SONGWRITERS: WHY DO YOU CARE?

Industry bloggers are railing against the DOJ “100% licensing” decision. Dean Kay publishes daily damning diatribes. ASCAP and BMI have mustered up songwriter spokespersons to circle the wagons.

But, what’s in it for the songwriters? Their primary, overriding, single focus should be increased royalties. How does this fight move that needle? It doesn’t.

The 100% decision creates an administrative mess for ASCAP and BMI. Among other issues, each will have to account over to the other for fees collected for the non-affiliated shares. It means that songwriters who chose one PRO will be paid by the other PRO.

But, it has no impact on the royalty rate paid by the user, the digital services.

Isn’t that what matters?

Songwriters do not select ASCAP over BMi, or vice versa, because one pays better streaming royalties than the other. They pay the same. The PRO choice is made on intangible qualities and extracurricular benefits – a personal connection with the writer relations representative or the appeal of outreach and educational programs.

Nothing changes those things. ASCAP and BMI will still compete for writer affiliations in the same ways they always have. Songwriters will still have those choices.

The only thing songwriters should care about is the royalty rate. Overturning 100% licensing and returning to “fractional” licensing will have no impact on the rate.

The single, irrefutable reason why song rates are too low is because recording rates are too high.

Streaming deals are structured as percentages. There is never more than 100% of the pot to give away. The record labels are paid more than 50% of streaming revenue; the songs are paid less than 15%. In total, more than 83% of streaming revenue is paid out for content costs. After overhead, technology and maintenance costs, and profit to investors, there’s nothing left in the pot to give away. The pot may increase with more subscribers or higher user rates, but a bigger pot doesn’t change the relative content royalty shares.

100% licensing is a distraction. Direct licensing (rightfully rejected by the DOJ) would be a disaster for songwriters.

The only way for songs to increase their share of streaming royalties is for the labels to give back part of the royalty pool. “Market value” for songs was foreclosed at the get-go by pre-existing label deals. But, the major labels and publishers – who control 70% of the revenue-earning songs in the U.S. — are corporate sisters who serve the same corporate giant and its shareholders. The label side has substantially greater profit margins, so there is no corporate incentive to rebalance these percentages.

Songwriter protests should be directed at label dominance. Songwriters have little to gain from ASCAP/BMI – DOJ battle.