DIGITAL MUSIC STREAMING IN THE 21ST CENTURY:

THE MUSIC INDUSTRY BECOMES RADIO-ACTIVE

by

Kaitlyn Paradise

A Thesis Submitted to the Faculty of

The College of Business

In Partial Fulfillment of the Requirements for the Degree of

Master of Science

Florida Atlantic University

Boca Raton, FL

August 2014
Copyright by Kaitlyn Paradise 2014

ii
 ACKNOWLEDGEMENTS

I would like to express my heartfelt gratitude towards my committee members,

Dr. Kyle Prescott and Dr. Marc Rhorer, for taking the time to enrich my education, and to

my committee chair, Alejandro Sánchez-Samper, for always having time for me with my

best interest at heart. Additionally, I wish to express heartfelt gratitude towards Dr. Ira

Abrams, Dr. Mary Kay Boyd, Michael Zager, my loving parents and friends, and all of

my coworkers at AEG Live SE, especially Scott Gartner, for the combined and

continuous support, patience, and encouragement I needed to get me through.

iv
 ABSTRACT

Author: Kaitlyn Paradise

Title: Digital Music Streaming in the 21st Century: The Music Industry
Becomes Radio-Active

Institution: Florida Atlantic University

Thesis Advisor: Alejandro Sánchez-Samper

Degree: Master of Science

Year: 2014

Digital music streaming websites have taken over the musical landscape. While

the digital music market is booming, both data and time have revealed that the current

system as it exists will not provide a sustainable future for creators of content or for

technology companies. Although some consumers are willing to pay for content they can

access for free, many are still enjoying content without paying. Both the technology

companies and creators of content have sacrificed to meet consumer demands, but the

technology companies have been too willing to make creators of content be the ones

paying for ‘free.’

Recent legislative efforts have provided a good start to balancing a system that is

clearly in distress, but there is still much be done to move the music industry forward.

This paper examines the current issues facing the digital music streaming industry and

several legislative and industry-prompted efforts in current discussion.

v
 DEDICATION

This manuscript is dedicated to the friends and family who saw my success when

I could not see it in myself. I am forever grateful.

 DIGITAL MUSIC STREAMING IN THE 21ST CENTURY: THE MUSIC INDUSTRY

BECOMES RADIO-ACTIVE

List of Tables .........................................................................................................................ix

Introduction ............................................................................................................................1

A Brief History of Copyright Law .........................................................................................4

Copyrights Within Musical Works ............................................................................4

Mechanical Royalties and the Copyright Act of 1909 ...............................................4

Sound Recording Royalties........................................................................................7

Other Issues Facing Copyright at the Turn of the Century ........................................9

The Political Side of Music....................................................................................................11

The Songwriter’s Equity Act .....................................................................................12

The RESPECT Bill ....................................................................................................12

2014 Music Licensing Hearings ................................................................................13

Digital Music Streaming Services .........................................................................................15

The Beginning of Digital Music Streaming ...............................................................17

Non-Interactive Digital Music Streaming ..................................................................17

Interactive Digital Music Streaming ..........................................................................19

Issues Affecting Digital Music Service Providers .................................................................21

The Internet Radio Fairness Act ................................................................................21

Pandora Fights to Define ‘Fair’ in a Free Streaming Market ....................................23

vii
Issues Affecting Creators of Content .....................................................................................28

The Access Versus Ownership Debate ......................................................................29

Apple Gets Their Piece of the Pie ..............................................................................31

Private Clear Channel Deals with Record Labels ......................................................32

The Cost of Free.........................................................................................................35

The Future of Performing Rights Organizations .......................................................36

A Review of Performing Rights Organization Consent Decrees...............................38

A Saving Grace for Performing Rights Organizations ..............................................38

Issues Affecting Consumers ..................................................................................................41

Creating a Prosperous Future .................................................................................................43

RIAA Solutions for the Music Industry .....................................................................43

Conclusion .............................................................................................................................46

Appendix A. Abbreviations and Acronyms ...........................................................................48

References ..............................................................................................................................49

viii
 TABLES

Table 1. A Breakdown of Digital Music Service Types ........................................................17

ix
 INTRODUCTION

Digital music streaming websites are taking both the music industry and the

Internet by storm. The number of music streaming websites available to users is growing

every day at an astronomical rate, and eventually music streaming is predicted to make

the sale of digital downloads obsolete. In addition to the growing number of available

streaming websites, there are new types of websites and new ways to access digital

streaming websites being born into existence every day. Gone are the days of simply

listening to music – users now posses the ability to create a personalized and unique

listening experience wherever, whenever, and however they want to listen.

