Revisiting royalties in the music industry: the promise of “Big Data”

‘Big Data’ services track. every stream, download to allow for easier payment negotiations. shutterstock.com

For those who believe the music industry’s aim should be to encourage creativity, Robert Fripp’s diary makes for depressing reading.

The veteran guitarist, founder of King Crimson, has published the diary on his website since the 1990s, during which time he’s spent more hours locked in bitter legal battles with labels and distributors than he has playing music.

Written with the driest of English wit, Fripp’s diary details the trials and tribulations of the independent artist in a music industry now dominated by an oligopoly of major companies.

Fripp’s particular bête noire is the Universal Music Group. “You cannot expect a company the size of UMG to read or apply the details of every contract of every catalogue it acquires”, Fripp cites from legal correspondence received from UMG following the company’s acquisition of yet another competitor – and wryly notes in the same breath that nearly two decades’ worth of royalties for his two albums with The Police guitarist Andy Summers have remained unpaid.

Robert Fripp has accused UMG of not paying owed royalties. Rocky A via Flickr

Such criticism of the music industry’s status quo could be dismissed as sour grapes from an industry rebel, were it not for a litany of similar complaints from many other artists.

From Courtney Love’s famous jeremiad denouncing the music industry’s exploitation of creative work as “piracy”, through to The Artist Formerly Known as Prince performing with “SLAVE” written on his cheek, to more recent stories about artists suing their record companies for unpaid royalties and unfair contracts, the critiques of the current system continue to mount, with no clear solution in sight.

Australia is a relative outlier in these conflicts – from ACDC to Kylie and beyond, Australian artists have been wildly successful on the international stage, and have been exposed to the complicated business dealings there.

But domestic relations between artists, labels, and collecting societies appear considerably less fraught than they are on the global stage.

That’s not to say that the winds of change aren’t starting to blow here, too. This year, the Australian Consumer and Competition Commission (ACCC) is reviewing the performance of the Australasian Performing Rights Association (APRA) in its statutory role as a royalty collecting society.

Industry submissions to the ACCC paint a mixed picture. Their final determination should be just around the corner.

More than ever, APRA, labels, and artists alike are coming to terms with the emergence of a new group of global industry players into the mix – streaming services like Spotify and download services like iTunes – whose global market share provides them with considerable bargaining power in their dealings with rights holders.

In principle, Spotify or iTunes could bypass the conventional royalty collection and distribution frameworks altogether. Labels, and even individual artists, could upload their releases to these services directly, and receive an agreed fee per play or download in return.

Some labels are beginning to negotiate exactly such separate agreements with these new online providers, bypassing the APRAs of the world.

Big Data

The emergence of these direct deals is tied to the emergence of “big data” on music consumption. In these services, every single stream or download is monitored, tracked, recorded, and a negotiated value can be assigned to each such transaction.

This is a far cry from the conventional royalty determination process for radio broadcasts and even physical album sales, which traditionally have been considerably more difficult to quantify.

In itself, this does little to improve the lot of artists or consumers. It really only facilitates the flow of money between providers and labels.

Earlier this year, in frustration at the intransigence of global industry players, the Australian parliament’s Standing Committee on Infrastructure and Communications famously suggested that Australian consumers circumvent the geo-blocks that meant that a US0.99¢ song from iTunes US cost A$1.69 on iTunes Australia, even at a time when the Australian dollar traded higher than its US counterpart.

Such region-specific consumer exploitation would remain untouched were relations better between labels and providers.

Artists still rely on their labels to pay them royalties, but shutterstock.com

Similarly, the individual artist – Fripp, Love, ACDC or Tame Impala - would not necessarily see a cent more in royalties. They remain dependent on the royalty reports provided to them (if indeed they are) by their labels.

But here, too, “big data” on streams, downloads, plays and sales could play an important role. No longer are such data available only for “born-digital” music services such as iTunes and Spotify, but they are also gathered in increasingly fine detail about sales, radio broadcasts, plays in public venues from hairdressers to pubs, and other forms of offline music consumption.

Music fingerprinting technology — similar to the Shazam smartphone app — is now able to identify individual radio plays within a very narrow margin of error.

The problem here is not one of data availability, but of transparency. Many such data sources are fiercely protected by their owners, and little effort has been made to combine them or to determine the distribution of royalties, not just to the labels but also onwards to the artists themselves, on this basis.

There is a significant opportunity here for collecting agencies like APRA, or a new statutory body, to take leadership of this process (with appropriate government backing, if necessary). This could throw open the curtains and shine a new light on how recorded music performance is accounted for, valued, and rewarded in the Australian and international industry.

If Robert Fripp’s diary is any guide, this won’t be an easy process. The major labels, in particular, have a vested interest in the current process which has served them well.

It is a necessary struggle, however, which ensures that all stakeholders in the industry, and especially artists, are rewarded for their creative work.

And there’s some light at the end of the tunnel. Fripp, at least, has now resolved his conflicts with the labels to such an extent that he feels ready to revive King Crimson. Long may it reign.