June 13, 2010 – 1:12 pm
Photo by ajburgess
In Britain, there’s an organisation called PRS for Music. They’re a membership organisation of composers and songwriters, and they collect royalties on behalf of those members, whenever music is performed publicly or broadcast.
And the PRS has reciprocal arrangements with other collection societies world wide – APRA in Australasia, IMRO in Ireland, ASCAP & BMI in the States, etc. So whenever a British composer’s music is played in France, money can return to that composer.
It’s a great system, and it means that people get paid when their creations are used – particularly in a profit-making context (eg: getting played on the radio; used as mood music in a restaurant or bar; performed live in concert; played by a DJ in a nightclub).
But it’s a far from perfect system.
The trouble with Rights Organisations
There is a fundamental problem and it’s a data problem. Accuracy in reporting is the issue. Because with the sheer amount of outlets, opportunities for broadcast and blanket licensing being done, the collection societies have to do an incredible amount of guesswork to try and distribute money fairly.
Radio stations do not report every single song they play, but are periodically sampled. Bars and clubs pay blanket licence fees, but do not typically report every composition that gets played each night of the week.
And so there’s a lot of stuff that simply falls through the cracks and doesn’t get counted – and typically, this disadvantages the people who get very few plays. And I’m not talking about ‘unsuccessful’ or ‘unpopular’ artists – I’m talking about new artists, artists who work in specialist and niche genres of music and, in fact, everyone who’s not in the upper echelons of the music biz (let’s say – for the sake of argument – the top 20% of composers).
Because the fact is, if your music gets played on the radio five times, but only one of those times are counted, the collection society will assume, based on statistical probability, that it was not your song but, let’s say, Elton John’s that got played those other four times.
That is, of course, an oversimplification of the problem – but it neatly describes the net effect.
Estimation and extrapolation hugely favour the already well-represented when you’re working from broad sets of information from the larger bars, radio stations and other outlets, rather than the pinpoint-accurate granular data you’d get if you were able to count every play of every song in every club, pub, bar, workplace, internet radio station, and so on.
Because if you don’t even show up on the radar, you won’t even be factored in when the sample data is used as the basis of dividing up the cash.
PRS wants to be fair
This is not a problem of not caring about the little guy. As membership organisations, royalty collection societies want to help those members, and not just the rich and famous ones (I know people who dispute this presupposition, but let’s assume for the moment that it’s true).
This is a simple matter of the tension between the desire for perfect data reporting, and the perceived cost of increasing existing levels of accuracy.
PRS for Music could actually attain near-perfect reporting accuracy – but they might not have much money left to distribute to their members if they did (actually, I don’t think it’d be nearly as expensive to meaningfully improve their accuracy as they think it would be – but that’s another debate).
So – another solution is required. One that costs no more to administer, but is significantly more egalitarian. I have one in mind – and it’s one that not only helps the overlooked and out-of-pocket composers, but actually proactively improves the music landscape.
The 80/20 solution
Here are the figures:
PRS membership statistics from their website
PRS revenue statistics from their audited financial results [PDF]
To use round numbers, then. There are 60,000 members of PRS, for whom a total of £600m is collected and shared out.
My proposal is simply this:
Take 20% of the total revenue, and spread it evenly between the bottom 80% of composer members.
The remaining 80% of the money collected then becomes the pool from which PRS can attempt to accurately and fairly distribute according to the records and statistical data that they have.
On the numbers above, this would mean that 48,000 members of PRS would automatically receive a baseline sum of £2,500 in a year. They would then receive a proportion of the remaining money based on airplay, public performance or concerts that had actually been reported to the society.
There’d be several positive effects of this very simple intervention:
1) It would go a small way to close the gap between the incredibly well-represented members – the popstars and television theme tune composers – and those who tend to be under-represented in the statistics: dance music producers, independent bands, contemporary classical composers, independent film soundtrack producers, and other niche music makers;
2) It would provide a very strong incentive for new artists to join the collection society;
3) It would inject small amounts of capital into the independent and marginal music scene. £2,500 is not enough to live on for a year, but it is enough to buy a new guitar amp, fix the touring van, record an EP, shoot a low-budget video, get some professional photography done, pay a decent website developer, commission a string arranger for the album, make t-shirts, print flyers, do some press – or whatever small but career-changing act that not having that money is currently preventing.
