Dissecting the Digital Dollar – Extract 4 – The Role of the CMOs

08 March 2017

The Music Managers Forum has long campaigned for a fairer, more transparent music industry that operates in the interest of artists and fans.  We published Dissecting the Digital Dollar parts 1 and 2 to further that aim regarding streaming. Both are available from our website. These bite-sized extracts summarise each issue and propose practical courses of action for managers and artists. Extract 4 will examine the role of the Collective Management Organisations.

The major labels license most streaming services directly rather than through the collective licensing system and the indies through Merlin or aggregators. Generally the record companies maintain that this is the best approach.

The publishers primarily license digital services through their collecting societies (both mechanical and performance rights) though the big five often license Anglo-American mechanical rights directly. The indies publishers in the UK formed IMPEL to license alongside the big 5. Performance royalties used to be a separate license from the CMO (Collective Management Organisation) but are now licensed by the big 5 and IMPEL. Many publishers seemed to think that, if anything, there would be more direct licensing of digital in the future.

Artists and songwriters generally prefer collective licensing, and would like more digital services licensed this way. Collective licensing can benefit artists and songwriters financially as they are directly paid to them. Though another reason for supporting the collective approach is a feeling that everyone should be paid the same for any one stream, rather than what you earn depending on what deal your label or publisher did with the DSP. Many artists and songwriters also trust their CMOs more than the labels and publishers they are signed to.

Managers recognise that, while their artists and songwriters may prefer collective licensing, there can be problems with the CMO model. This includes relying on bad societies for international royalties; the intervention of rate courts or similar driving down royalties; CMOs being slow decision makers; societies having the same transparency issues as the labels and publishers; and excessive commissions and fees.

Actions for Managers/Artists:

  1. In Europe, artist and managers could communicate the issues – especially around transparency and accountability – to whichever government agency has been given an oversight role by the recently introduced Collective Rights Management Directive. This directive was specifically introduced to ensure CMOs are in touch with their members. In the UK the agency is the Intellectual Property Office. Managers and artists could make a point of identifying and lobbying creator representatives on the board of CMOs.
  2. Artists and managers will put pressure on the CMOs (either individually or through their trade bodies) to address the specific issues with collective licensing. This includes applying many of the transparency recommendations in DDD2- Extract 3 to the collecting societies too.
  3. Artists and managers call on labels, publishers and CMOs to be much more clear on which services are being licensed directly and with what rights and which ones are licensed collectively in which territories.
  4. Non-Disclosure agreements should be rarely used by organisations which are owned by artists.

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