Consumers have made it clear that digital music streaming abilities, available at

the touch of a button, are the next big thing and the music industry has no choice but to

follow the demand. Due to updates in technology that make consumers’ demands

possible, artists and songwriters have also benefitted. Artists and songwriters are now

able to reach fans in ways they were never able to before, generating profits without the

backing of a label or publisher, which was once only dreamed of. With a demand this

strong for access to content and multiple ways to reach consumers, the technology

companies, artists, songwriters, record labels, and publishers alike should be jumping for

joy as they cash in checks as large as the demand itself.

However, several notable streaming websites have complained that they are not

able to keep enough of the profit that is being generated by traffic to their website. Digital

music streaming websites are required to pay out licensing fees and the royalties that

1
result from the stream of copyrighted music, or content, over the Internet. Most digital

music streaming websites are complaining that these rates are too high for them to ever

become profitable. Some have even gone to court in an effort to lower their required

royalty rates. Creators of the content being streamed, on the other hand, feel that they are

getting less than what is fair market value for the licensed use of their work, often making

percentage points of pennies for every stream, and sometimes even less. Why is there

such a discrepancy when it is clear that the digital music industry is booming?

At this moment, the question of whether digital music streaming will ever provide

a profitable future for technology companies in addition to creators of content, which

includes artists, songwriters, music publishers, and record labels, holds no promise of a

fast answer. One of the major issues surrounding the topic of digital music streaming is

that the necessary regulation for how much each party involved in digital music

streaming should be compensated has not been legally set, leaving many players to fight,

literally, for themselves. This has allowed the technology companies to lower the value

that the industry places on those who create content, in addition to their songs. Without

question, if the streaming industry continues on its current path, the digital music industry

may be torn apart for good.

Although the digital music streaming industry has the potential to become a highly

profitable revenue stream, the monetization of digital music streaming has complicated

what profits technology companies, artists, songwriters, record labels, and music

publishers are entitled to; consequently, creators of content have seen their value within

the music industry greatly minimized.

2
 A BRIEF HISTORY OF COPYRIGHT LAW

No discussion of digital music is complete without considering a history of

copyright protection as it relates to music. Congress established the concept of copyright

protection in 1787, meaning authors should be compensated for their creations in order to

motivate them to keep creating. The Constitutional Provision Respecting Copyright

reads, “The Congress shall have the Power… To promote the Progress of Science and

Useful Arts, by securing for limited Times, to Authors and Inventors the exclusive Right

to their respective Writing and Discoveries (U.S. Const. art. I, § 8.).” As explained in the

Exclusive Rights in Copyrighted Works Statute (2011), the rights granted to an author

through copyright include the right:

(1) to reproduce the copyrighted work in copies or phonorecords;

(2) to prepare derivative works based upon the copyrighted work;
(3) to distribute copies or phonorecords of the copyrighted work to the public by
sale or other transfer of ownership, or by rental, lease, or lending;
(4) in the case of literary, musical, dramatic, and choreographic works,
pantomimes, and motion pictures and other audiovisual works, to perform the
copyrighted work publicly;
(5) in the case of literary, musical, dramatic, and choreographic works,
pantomimes, and pictorial, graphic, or sculptural works, including the individual
images of a motion picture or other audiovisual work, to display the copyrighted
work publicly; and
(6) in the case of sound recordings, to perform the copyrighted work publicly by
means of a digital audio transmission.

Copyright protection is important for authors because it assures the author

compensation for the use of his or her copyrighted works by others. Additionally,

copyright protection backed by registration allows an author to sue for infringement, or

3
an illegal use of a work that occurs when the author’s permission is not obtained by the

end user. The public also benefits from copyright protection, as it allows and encourages

new works to be created from copyrighted works, so long as the proper permission is

obtained. In this way, a mutually beneficial situation exists because Federal law

encourages the processes of creation and discovery. Copyright protection has become

especially important in the digital age due to issues such as file sharing and illegal

downloads.

COPYRIGHTS WITHIN MUSICAL WORKS

All recorded musical works in existence are protected by two separate copyrights.

The first and oldest musical copyright protects the musical composition, which holds the

basics of the song – the notes, rhythms, harmonies, lyrics, etc. – on a manuscript or

written document. The income generated from the use of a musical composition by

others, whether through streaming or through the purchase of the sheet music, generally

goes to the songwriter and music publisher. In some cases, the songwriter is not always

the recording artist, who is compensated separately for their contributions. The second

copyright protects the sound recording that a listener hears when they listen to a song.

The recording artist(s), record label, producer, and background musicians generally

receive the income generated from the use of the sound recording (Brabec & Brabec,

2011).

