The major publishers, via flack, David Israelite, insist that direct licensing – withdrawing digital rights from ASCAP and BMI – will increase song royalties.
Today’s Hypebot.com review of Spotify’s financials expose the folly of that solution.
Spotify loses money every month
Spotify’s gross margin per user has declined each year
Content license costs consume 83% of Spotify’s gross revenue – that includes current publishing royalty rates at 15%
Israelite keeps pounding the fiction that direct licensing can force the streaming services to increase publishing royalties from the services’ share of revenue.
But, that flies in the face of math. As Hypebot.com describes, Spotify is “a model with already wafer thin margins” whose “gross revenue going to rights is clearly too high and unsustainable.”
More to the songwriters’ plight, “… the labels aren’t decreasing their rates” to accommodate the momentum of publishing demands.
But they must.
There’s no more blood to squeeze from the turnip services. New publishing royalties can only come from the share of royalties that the labels have corralled – from original deals that excluded publishers.
If Hypebot.com is right and the economics of streaming is broken – because the falling effective monthly retail price cannot support the content costs – then songwriters need a genuine advocate at the table when Reconstruction commences.
The major publishers are not that. They are adjuncts of the labels, corporate sisters who answer to the same profit whistle. Direct licensing will put publishers at the table, with all their corporate conflicts in tow.
Only ASCAP and BMI – somewhat independent and sufficiently bound to serve songwriters — are the most viable choices to be the songwriters’ advocate.