Re: Re: Why this is a big win for artists as well as songwriters and publishers
Songwriters are paid mechanical royalties by publishers. Publishers seek to collect mechanical royalties from the companies that distribute copies of their works (e.g., record companies distributing CDs and iTunes distributing downloads). Publishers license and collect mechanical royalties either directly of through an agent on their behalf (e.g., the Harry Fox Agency in the USA).
However, in the USA, but not in most other countries, iTunes and the record companies agreed that the record companies would cover iTunes mechanical royalty liabilities to publishers for downloads. The problem with this is, publishers didn't agree to waive their right to get paid direct from iTunes. And why would you, if you were a publisher or songwriter? Why would you want to have to wait for a record company to receive reports from iTunes and take months or years to turn around and pay you at reduced rates in many cases? That isn't fair. But whether you think it is fair or not to let the record companies get their fingers into this income stream, record companies do not normally have the right to grant mechanical licenses to any third party - iTunes or otherwise - on behalf of third party publishers.
One appeals win doesn't mean everything will change. UMG is trying to say that Eminem's case is unique, although it isn't. The legal battles will continue.
Nevertheless, what is changing is that iTunes is moving to streaming, and it is obliged to license and pay streaming royalties to the publishers directly (or through the publisher's agents such as HFA) - not through the record companies. This will mean more money for publishers and songwriters, who typically split mechanical royalties, and this cost will come out of the pockets of Apple and/or the record companies, ultimately.
These changes will also mean more money for artists, as record companies report streaming income as licensing income, unlike downloads, which they report as sales. Said another way, most artists currently get 50% of streaming income, but only a small fraction of download income, so a shift to streaming will benefit artists, in terms of the their percent splits with the record companies.
Re: Re: Re: Re: Re: Re: Why this is a big win for artists as well as songwriters and publishers
I wish I had time to respond in so much detail to your question, but you can easily research the differences between licensing and selling products in a business administration class or on the internet. I described the #1 difference above.
Re: Re: Re: Re: Why this is a big win for artists as well as songwriters and publishers
There are big differences between sales and license income. I won't go into all of the differences, but a big one is the record label takes no financial risk on license transactions, unlike CD sales and 360-participations, which require the record company to front costs.
Why this is a big win for artists as well as songwriters and publishers
This is a big win for my artist, publisher and and songwriter clients!
It not only may impact artist earnings (royalties vs. 50% of net receipts, not to mention approval rights) but also publishing royalties: If the download is not deemed to be a sale by the label, then the publisher has the right to receive a full mechanical royalty rate directly from iTunes, not a reduced rate through the label. (Record companies apply so-called "controlled composition" provisions contained in artist contracts in order to reduce the mechanical royalties payable to publishers, but the labels do not have the right to assign such controlled composition provisions to their licensees such as iTunes.)
Contrary View + Now is the Time for Publishers to Demand Direct Accountings from Apple
Publishers do not have an "inability to understand that promotions can lead to more sales."
Many publishers will gladly grant gratis (free) promotional interactive streaming licenses to Apple for this reason. (Publishers grant gratis licenses all the time.) However, this decision is not Apple's to make. It is the publisher's.
That said, I wouldn't blame a publisher for not granting a gratis license for interactive streaming by Apple. After all, Apple is in the business of selling devices and the publishers don't share in that profit. Further, the only amounts that publishers receive from an iTunes download in the US is what they manage to squeeze out of record companies, which is not a fair share compared to the record companies' and Apple's shares. So, publishers and songwriters have less to gain from additional sales than any party.
Most importantly, Apple is shifting to streaming, and away from downloads, so it is crucial that publishers now establish their right to receive direct accountings from iTunes and not let Apple and the labels once again team up to virtually squeeze out publishers and songwriters, which is what happened with downloads, at least in the USA.
Not to mention that other music distributors under Section 115 of the Copyright Act must choose either to pay statutory rates set by the Copyright Royalty Board for interactive streaming uses, or, more often, opt to negotiate more favorable rates (including $0 rates) with publishers. Why should Apple have an unfair advantage of not having to pay or negotiate for such interactive streams?
Just because the graphic *says* it depicts the flow of rights and royalties, doesn't mean that it *does* portray music royalty flows... a real music royalty chart would be much simpler. The graphic has a lot of items that have nothing to do with music royalties.
I agree: The above chart is a summary of UK rights and that the chart needs "repairs." Britain's answer to the RIAA, BPI, does not issue or obtain licenses, so I agree it is irrelevant for purposed of this flowchart.
However, payments to the AFM for sessions musicians are made by record companies in the US as well as UK. Still, this is a very minor point because union payments are of no concern to a music service licensee and should not be included in a licensing flowchart.
Even though I tweeted this chart to my followers last week, it is a little misleading, and was deliberately created to look complicated by a company who missed its deadline to license rights. The main problem is that it incorporates more items than necessary. (For example, a manager's commission doesn't belong on a music rights and royalties chart because it is of no concern to a music licensee.)
Did you read this (http://www.huffingtonpost.com/rick-carnes/professional-songwriters_b_680276.html) opinion piece from Rick Carnes about CC licenses?
You will probably disagree with most of what he has to say, but it is hard to dispute the fact that CC licenses basically have the effect of transferring money from creators to corporate interests. This is why, as an artist advocate, I can not support CC licenses.
However, I do support efforts to make it easier for music customers to do business with licensors, and I think we are moving in that direction in the shift to streaming and the success of music libraries, which puts pressure on traditional copyright holders to provide better service to music users.