In other words, the 80/20 solution not only corrects the problem of a lack of data that exists down the shallow end of the royalties pool, it also goes beyond merely paying composers, and starts investing in new music cultural production.
It’s not fair
The 80/20 solution is not a ‘fair’ method. But it’s not trying to be. This is better than fair. Fair, in this instance, does not mean egalitarian or ‘a level playing field’.
Fair, when it comes to royalty distribution simply means that the people with the most populist works that have the best connections and the most money spent on marketing will necessarily get the most money.
Fair means that innovation and experimentation are neither encouraged nor rewarded. Fair means that the safest, most mainstream and most formulaic music gets the vast majority of the money.
Now, this would still be the case under the 80/20 solution. Don’t forget that of that £600m, £480m is still to be divided up under the old system. Elton John and Phil Collins will not be made paupers under this scheme.
But what it means is that the people who were pretty much guaranteed to get only the smallest of sums (if anything), despite the fact that they might be played in contexts that are invisible to the collection society due to the granularity of the data, can now get money that they deserve.
In other words, this moves it from simply being about paying composers – and makes it also about investing in composition.
And it means that even if a small number of composers end up getting money that they didn’t earn, that money is still going to composers – and it’s going to the composers who need it the most in order to continue and develop what they do.
We’re talking about the ones for whom that £2,500 would make all the difference in the world – both to them and to their fans – and perhaps even the difference that might lift them from the bottom 80% into the top 20%.
An opportunity for cynicism
Where this might all fall down, of course, is if the rights organisations are unduly influenced by their most moneyed and most influential members – the rich songwriters, and in particular, the large publishing companies who are the ones who stand to have their margins topsliced by such a move.
An organisation that wishes to benefit the majority of their members, rather than simply bow to the wishes of the most powerful who are already getting a larger proportion than they probably deserve (and want to hang onto that edge no matter what) would certainly be drawn to consider a proposal such as this.
I happen to think the PRS is such an organisation. I’ve met people from the PRS, and I believe that they do care about all of their members, and not just the ones that make the most money.
But it’d be interesting to find out what the realpolitik of that might be, and how that played out. I’m certainly not holding my breath.
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13 Comments
Great thinking and a positive if not flawless solution. At the end of the day it’s up to artists to lobby the PROs who, after all, represent THEM. Perhaps a grassroots version of Featured Artists Coalition or similar could take a manifesto like this out to long tail members?
I like the idea – surprising though it may seem.I certainly agree with your rationale.
I do see a couple of problems though (wouldn’t be me, if I didn’t):
1. The system benefits the lower tier of the under-represented composer at the disadvantage of the upper-tier. You benefit most from this system if you have very little royalty entitlement – you are getting paid more than you arguably deserve. On the other hand, you may find that since there is less money for the actual distribution, you’ll get underpaid for those plays that can be attributed to you. Whether the lump sum from the general distribution would offset this is something to consider in the context of real-world data.
2. The “free money” from the general distribution might serve as an incentive for composers who wouldn’t have any royalty entitlement – because nobody wants to play their music – to join. As a result of the swelling number of claimants, the general distribution payout per artist is likely to decrease – possibly to a point where it’s a token sum. That could undermine the whole purpose of the exercise.
I think this idea has a lot going for it and it is something the PRS should seriously take on board as a way of fundamentally enhancing what they do (as you say, making it as much an investment in composition as a reward). Then again, I am a current PRS member and cannot pretend the idea of £2,500 extra in my pocket a year right now wouldn’t be fantastically welcomed!
My only concern would be that if word got out that PRS members were getting that much per year as a baseline just for being members, a lot of people would sign up and that bottom 80% would represent a far higher number of composers, surely lowering the “baseline” amount payed out?
If you were to end up with a situation where there are lots of new PRS members who maybe have only one recorded instance of airplay/live performance but are receiving a couple of thousand pounds a year, surely this would make it a harder sell to explain to the upper 20% of artists who are receiving less as a result?
Don’t mean to seem nit-picky but really interested by the idea and would love to see it implemented or considered in some way. In the current economic climate it could surely win favour as a simple way to invest in the more grass-roots end of the creative industries (as you said, a lot of that money may very well be invested back into recordings, music videos, tours, merchandise etc.).
Ah, took too long writing my reply and was beaten to the punch (above). D’oh.
