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Published today at The Great Escape, the UK’s biggest showcase festival for new music, a new guide from the Music Managers Forum and produced by CMU Insights. The $ong Royalties Guide lifts the lid on the complex way in which songwriters’ repertoire is licensed to digital music services, and how inefficient payment systems are drastically reducing the royalties that creators receive.

While featured artists can be paid royalties within weeks of a track they performed on being streamed – especially if they self-release via a DIY distribution platform – those who actually wrote the track must frequently wait years before receiving their share.

This is the result of a complex system of ‘royalty chains’, whereby global-facing digital music services are often licensed on a territorial basis and revenues flow between a succession of overseas collecting societies, publishers and other intermediaries. 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.

In theory, songwriters should be major beneficiaries of the streaming revolution. Proportionately speaking, the percentage of income allocated to the song copyright in streaming is often double that allocated on a CD sale. However, problems on the royalty chains mean most songwriters are yet to see the benefit.

These problems increase as listening goes global, especially beyond Europe. According to recent Spotify research, UK artists (and therefore, UK writers) 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, 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. Currently the vast majority of music creators have little insight into how their rights are licensed online and the MMF/CMU report highlights the enormous complexity underpinning this confusion. 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, said:

“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 six key recommendations that the MMF would like to see adopted. 

These are:

• Greater transparency – data around royalty chains, rights ownership, admin fees and payment schedules must be made available.
• Reveal the disputes – collecting societies and music publishers should proactively alert songwriters when disputes occur with their rights that could halt payments.
• Global licensing – we must reduce the number of links in the royalty chains. New services and new markets should not be licensed locally, and licence renewals should be global wherever possible.
• Quicker payments – as an absolute minimum, songwriters should be paid within nine months of a track being streamed.
• Black Box reform – attributable or uncollected streaming revenues should never be redistributed by market share. There should be consultation within the songwriting community to find alternative distribution processes.
• Campaign for change – songwriters, managers and accountants must push their publishers and collecting society partners to actively and urgently address licensing inefficiencies. Industry growth should be equitably shared by all.

Download the Guide here