by Christian Hamilton | November 21, 2014 5:10 am
We’ve all heard the stories criticizing major record label contracts. Anecdotally we understand that many of the deals signed by artists are bad, but what does “bad” mean and just how bad are these deals? More importantly, how exactly are they bad? In an earlier Facebook post Nikki Sixx spoke openly about “A big unaddressed issue” that is plaguing the music industry. If you have not heard the term “Breakage” take a minute and check this out.
So what exactly is Sixx talking about here anyways? Well as Posted in News by A2IM: Certain services, such as Pandora, Sirius/XM, Music Choice, etc., are covered by compulsory statutory licenses. In general these licenses for non-interactive music streaming services, where the listener can’t pick the song, have been good for the independent music label community because all music label copyrights, whether those of the major labels or those of independent labels or artists, are treated equally and paid the same rate amount for each stream (play) of that music. Those rates set by the Copyright Royalty Board and administered by SoundExchange. The authority of SoundExchange to aggressively pursue the best possible statutory rates and handle all of the administration, including processing and auditing, results in having a central group to protect Indie rights as the statutory rate is working and indie labels are benefiting from having a this central voice.
For music streaming services not covered by compulsory statutory licenses, those that have an audiovisual component or allow greater customer interactivity to select the songs or create playlists, a direct license is required between the music service and the copyright owner. These services may equally be valuable to the independent music label and artist community but the deal terms are trickier. Compensation under these agreements (generically) might include a combination of a per stream rate, revenue sharing, equity in the service, minimum guaranteed revenues, and an advance. If the advance or minimum guarantees exceed the amount earned during the licensing period the label will earn “breakage” in excess of the earned amount.
“I’d like to talk about the pink elephant in the room for a minute.
A lot of artist’s are talking about Spotify right now and some might say its because they have new albums out. It could also be considered a good marketing tool because to be honest with you, it gets picked up a lot in the press. Just to be clear I too have a new album out and a new video for Sixx:A.M Any smart artist should know how to use the internet just like Bono, Taylor Swift and Dave Grohl are right now but that being said the pink elephant in the room is that YouTube is playing all of their music and they aren’t getting paid for it. They are making even less money from YouTube than Spotify so let’s not just target Spotify here.
A big unaddressed issue (and more important in my opinion) is that artists aren’t getting paid because of a term called “BREAKAGE”. That’s where the record companies have equity or take advances from the different streaming companies and never recoup them. Thus, never paying the Bono’s, Taylor’s, Dave’s and many, many, more. These artists should really be talking about that. But I think they may not know or are afraid that their labels (or distribution companies) won’t promote them if the tell that “dirty little secret.”
Also what are we doing to help new artists? We were all new artists once too. We’ve been around long enough that we should be addressing these issues to help new artists; exposing the things that are more than just roadblocks, the things that are actually sinkholes.
I don’t understand why the press never writes about it but hopefully they will start talking about breakage and how new artists can get more exposure. We have the power as the artists to raise awareness and change the future of the music business. Let’s use our brains to not only promote our music but to address the pink elephant in the room…”
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