billion:

SiriusXM’s growth was not limited to its top-line.  Since its business model scales so well, the increases in subscribers and revenues translated to incredible growth on the bottom line.  The company’s operations have been generating so much money that its free cash flow has grown an astounding 525% over the same 5 year period, now surpassing $1 billion per year:

We applaud SiriusXM for its success and hope it continues.  We merely wish that SiriusXM would pay its fair share to artists and labels by no longer hiding behind an antiquated law enacted before satellite radio even beamed music to its first subscriber.  The SiriusXM subsidy should vanish into a black hole.

Steve Marks

Chief, Digital Business & General Counsel

The post SiriusXM: A Success Story (So Why Are They Still Paying Below Market Royalty Rates to Music Creators??) appeared first on RIAA.

“Valuing Music In A Digital World” explains some of the factors that contribute to the undervaluing of music like a broken DMCA and holes in the licensing laws such as the lack of a performance right for terrestrial radio.

The post Valuing Music In A Digital World appeared first on RIAA.

The Federal Communications Commission (FCC) is considering a petition by several major radio broadcasters to weaken certain transparency requirements for the sponsorship of music and sports programming. We strongly oppose the broadcasters’ request and proposed alternative reporting framework for a variety of reasons, including:

• Failing to provide proper disclosure at time of relevant broadcasts provides less transparency to consumers and is not in the public interest.
• It obfuscates the broadcaster’s role in accepting payments, which can lead to unfair practices such as broadcasters demanding free artist labor or payment from record labels.
• Enhanced online disclosure is a helpful addition to disclosure but not a substitute for disclosure at the time of the relevant broadcast.

A copy of our filing with the FCC is available here.

Vicky Sheckler
Senior Vice President, Deputy General Counsel
RIAA

The post Opposing Broadcasters’ Request To Weaken Programming Sponsorship Rules appeared first on RIAA.

Reps. Jerrold Nadler and Marsha Blackburn stood with members of the music community today in New York City to launch the “Fair Play Fair Pay Act of 2015,” bipartisan music licensing reform legislation they introduced along with several of their colleagues.

Click through here to find our letter to Congressmen Nadler and Blackburn that includes our thoughts on the bill.

The post The Newly-Introduced “Fair Play Fair Pay Act of 2015” appeared first on RIAA.

The U.S. Copyright Office today issued a comprehensive report – “Copyright and the Music Marketplace” – with its recommendations on how to modernize music licensing. Below is a comment on the report from RIAA Chairman and CEO Cary Sherman:

“The Copyright Office has made an important contribution to the ongoing conversation about modernizing the copyright laws. They have given all of us in the music community a lot to digest and reflect upon. As the economic engines of the broader music industry, record labels look forward to participating in this ongoing discussion and working towards reform that will both modernize the outdated music licensing system and more accurately reflect the investments and value that the various stakeholders bring to the music marketplace.

“The office recognizes a consensus within the industry that the current system for licensing musical compositions is broken. Reform is necessary to develop new revenue streams for all creators and innovative consumer product offerings for music fans. The office also recognized that it is time to fix the system to ensure that all creators are paid fair market value for their work, regardless of the platform on which their work is used. For example, a performance right for FM and AM radio is long overdue. The fact that a multi-billion dollar broadcasting industry that derives its value from music gets a special interest carve-out from paying artists and labels continues to be indefensible. Likewise, artists and labels behind iconic recordings made before 1972 deserve to be compensated by digital radio outlets like Pandora and Sirius. They could change their minds and start doing the right thing tomorrow. We are pleased that recent court decisions have focused attention on this injustice and we look forward to resolving those lawsuits so that discrimination against these iconic recordings no longer exists.

“Working with our music industry partners, there’s much we can accomplish to foster a more vibrant and successful online music marketplace. We look forward to studying the report in depth to further understand the office’s recommendations and to working with the office and all stakeholders to improve music licensing.”

The post RIAA Reaction To U.S. Copyright Office Proposed Reforms To Music Licensing System appeared first on RIAA.

First, the numbers. A label P&L (balance sheet) looks far different than the blog portrays. Labels don’t “keep more than 80% of the money they receive” – labels invest that money in finding and developing talent, marketing and promotion, and distribution. Fortunately, there’s a wealth of facts and figures in a report — “Labels At Work: The Music Business In The Digital Age” — we submitted to Congress this summer. Here’s some food for thought:

• In the last decade, the major labels spent more than $23 billion on talent, of which roughly $18 billion went to artists. Artist royalties have increased by 36% over the last decade as a percentage of label revenue, remaining steady in dollars as label revenues have plummeted.
• Artist royalties alone are three times more than label operating profit. That’s right – at the end of the day artists receive 3x what the label does, and that doesn’t include money such as endorsements that artists derive once their careers are launched by the labels’ investment.
• Labels spend more as a percentage of their revenue on R&D – finding and cultivating artists – than other industries such as pharmaceuticals, biotech, computer software and high-tech hardware. And yet successful new music releases remain elusive – 80% of releases sell less than 100 copies and roughly 95% sell less than 1000 copies.

