Who Benefits As New Royalty Demands Rise?

Even as music sales are dropping, mechanical and performance royalties are at all time highs thanks payments from emerging media. The push for even higher payments reached new levels this week.  But how these increased demands could effect innovation, consumer behavior and eventually overall revenue remain unanswered.

In an interview in RoyaltyWeek (via RAIN) by Brian Zisk of the Future of Music Coalition with John Simson, Executive Director of SoundExchange, Simson outlined the collection agency’s position on the Copyright Royalty Board’s recent controversial decision to raise rates for internet broadcasters:

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I’m tired of the claims that have been made over and over, a sort of arrogance on the webcasters side that we’re doing you a favor playing your music…you’re playing it because you either love it or because you think it helps you gain an audience and it serves your purpose… there have been studies that show over the air radio may not be promotional at all; it may be more substitutional...I think we should recognize that we can both benefit as long as we respect each other and say, you know, ‘Yeah, they need to be paid fairly when we use their stuff.’

The Copyright Board agreed late this week to review arguments, but how can higher rates be fair for internet broadcasters who already pay significantly higher total royalties than traditional broadcasters?
And who gains if higher rates put many webcasters out of business as many believe they will?

Its not just internet broadcasters who are under fire. Late Thursday The National Music Publisher’s Assocition announced that it was joining a consortium of publishers suing XM over portable players with copying capability.  Just a few weeks ago ASCAP took the position in court that buying a download triggers not only mechanical royalties, but also payments for a performance.

While creators deserve to be paid, when do their demands become excessive?  No one benefits if the music discovery enabled by a multitude of niche broadcasts ends or new platforms like Pandora shut down.

In the end rights holders may drive music discovery further underground leading to smaller payments overall.