4
MECHANICAL ROYALTIES AND THE COPYRIGHT ACT OF 1909

Although copyright was established in 1787, the Copyright Act of 1909 was the

first act to establish copyright protection for musical compositions (Brabec & Brabec,

2011). For the first time in history, each public performance of a copyrighted musical

composition or each sale of a song’s sheet music would produce a royalty payment. The

Copyright Act of 1909 also granted copyright protection to the musical composition

written on piano rolls, which were very popular during that time (Moser & Slay, 2012).

In 1909, the work must have been previous published to gain copyright protection.

The Copyright Act of 1909 was also significant for music publishers because with

this act came the creation of the mechanical license, an important license still used today.

The Copyright Act of 1909 established that any person seeking to reproduce a musical

composition is required to obtain a mechanical license from the copyright owner, usually

the music publisher, before being lawfully allowed to distribute or reproduce the

copyrighted work (Moser & Slay, 2012). In 1909 the mechanical royalty rate was set at 2

cents for each copy of the work. Today, that rate is set at 9.1 cents per download or 1.75

cents per minute for songs running over five minutes, whichever is greater (Brabec &

Brabec, 2011). Although musical compositions were protected by copyright in 1909,

sound recordings were not protected until much later.

The creation of the mechanical license brought with it the need for an

organization that could manage this license as it relates to public performances.

Monitoring the public performance of a musical composition and collecting royalties

from the users proved too difficult a task to be accomplished solely by the author of each

5
work. A larger entity was needed to provide these services to authors. Performing rights

organizations have been established to continually meet these needs.

The first performing rights organization, or PRO, was established in 1914 to solve

the issues surrounding the public performance of musical compositions. The American

Society for Composers, Authors, and Publishers, better known as ASCAP, was created by

a group of American composers who wished to police the use of their works and ensure

the payment of royalties owed to authors for the public performance of copyrighted

musical compositions. ASCAP is a non-profit entity that collects and distributes royalties

directly to artists and songwriters. Direct distribution is a huge benefit to artists and

songwriters because no other entity can keep part or all of an artist or songwriter’s profits

under this distribution structure. Over 100 years later, ASCAP still exists to grant blanket

licenses for use of its catalogue to entities seeking to publicly perform copyrighted

musical compositions and collects and distributes royalties for the artists and songwriters

who have representation in ASCAP’s catalogue (Moser & Slay, 2012).

ASCAP is not the only PRO in existence. The Society for European Stage

Authors and Composers, or SESAC, was the second PRO to exist, starting in 1931.

Initially, SESAC was only available to authors located in Europe, but it has since grown

to include American authors as well. SESAC is a for-profit entity, and is the smallest of

the PRO’s operating in the U.S (Brabec & Brabec). Finally, Broadcast Music

Incorporated, BMI, came into being in the U.S. in 1939. Initially, BMI was created due to

the fact that radio broadcasters claimed ASCAP’s fees were becoming too high for them

to keep operating. These broadcasters joined together to stop ASCAP’s rate increases

(Moser & Slay, 2012). Today, BMI operates in the same fashion as ASCAP, as it is also a

6
non-profit entity. All three PRO’s are still in operation throughout the U.S. for the

advocacy of artists and songwriters. BMI is currently the largest performing rights

organization in America (BMI, 2014).

The Harry Fox Agency is not a performing rights organization, but acts as a third

party to distribute mechanical licenses for the reproduction and distribution of musical

compositions. The HFA is different from PRO’s because it only distributes mechanical

licenses for the purposes of reproducing and distributing copies of a musical composition;

the rights granted from the HFA do not include the public performance of musical

compositions (HFA, 2013b). The HFA also represents all of the PRO catalogues. The

HFA charges a 6.75% commission rate to copyright owners of musical compositions,

usually a music publisher, in order to issue mechanical licenses, collect royalties, and

distribute these royalties appropriately (Moser & Slay, 2012).

SOUND RECORDING ROYALTIES

Sound recordings faced challenges until the mid part of the twentieth century.

Performance royalties were only to be paid for the musical composition contained within

a sound recording, and not for the sound recording itself (Spahn, 2013). In 1972, an

amendment to the 1909 Copyright Act finally afforded copyright protection to sound

recordings created after the amendment’s effective date, on a limited basis (Moser &

Slay, 2012). These limitations brought many challenges to the music industry towards the

turn of the century, when the Internet phenomenon created a new outlet for music to be

publicly performed. It was not until 1990 that Congress recognized that leaving the public

7
performance of a sound recording out of the scope of public performance rights was

highly problematic concerning the growing and massively popular Internet.