What’s behind these numbers? A lot of work. Labels spend tens of thousands of hours on the road and online to find great artists; connect great musicians; and bring together the producers, engineers and technology to bring a song to life. Labels design campaigns for a new release and tours, and help build a fan base to launch a career. And let’s give credit where it is due: labels have reinvented their businesses by creating the infrastructure and licenses necessary to bring music to fans everywhere. One illustration? Look at the dozens and dozens of digital services—a diverse array of consumer-friendly models—licensed by the major record companies listed on www.whymusicmatters.com.

These financial and creative investments show labels are far from mere “middlemen” as the blog states. Many recognize that today labels are more important than ever. Let’s face it: ideas from a decade ago like the “long tail” or that artists could easily and single-handedly develop a massive online audience have been laid to rest by the cacophony of the Internet. How many thousands of bands toil in obscurity on YouTube and other places online? How many other entertainment options are thrown in the faces of consumers every day? Bottom line: competing for consumer attention is more intense than ever, and labels provide a critical role to help artists break through the clutter and find an audience.

And let’s not forget that the labels’ creative and financial fuel seeds and supports an entire music ecosystem. Music drives terrestrial and online radio, digital retailers such as iTunes and music services such as Spotify, and touring companies and ticketing services, just to name a few. And countless others benefit from music’s draw, whether YouTube or bars and restaurants.

So I come back to the point David cast aside at the beginning of his blog — how to sustain and ensure a healthy music ecosystem so investments in music like those made by labels continue to flow. That requires continued work by labels to build partnerships and help open new markets in an ever-changing world. But it also requires others to step up, such as terrestrial radio paying for music and others paying older iconic artists for pre-72 recordings. And in a world of converging functionality between music services, we need rational rate structures to ensure a fair return to artists and labels lest their critical investments to create music dry up. But that’s a subject for another blog.

Steven Marks
Chief, Digital Business & General Counsel

The post How David Pakman Shortchanged Role Of Record Label appeared first on RIAA.

The House Judiciary this morning convenes a second subcommittee hearing on music licensing.  Cary Sherman, CEO of the Recording Industry Association of America (RIAA), will testify.  In his opening testimony, Sherman calls for a series of reforms, including:

• Grant a broadcast performance right for sound recordings
• Make sure artists who recorded before 1972 are paid
• Allow rights to be bundled and administered together
• Create an across-the-board market-based rate standard
• Consider a one-stop shop for musical work licenses

He also touts a new report from the RIAA, submitted to the committee on Tuesday:  “Labels At Work:  The Music Business In The Digital Age.”   In his testimony, he cited some of the new facts and figures unveiled in the report:

In the process of embracing digital distribution, record labels have revolutionized the business, streamlining their operations and allocating a higher proportion of their revenues to investing in artist career development. Record labels provide the investment on which everyone in the music value chain depends, “seeding” the entire music ecosystem with $20 billion in U.S. talent investment – including artists, songwriters and music publishers – in just the last decade (and that’s just from the major labels). The majors also invested an additional $6 billion over the same period to market recordings in the U.S.

And even in tough times, our investments in creators have been significant. As a percentage of U.S. net sales revenue, over the last decade major label payments for artist advances and royalties have increased by 36% and mechanical royalties for songwriters and music publishers have increased by 44%.

The post RIAA CEO Sherman Urges Simplified Licensing System appeared first on RIAA.

But something folks may not know is that Pandora and SiriusXM don’t pay artists or rights holders for music they play that was made before 1972. That’s when federal copyright law kicks in and says that services like Pandora and SiriusXM must pay artists and rights holders to play their music. So all post-1972 artists are paid when they are played on these services, but not the recordings of pre-1972 artists — which include so many legends that paved the way for current artists and helped develop the sounds we hear today. Pandora and SiriusXM are ignoring the importance of state laws which protect music made before 1972. These state laws are the basis of our two ongoing lawsuits against Pandora in New York and SiriusXM in California. Legacy artists and labels deserve to be paid when their music is played on these services, and we will continue to fight to right this wrong in state court.

