Licensing

One Ted T. has the answer to why my proposed solution to Killer of Sheep's IP problems won't fly:

The reason is that licensing is the purview of "music publishing" companies, who are usually entirely unrelated to the record companies. Thus if artist X were to sell a ton of CDs, because their song was heard in a popular film, the "music publishers" won't see a dime -- their profit comes only from the licensing fees.

Of course this is insanely stupid for the music industry as a whole -- they would be much better off to wave licensing fees entirely and sell more records. Then they wouldn't have to bribe radio stations to play their music... If the powers that be had any sense at all -- they would buy out and put out of business the music publishers, and set up a low cost, simple licensing procedure. It would still be expensive to license a band like The Beatles who don't need the advertising, and don't want people becoming sick of their music, but the rights for low selling artists, who could use the promotion, would be available for a song.

But this won't happen, because the music industry is tenaciously clinging to a nearly century old business model, and will continue to do so until most new artist start self publishing, and put the entire industry out of business for good.

And there you have it.

Comments

[I]f artist X were to sell a ton of CDs, because their song was heard in a popular film, the "music publishers" won't see a dime -- their profit comes only from the licensing fees..

That's not true. The music publishing companies would make some money on licensing fees from the sale of CDs.

Of course this is insanely stupid for the music industry as a whole -- they would be much better off to wave licensing fees entirely and sell more records.

This makes roughly as much sense as saying that journalists should give their writing away for free to sell more magazines. "The" music industry has two big components with different interests. Some people write songs. Some people perform them. The music publishers represent the rights of the former.

The music industry certainly has its problems, but the solution is not that writers give stuff away for free.

Posted by Tyrone Slothrop | June 7, 2007 3:51 PM

And another thing:

Of course this is insanely stupid for the music industry as a whole -- they would be much better off to wave licensing fees entirely and sell more records.

Sometimes this makes sense. Other times, not so much. Consider the movie "High Fidelity." How many people went out and bought either the soundtrack for the film or the records for the various musicians whose stuff was used? Not me. But the movie certainly sold more tickets because it used both recordings and music so well. Was it insanely stupid for the music industry to take its share of the economic gains in the form of licensing fees from the movie producers rather than trying to sell more records? Certainly not. Particularly in the case of whomever wrote "Let's Get It On," since I'm pretty sure that while the movie benefited greatly from Jack Black's performance, people weren't rushing out to buy the recording.

Posted by Tyrone Slothrop | June 7, 2007 4:21 PM

My guess, too, is that the publishers aren't necessarily irrational. Fees can go high, and the publishers tend to hold out for the jackpot of the big film that can come close. I'm sure it's confounded by the ad hoc system of rights clearance. There's no one-stop shop that a filmmaker can go to: she often has to negotiate on an artist-by-artist basis.

Enjoy Killer of Sheep, by the way. I thought it an amazing film when I saw it back in college... will have to check out the re-release.

Posted by Chris C | June 7, 2007 4:31 PM

Couldn't the music publishing companies just negotiate with the record companies and agree to license music for a film for a negligible amount in return for a percentage of profits for record sales? I don't see an obvious structural reason why this should be impossible, but maybe there is one.

Posted by Seth | June 7, 2007 4:32 PM

Ty is right that Ted T misunderstands the music publishing/licensing structure and so comes to a wrongheaded conclusion. Excuse a little more detail, because it goes to the confusion of the general public's and most journalist's thinking on this.

On the sale of CDs, the publisher (already often the writer/artist, like myself) gets a royalty for the mechanical reproduction of the underlying intellectual property -- the song. This is in part in exchange for giving up the exclusive right to the song. Once it is released, anyone can cover it generally w/o permission. If they release it, however, they owe the publisher the fixed statutory mechanical royalty. This is wholly separate from the rights associated with sound recording itself. Whomever "paid" for the record (usually the record company by contract) owns the sound recording and can license it at fair market value. For a long time, the record companies had their own publishing arms, so they got the whole pie. In general, as an artist got more popular he/she/them could negotiate ownership of master recordings and independent publishing deals. The more popular you become, the bigger slice you get.

Remember, the publisher's royalty is FIXED, while the value of the sound recording is LIMITLESS (Think Beatles).

Songwriters and publishers also get performance royalties from radio, venues, bars, muzak, etc. This is administered by societies like ASCAP and BMI. More play, more dough.

It's complicated, but it balances the risk/reward dynamic of the business well - or at least it did. The record companies are no longer really taking the risk of finding, recording, and cultivating artists anymore.

Their current interest is entirely wrapped up in their vast catalogs of recordings and published songs. This is the lifeblood of the industry and they're not going to give it up -- especially since it is not being replaced by new music. They are going the way of the dinosaurs, but don't penalize the songwriters to tear them down or prop them up.

Simplfying it w/ one stop licensing is a good idea, but who ultimately gets the money matters.

Posted by Jay | June 7, 2007 4:43 PM

My above is in reference to CD sales. Licensing for synchronization is another matter.

Posted by Jay | June 7, 2007 4:46 PM

I saw a print a few years back, and it's a fucking wonderful movie.

Enjoy the show.

Posted by Petey | June 7, 2007 5:13 PM

"This makes roughly as much sense as saying that journalists should give their writing away for free to sell more magazines."

This is not a particularly inaccurate description of what happens. Many journos do work for free to get a foot in the door and to get their name out, and for a pittance even once they get a staff job. I've written for a newsstand magazine where the only people being paid were the editor, the deputy editor and the production editor. Of course, this isn't a healthy way to run an industry and perpetuates the class imbalance of journalism.

Posted by Ginger Yellow | June 7, 2007 5:36 PM

Many journos do work for free to get a foot in the door and to get their name out, and for a pittance even once they get a staff job.

That was talkingpointsmemo.com's original business plan, right? It certainly may make sense for some journalists or musicians to try this, but that doesn't mean it's stupid to ask for money for your work, either.

Posted by Tyrone Slothrop | June 7, 2007 5:49 PM

Matt, I think this comment is just wrong about the law. Did you check this out before posting?

Posted by ed | June 7, 2007 6:26 PM

There are two fundamental problems here.

One problem is that copyright simply lasts far too long. No one has ever come up with a convincing case why a term of 14 years (as specified by the original Copyright Act) isn't long enough to "promote the progress of science and useful arts." If we followed "original intent" in this case, then there wouldn't even be an issue here, since all of the music in question would already be in the public domain. Hollywood wouldn't be quite as rich, but our culture as a whole would be much richer, and there would still be ample incentive to produce. No one writes a book or plays a song because they think they might get royalties in 25 years.

The second problem is that we allow copyright holders to veto the creation of derivative works, and define derivative works in a very broad manner. Copyright holders should be able to get royalty payments for obvious derivative works (or the use of their songs in movies and other media, as is the case here), but they should not have veto power. The rates should be set by a government licensing board and anyone willing to pay them should have the right to use the material in question. It doesn't "promote the progress of science and useful arts" when creators can FORBID the production of offshoot works they don't like.

Posted by Josh G. | June 7, 2007 6:30 PM

As a trivial point, one "waives" rights; "waving" rights would be very different.

Posted by Gary Farber | June 7, 2007 7:52 PM