I don’t have a problem with lowering the baseline, personally – especially if that means that there’s more artists earning royalties than ever before.
But imagine an extreme situation in which this suddenly means that the PRS had TEN TIMES as many members who met their criteria for joining. That criteria, incidentally, being as follows:
You must have at least one piece of music that has been:
- broadcast on radio/TV
- used online
- performed live in concert
- otherwise played in public
And then, PRS charges £10 per head, taken out of the first royalty payment. That tenfold increase in members would have the immediate effect of radically increasing the subs to PRS, thereby immediately allowing them to seek much greater accuracy in reporting.
I don’t think this would necessarily have the effect of people who are not musicians suddenly becoming musicians so that they could get their ‘free’ £250 (as that’s what it would reduce to) – but even if it did – more musicians is a positive outcome, not a negative one. But my suspicion is that it all it would do is encourage more people who should be members to actually become members.
Also, if the per-head payment for the lower 80% did reduce to just £250 (and that’s a very extreme hypothetical) – that’s still enough to make a significant difference to a lot of people. It’s not an income, but it helps.
And let’s not forget – the 80% of money left over that gets distributed to the artists will go to all of the artists in the same proportion as before. It’ll just be as if the collection society brought in less money overall, but shared it out in the same way, once the overwhelming majority of composers have had their small lump sum.
Nobody gets less relative to someone else who ‘deserves’ less – and the more people join (remembering that these are all people who have written something that qualifies them for membership), the better this gets for music as a whole.
Frankly, the idea of the top 20% of royalty earners begrudging a small payout to their less commercially successful and struggling bretheren might seem somewhat churlish, don’t you think?
Looking at the criteria, I’m worried that the potential increase in membership may be more than tenfold – anyone can place their song online and quite a few people have. While they may not have bothered to join PRS till now, because they didn’t think it worth the effort, they may well consider it once word gets out that you get paid just for joining.
Before you know it, you may find that the baseline rate is the ten quid they charge you for your membership.
Still seems an idea worth exploring, though I generally prefer scenarios where your reward is proportional to how much your work is in demand.
Nice idea and being as the only way to become a member is to have your music broadcast it would only encourage more creativity.
I had an idea of how they could improve the accuracy of the sampling process in 2003. I ran a venue for a while and we paid PRS for the blanket license. They “once” sent someone in to sample the music, and I had a few bands ask me to sign their forms to show they had played live in the venue. I studied music technology in 1998 and learned how MCPS and PRS works and collects it’s data. Since then technology in this field has increased although not strictly for the purpose of royalty collection. Shazam for example holds a database of spectrograms of pretty much every song recorded, it analyses then cross references a sample of music and then relays the song and artist back to the sender. Now this is a rather gimmicky use for the information, but with the increase of noise limiting hardware being installed in venues as a matter of health and safety (And almost probably soon to be legislation) there now comes an opportunity to couple the two technologies to inform PRS exactly what music is being played in every venue and moreover how frequently. The technology can also be applied to feeds from all broadcast channels on tv and radio, most of which are now digital. The larger radio stations and BBC for example actually specify every piece of music played but regional and local radio stations are still subject to the current spot sampling procedures. The technology exists to now automatically electronically monitor most commercial broadcast outlets for music and collate the data into a fairer set of figures. The only proviso would be that the venue had an internet connection and “pick up” hardware connected to the service to monitor the output. Most radio stations broadcast over IP now too so those could be directly monitored from the back end of the system. This also creates new possibilities for sampling the internet thus creating more revenue for composers. Once you get round the Big Brother aspect of such a system of course.
Great post Dubber, well-meaning, thought provoking, clear and considerate. My thoughts:
There are numerous ways to redistribute wealth; some involve adjusting the marginal rate of tax others look to offer credits, whereas you’ve opted for simply top slicing a revenue pool and spreading it across the lower eighty percent of writer earners, regardless of their effort. Does this make sense?
Well, there’s lots of criteria you could of also have considered, and when you do take the ‘other’ criteria on board, your proposal becomes less applicable – both in theory, and practice. The most obvious omission is the number of songs written by that songwriter – should someone in the lower 80 percent who has a vast catalogue receive the same lump sum compensation as someone with one work to her name? Similarly, what about the length of membership – should a writer that has been a member for half a century and hasn’t written a song since before England winning the world cup in 1966 receive the same wealth transfer effect as a new writer who is busily penning songs for everyone and anyone in search of an elusive hit?
