A new report published by the Music Managers Forum (MMF) claims that inefficient payment systems are reducing the digital royalties that creators receive.
While featured artists can be paid royalties within weeks of a track they performed on being streamed, the MMF said that songwriters must frequently wait years before receiving their share.
Global digital services are often licensed on a territorial basis and revenues flow between overseas collecting societies, publishers and other intermediaries. According to the report, it means songwriters and composers frequently face a series of delays and deductions to their royalty payments, as well as a significant risk of their rights being misreported and unattributed.
The MMF has recently called for clarity over increases in PRS For Music admin fees, including a quadrupling in some cases of costs added to international collections.
While songwriters should be beneficiaries of the streaming revolution, the MMF report states that problems on royalty chains mean the creators are losing out. Problems could increase as listening goes global, especially beyond Europe. According to recent Spotify research, UK artists are already generating four streams abroad for each one at home.
Annabella Coldrick, CEO, Music Managers Forum, said: “Streaming should be boosting songwriters’ incomes, instead MMF research reveals much of their money is subject to unnecessary data disputes, deductions and delays. Long and complex royalty chains need to be simplified and shortened so more of the money gets back to the creator of the music. Digital licensing needs to be fit for purpose.”
Paul Craig, of Nostromo Management (Biffy Clyro) and chair, Music Managers Forum, said: “This is a timely report and should be required reading for everyone in our business. In great detail, it shows how the complexities of online licensing have hampered industry growth and impact on the livelihoods of songwriters and composers. It’s a situation we cannot allow to continue. Urgent reforms are needed.
“At the core of these must be an overhaul in the practices of collecting societies, and adoption of more fluid and globalised licensing processes. Personally, I’m a supporter of collective licensing, but only through such modernisations will we break the royalty chains and ensure creators receive all revenues they have earned.”
Crispin Hunt, chair, The Ivors Academy, said: “Dissecting the Digital Dollar is an important series of reports that help explain how the industry is currently structured and ways in which it needs to improve. The report suggests that creators should be more informed and able to understand what work societies and publishers are doing on their behalf – we endorse this view.”
Nigel Dewar Gibb, Lewis Silkin LLP, added: “It’s a complex business but it doesn’t need to be. You need to look at all parts of the chain and understand all the links and the problems that are caused by any breaks. It requires a range of skills to get on top of this and new and innovative services are evolving to address this so there is better understanding and management of the copyright assets and just as importantly the related royalty flow.”
Dissecting The Digital Dollar - The $ong Royalty Guide includes key recommendations that the MMF would like to see adopted, including greater transparency on data around royalty chains, rights ownership, admin fees and payment schedules; alerts from publishers and collection societies when disputes occur that could delay payments; and a reduction in the number of links in the royalty chain.
The MMF has also called for quicker payments, with a minimum turnaround of nine months, consultation on alternative distribution processes such as user-centric payments and a step up in the campaigning on licensing inefficiencies.