Others recognize this problem and are moving forward to fix it. U.S. House Reps. George Holding and John Conyers have introduced a bill called the RESPECT Act which requires digital music services like Pandora and SiriusXM to pay ALL artists and rights holders for their music, regardless of the date that music was made. After all, a business that uses someone else’s property should pay for it. Litigation is one way to resolve past injustices, but smart prospective legislation is the best way to address the issue moving forward. We strongly support this bill and echo the call for SiriusXM and Pandora to do the right thing and not leave pre-72 artists out in the cold. We thank Reps. Holding, Conyers, and other co-sponsors for their leadership and recognition that all artists and rights holders deserve payment for their work, regardless of the distribution platform.

For more information on the pre-72 campaign, please visit www.project-72.org.

Cary Sherman
Chairman/CEO

The post Saluting the RESPECT Act appeared first on RIAA.

“Modernizing the licensing system for musical works is a win for everyone…must be a collaborative exercise,” says RIAA CEO

WASHINGTON – Simplifying the licensing system for musical works is key to further expanding the digital music marketplace, providing fans with more music options and creating healthier revenue streams for music creators, according to the Recording Industry Association of America’s (RIAA) official comments filed as part of the U.S. Copyright Office’s examination of music licensing. But simplification will only occur, RIAA notes, if all stakeholders in the music community engage with an open mind.

The RIAA’s comments examine the complex world of licensing the underlying musical work in a sound recording, a system that industry leaders throughout the music business would like to see modernized.  Today, a new release by a record company can require a vast number of licenses to meet consumer demand.  For example, RIAA notes in its comments that one record company responsible for a current, successful release had to obtain 1481 mechanical licenses for the project.  Digital music services face challenges launching with millions of songs.  RIAA argues that a new system should simplify licensing by aggregating rights under a blanket license, much like ASCAP and BMI offer; ensure that owners of musical works receive fair market value for their works; and cover all the rights needed to bring modern music releases to market.

In its filing, RIAA emphasizes its desire to work with its partners across the music community in exploring new ideas to tackle the challenge:

…While the systems for licensing sound recordings are working reasonably well in many respects, everyone agrees that the systems for licensing musical works are not…We believe that fixing this system will require all stakeholders to work together to take bold steps, rather than just a little tinkering… The key is to update the systems that address the inherent challenges of musical work licensing in a way that all can agree will fairly and appropriately serve creators, rightsholders and the marketplace. 

The groundbreaking proposal that RIAA hopes to work through with its industry partners would encourage blanket licenses that include all the necessary rights instead of multiple licenses from multiple entities with overlapping rights; and it includes a suggestion that publishers and songwriters be compensated with rates negotiated and agreed to by industry partners rather than those set by courts:

It is understandable that reform will be neither possible nor desirable unless songwriters and music publishers believe that it provides for rates that are more market-based than rates determined by the Copyright Royalty Judges or rate court. …One possibility would be…a rate that is an agreed, consistent, set percentage of label revenues from modern music products…Only if a precise percentage were negotiated and agreed by stakeholders might it then be suggested as legislation, so that no party would be agreeing to reform without understanding its economic consequences. This would be a market-based royalty, because labels’ deals are negotiated in the marketplace, and publishers and songwriters would receive the percentage of that deal that they had previously negotiated with record companies. 

Some of the potential advantages to such a licensing structure, according to the RIAA, include:  market rates for publishers and songwriters; more consumer choice as simpler licensing procedures attract funding and development of innovative services; more revenue for services and higher royalties for creators resulting from savings from simplified licensing and payment procedures; improved accuracy of payments, transparency, and audit rights for publishers and songwriters; and viability for ASCAP and BMI, which would, among other things, continue to license radio, TV and venues as they always have.

“Modernizing the licensing system for musical works is a win for everyone — from digital music services to songwriters, music publishers, artists, labels, and fans,” said Cary Sherman, CEO, Recording Industry Association of America.  “That’s the only way this will work – it must be a collaborative exercise.  We don’t pretend to have all the answers.  But we know the status quo is not working like it should.  It’s time to have this conversation.  It’s time to think outside the box and begin to build a modern music marketplace – based on market-based concepts — that work for all music creators.  We appreciate the efforts of Congress and the Copyright Office in undertaking its examination of the complex licensing system.”

RIAA also proposed incorporating pre-1972 recordings into the federal statutory license system and echoed the Copyright Office’s call to establish a terrestrial performance right so that artists and labels can be paid when their music is played over AM/FM radio.

For a copy of RIAA’s filing please contact Cara Duckworth Weiblinger at cduckworth@riaa.com.

The post RIAA Suggests “Bold Steps” To Modernize Music Licensing System appeared first on RIAA.