Thursday, September 13, 2012

The Music Industry Part 1

I'm Canadian, so you can imagine how I felt when my US based digital music company opened and I was told by our distributors that we weren't allowed to operate outside the US!

All my life I grew up wondering why things would take so long to break outside the US, feeling left out as a Canadian, and here I am on the other end of the stick... but not by choice.

The reason we're not allowed is because in almost all countries there exists a copyright agreement between the Federal Government and some kind of 'Performing Rights Society', or PRO. In the US we have ASCAP and BMI, in Canada it's SESAC and SOCAN.

Now for the artists sake, historically these companies have collected royalties on their behalf and paid it to them. They've been an essential part of artists generating revenue just because their music is being played out there on radio, TV, film, and now... the internet.

If I want to sell music in Canada, I have to make an agreement with the PRO up there (SOCAN) and give 10% of all my sales to them. They're then supposed to redistribute this money back to artists, but they often don't.

As it turns out, international monies withheld from retail services on behalf of artists RARELY make it back to even the record label level. I've got a record label owner friend (who shall remain nameless), who can't get royalties he's owed from iTunes UK! Biggest retailer in the space doesn't pay a record label it's due witheld from it's own service.

Additionally, public spaces are charged a fee for broadcasting music. Restaurants, bars, retail outlets, yoga studios... if they play music they're technically supposed to pay a yearly fee that in the US ASCAP and BMI charge $300 each for the average space. That money is also supposed to get back to artists, but it doesn't because ASCAP and BMI don't know what's being played in small commercial spaces. They average it out based on broader syndicated radio and TV -- you can apply for a bursary from them, but it's not easy.

So, international music sales are a nightmare. If YogiTunes wanted to operate in the EU, we'd have to negotiate over 250 contracts with PRO's. 250!! That's insane...

There are hopefully some harmonizing waves coming down the pipes, because with the internet being our domain of operation, the concept of restricting the flow of creative property due to outdated territorial laws is pretty backwards to say the least...

Hopefully things will shift for the better. I can see why music has become free - so it can get around all the attempts at lock down coming from the corporate side of music.

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