There’s two questions which help broaden the topic as well as tease out some of the anomalies. Dubber comes at this from what might be termed a utopian point of view, which is cool – sure – but doesn’t necessarily make it right. There are numerous examples of redistribution in collective rights management, and across the music industry, but they involve decisions that will appear ‘right’ to some and ‘wrong’ to others. Should classical music receive monies that would have gone to more popular forms of music? Should there be quotas on radio playlists to protect domestic talent against overseas imports? These questions have been debated, and deployed and retracted, for years, but the basic motivation is not that dissimilar to that of Dubber: the case for intervention.
My personal view is that Dubber’s identified the wrong symptoms, and could lead to the wrong cures. Here’s one way of abstracting the problem – velocity – or movement from rags to riches, and riches to rags. Point being those writers stuck down in the tail might have been in the head in a previous year, and vice versa. Factor this in and you have “anomaly central”, for example take a writer who has worked hard to go from rags to riches, should they (then) be penalized and forced to compensate a writer who has gone from riches to rags. Furthermore, whatever rule you intervene in markets with, you will leave writers on the edge of that (say) 80/20 rule marginally better or extremely worse off.
I prefer a flat market, or a level playing field that’s free of distortions – as the incentive should be to do what songwriters do best: write a hit. There’s lots of new songwriters writing hits that weren’t in the ‘head’ a few years ago, and there’s lots of opportunities for people to take up songwriting professionally and ‘give it a go’ – if you’re no good, take up something else. A subsidy might prolong that change, or give false expectations. The real goal is in improving monitoring and reporting of public performances, through technological advancements – and there is lots of evidence of this in the UK, arguably more than anywhere else in the world. Now, consider this – if you could get near perfect and cost efficient level of accuracy, and THEN found that the distribution didn’t change. If that were the case, then the question is why should it?
Finally, I’d also like to point out that earnings from the performing right should not be viewed in isolation – which is a frequently made mistake. Very few people in the music industry have one sole source of income, (mechanicals, sync – are two more sources for ‘just’ songwriters) and we’re increasingly moving towards a model where there are ‘more’ revenue streams not less. There may be indeed someone stuck down in the songwriter tail of distributions, who’s at the very top of earnings for a much larger head – and that someone could be an ‘artist’.
Thanks Slim – though I take issue with the idea that ‘making hits’ is what songwriters do best. I know an awful lot of composers and songwriters, and the vast majority of them do not measure their success or failure on the degree to which they’ve had a hit record.
Unfortunately, that’s the only criterion used and valued by the organisation that represents them.
I think Soundnomad is bang on the money – we’ve got the technology to provide if not completely accurate reporting, then a close facsimile. I expect that in a couple of years the problems that led to this post will be a lot less acute.
Incidentally, thinking about the issue in my spare time I came up with a rather nifty game-breaker for the proposed system, which I’ll outline at TCM (writing on the issue of game-breakers in general). Thanks for the inspiration, Andrew, that’s another beer I owe you.
Very interesting idea but it’s addressing two separate issues. Accurate reporting with fair remuneration and artist development. When I started working in radio I was pretty much appalled by the way PRS works. But the only fair way to do it is accurate reporting – if PRS want to tax it’s members to support developing artists that’s a separate issue, but they have fewer and fewer excuses for not collecting the data properly – they just need the will and to throw some money at it – probably a better use of that unaccounted for monies than giving it to Elton and Phil.
On the technology side I would take issue with this statement from Soundnomad: “Shazam for example holds a database of spectrograms of pretty much every song recorded” – if it does, then it’s software only works 80% of the time in my experience. More likely that Shazam has massive gaps in its database and I’d guess that those gaps are mainly around just the sort of new and developing artists we are talking about supporting.
The shazam database was really only meant as an example of existing tech. Services like soundcloud could easily include spectrogram authouring through it’s API for instance. I think that PRS would want to have their own data base anyway which developing artists could register their spectrograms with through the sound cloud API for example. iTunes now collates all digital radio world wide so that tech exists for a monitoring system. I’m just saying that the way it is going it looks like spectrogram monitoring could be a viable And fairer solution to royalty distribution, ok maybe not right now but certainly in the future.
On the issue of artist development I take the stance that a fairer distribution of royalies would help in that process.