Opposition to online streaming has been intense this summer. Songwriters, performers, and various music companies have spoken out against the meager royalties the streaming giants Spotify and Pandora dish out to musicians. Many prominent and influential artists have taken their music off Spotify. It seems that these streaming companies are in the business of fixing and maintaining their reputation against the onslaught of musicians and have little time left over for developing and improving their core competency – streaming music.
This past week, Pandora won an important court case against ASCAP, which solidly reiterates what was already written in copyright law. Spotify is an “interactive streaming service,” meaning users can skip as many songs as they like and choose what song or artist they want to listen to at any given moment. Because of this function, it almost replaces the need to own music. Musicians therefore have the right to choose to license or not to license. Pandora, on the other hand, is a “non-interactive streaming service,” and functions similarly to terrestrial radio. Like terrestrial radio, there is a compulsory license in place, requiring artists to license their music if they are associated with a PRO like ASCAP. This is why you hear about artists taking their music off Spotify, but not Pandora.
So what does this court case actually mean? Basically it removes the possibility of getting through any loopholes to take music off Pandora. If an artist wants to boycott Pandora, their only option is to remove all their music from performing rights organizations like ASCAP, BMI, and SESAC. Publishers and songwriters are not allowed not allowed to make separate, market-driven deals with Pandora if they are also a member of a collecting society. Pandora had made private copyright deals with prominent publishers like Sony, EMI, Universal, and BMG, requiring the streaming company to pay a higher royalty rate to their artists. This court decision will most likely void those deals and prevent any similar deals from happening in the future.
While most artists wouldn’t dream of taking their music off their PRO, the possibilities for direct licensing are becoming easier with new technology. In a few years, big record labels and publishing companies may have these functions in-house.
With all this conflict in the streaming industry, there is little room for improvement and progression. Streaming companies are fighting rights holders and rights holders are speaking out against unfair royalties. Not to mention, the lawsuits are creating a further rift between modern artists and the copyright law, serving as a confirmation to many that copyright law is not caught up with modern society. This battle between the law, the streaming services, and the musicians does not equate to a healthy industry. Streaming companies will stagnate if they refuse to grow with artists, and artists will lose out on opportunity if they insist on shutting streaming services down their early in the game. Surely we can move forward and find a solution together?
What are your thoughts on music streaming? Should artists be concerned about taking their music down? Does the exposure make up for the small royalties? Can this ever be a healthy industry?