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'What is currently an opaque black box of song royalties, needs to be transformed into a glass box.' - Music Business Worldwide

The following op/ed comes from Annabella Coldrick, Chief Executive of the UK’s Music Managers Forum. Today, at The Great Escape music conference in Brighton, UK, the MMF is launching its Song Royalties Manifesto report. The MMF says the aim of the report is to “address failing music industry systems and practices that are resulting in songwriters and composers losing out on hundreds of millions of pounds in streaming revenues”.
Against a backdrop of the COVID-19 pandemic, the last two years have placed a renewed focus on many of the recorded music market’s glaring dysfunctions.
This is particularly so in the UK, where, triggered by tireless campaigning across the creator community, a Parliamentary inquiry concluded that the streaming market required a “complete reset” in order to fairly compensate artists, songwriters, musicians and producers.
Unsurprisingly, much of this debate has focussed on the record business. All three UK major label heads were called to provide oral evidence at the Committee, and there has been significant scrutiny of areas including legacy contracts, lump sum licensing advances paid to labels and new methods of revenue distribution, such as equitable remuneration.

All of these issues have been covered, in some detail, in Dissecting The Digital Dollar, the MMF’s long-running exploration of the streaming economy. But encouragingly, we’re also now seeing what appear to be green shoots of reform, with Sony, Warner and Universal all publicly committed to disregarding legacy recoupment debts pre-2000 in some shape or form.
Meanwhile, as a result of the Parliamentary inquiry, the UK’s Intellectual Property Office (IPO) has recently convened a number of pan-industry committees to explore market reform - including two working groups focussed specifically on transparency and data.
However, while there is an expectation of further reforms to benefit artists, the case for improving the situation for songwriters and composers should not be overlooked.
In fact, this is arguably where reforms are most urgent.

While songwriters should, in theory, be major beneficiaries of the shift to streaming (in the UK and Europe, song rights are allocated almost double the revenues from a stream than they received from a CD sale), in practice their revenues are reduced significantly by gross inefficiencies in our arcane and byzantine system of collection and distribution.
At its quickest, artists can be paid for their streams within two months, however it can take an excruciating one to two years for the writers of those recordings to receive their portion from the very same streams. By which time, a 15% revenue share (in Europe) will almost certainly have been whittled down considerably as money passes through the hands of multiple intermediaries - all of whom take a service fee.
In a global streaming market, this is unacceptable.

Such problems are intensified by the method in which song rights are reported between licensees and licensors. While labels and distributors provide digital music services with the ownership data of recordings - all bound up in an ISRC code - the equivalent identifier of the song (the ISWC) remains disconnected.
As a result, we are stuck with a system where the likes of Spotify, Apple Music and YouTube have to provide their licensing partners with reports of which recordings have been streamed, and then expect those publishers and collecting societies to match their ownership data to this information and invoice accordingly.
It’s unbelievably convoluted. If you were inventing a royalties payment system from scratch, literally no one would do it this way.
Given the already complex challenges of tracking songwriter ownership - where there might be multiple writers on a single track, signed to multiple different publishers - the potential for data conflicts and mismatches are glaring. As a result, huge sums of “unallocated” streaming royalties (i.e. where the owners cannot be traced) are still torrenting into the so-called “black boxes” of collecting societies.
How much songwriter’s money is held up like this? Astonishingly, we don’t know. Although a 2021 study by the Ivors Academy believes that £500m a year (!) in streaming royalties might be impacted by poor data, resulting in revenues being stuck in the system or misallocated. As the Ivors themselves highlight, that half a billion pounds is a conservative estimate.
“we are stuck with a system where the likes of Spotify, Apple Music and YouTube have to provide their licensing partners with reports of which recordings have been streamed, and then expect those publishers and collecting societies to match their ownership data to this information and invoice accordingly.”
Managers are often at the sharp end of chasing this revenue (most of our 1,200-strong membership manages at least one songwriter performing or otherwise) and the challenges presented by so-called “royalty chains” were raised by MMF back in 2019 when we published our $ong Royalties Guide at The Great Escape.
Much research and three years later, we are returning to Brighton to launch a manifesto. This not only updates on the progress to address the inherent problems with tracking and reporting song royalties - for example, the fantastic Credits Due campaign - but also presents a three-step road map for change.
This plan is ambitious, setting out an achievable goal for songwriters to be paid streaming revenues within two months, and for unallocated black box collections to be eliminated.
It is also dependent upon the participation of all in the industry - not least music managers, who have a huge role to play in ensuring song ownership data is captured, agreed and accurately uploaded into all relevant databases.
To get to this place, we believe the following changes need to be made.
In effect, what is currently an opaque black box of song royalties, needs to be transformed into a glass box. #glassboxnotblackbox
You can download the manifesto here for free, but our hope is that this simple road map can provide the basis for writers, managers, labels, publishers, collecting societies and music services to reach a consensus - ideally through the IPO’s Transparency and Data Working Groups.
In the short term, addressing Steps 1 & 2 should certainly be within the industry’s power to fix. If we’re not taking the responsibility to collect and provide 100% accurate data in the first place, then we’ll never get anywhere.
And while Step 3 is more challenging, it is nonetheless vital. Addressing these transparency and data issues now, is the only way we will ensure songwriters and their business partners can truly benefit from both the current generation of streaming services as well as the platforms and business models that emerge in the future.
However, these proposals are not ‘boiling the ocean’. They are achievable and feasible if all parties come to the table and commit to the plan - where there’s a will, there’s a way.
Music Business Worldwide
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