March 1, 2012

The Global Songwriter Shell Game: Why The Major Music Companies Are Getting Your Royalties

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By Jeff Price

While the major music companies’ revenue from music sales has gone down, they have a brand new increasing income stream: revenue generated from the sale of other people’s music. In the past five years, hundreds of millions of dollars of songwriter royalties have been generated and never paid to the songwriter, or have been given to Warner Bros, EMI, Universal, Sony and others based on their market share- estimates put this new income at over half a billion dollars.

Once these companies get the money, they keep it and don’t account to anyone.

All the while, the songwriters that earned this money have no clue their pockets are being picked, their royalties are not being paid, and their rights are being violated.

I discovered this infringement and lack of royalty payments while embarking on a journey to discover how much money TuneCore Artists earned as songwriters.  In the past three years, TuneCore Artists have sold over 500 million songs and earned over a quarter billion dollars from the sale of the recordings of their songs.  With the help of Jamie Purpora, the former SVP Bug Music Publishing Administration and now President TuneCore Songwriter Publishing Administration, we identified another $60 to $70 million earned by these artists in songwriter royalties.  The upsetting (maddening?) part, over 70% of this money never made it back to them. And keep in mind, I’m only talking about artists that use TuneCore—there are many more.

This infringement and lack of payment is one of the biggest outrages of the music industry and yet it is rarely talked about and even more rarely understood.

It needs to stop.

Let me explain the nutshell version of how it happens.

The new music industry is global. However, outside of the United States, digital services require additional rights, use different royalty rates and pay the owed royalties differently than the United States music industry. The end result is:

-The digital music service does not get all the rights needed from songwriters and therefore never pay the songwriter the money he/she is owed.
-At the same time, local performing rights and collection agencies outside the U.S. illegally take a % of the songwriter’s money while making it impossible for the songwriter to get what’s left over.
-This illegally obtained songwriter royalty money is then given to other major music companies in that country.
-These other major music companies knowingly take other people’s royalties from the collection agencies. (Why not, it’s free money earned off of music sales from songs they don’t represent that they do not have to pay royalties on).

This scheme is beyond outrageous, it’s wrong, it needs to stop (and it’s why we launched theTuneCore Songwriter Service). [more...]