Congress created The Digital Performance Right in Sound Recordings Act, or

DPRSRA, in 1995 to grant copyright protection for the public performance of sound

recordings. This was an important step for copyright protection because the digital

transmission of copyrighted sound recordings were now included in the public

performance right. With this act, compensation to copyright owners for the digital

transmission of sound recordings through an on-demand or subscription streaming

service became mandatory (Brabec & Brabec, 2011). The U.S. Copyright Act, Title 17,

Section 106 (6) reads, “Subject to sections 107 through 122, the owner of copyright under

this title has the exclusive rights…in the case of sound recordings, to perform the

copyrighted work publicly by means of digital audio transmission.” The performing

rights organization SoundExchange was created after the enactment of this act to issue

licenses for the public performance of sound recordings and to monitor the usage of these

licenses for the purpose of collecting and distributing royalties (Thomson, 2004).

SoundExchange is responsible for the distribution and royalty collection of a

different license from ASCAP, BMI, or SESAC – SoundExchange specifically distributes

statutory licenses that cover the digital performance of copyrighted sound recordings as

outlined in Section 112 and 114 of Copyright Law. ASCAP, BMI, and SESAC only

cover the license for the underlying musical composition. By law, SoundExchange is the

only organization that is allowed to collect royalties from digital music streaming

websites that stream sound recordings under the aforementioned Copyright sections

(Brabec & Brabec, 2011). SoundExchange keeps 5.3% of the royalties it collects for

8
administrative purposes, then gives 50% of the remaining royalties to the sound

recording’s owner, usually the label, 45% goes to the featured recording artist, and 5% is

split between all backup musicians (Peoples, 2012).

PRO’s, including SoundExchange, have become even more important to artists

and songwriters as the music industry has transitioned into a predominately digital

market. The royalties generated from the digital stream of songs has become one of the

biggest sources of income for artists and songwriters as the sale of digital and physical

records decline. All PRO’s are essential because they keep the digital music streaming

websites honest about usage – they directly monitor the stream of songs, allowing PRO’s

to assure the artists and songwriters they represent that the royalties paid to them by

digital music streaming websites, as well as others who use the work of a creator of

content, are accurate. With the size and scope of the music industry today, this is a task

that could not be easily managed without PRO’s.

Congress saw, still, the expansion and widespread use of the Internet and sought

to provide authors with greater protection from users illegally acquiring their copyrighted

works through file sharing networks. The Digital Millennium Copyright Act (DMCA)

was brought to life three years after the DPRSRA. The DMCA contains five titles, which

cover three main issues: prevention of piracy, the liability of online service providers

including safe harbors, and guidelines for webcasters. These provisions have been set

forth in order to make the Internet a safe place for both creators of content and for the

technology companies that wish to use copyrighted content for financial gain. The

DMCA also protects users by creating boundaries for the legal and digital consumption

9
of copyrighted music, and provides “safe harbor” for websites that might otherwise be

held liable for infringement due to the illegal activity of its users (Moser & Slay, 2012).

OTHER ISSUES FACING COPYRIGHT AT THE TURN OF THE CENTURY

With the advent of the Internet came technological advances that extended to

computer equipment. In the early 1990’s, consumers were able to purchase equipment

that would allow them to copy works protected by copyright as many times as desired,

with the end copy still exhibiting exceptional listening quality (Lamy, Duckworth, &

Kennedy, 1997). This led to a decline in record sales for creators of content, as

consumers were able to illegally copy albums from friends and relatives for free rather

than purchase the albums from a licensed distributor.

The Audio Home Recording Act of 1992 was created to establish that

manufacturers distributing equipment with the ability to copy “digital audiotapes” also

include security features that prevent users from being able to copy these digital

audiotapes multiple times (Landes & Lichtman, 2003). Additionally, manufacturers of

this type of equipment must pay royalties to artists and songwriters referred to as DART

royalties for each piece of equipment manufactured. Manufacturers of personal

computers do not have to pay DART royalties on new personal computers. DART

royalties must also be paid on blank mediums that consumers use to hold copies of

works, such as blank tapes or blank CD’s. DART royalties were deemed necessary by the

Audio Home Recording Act in order to offset any financial losses artists and songwriters

would face from the illegal mass copying and distribution of their legally protected works

(Landes & Lichtman, 2003).

10
 THE POLITICAL SIDE OF MUSIC

Certainly, there have been positive changes to the legislative landscape as the

music industry has grown and changed. Compensation for the legal use of a work’s

musical composition and sound recording are now guaranteed thanks to developments in

legislation. In fact, creators of content are able to receive royalties at all for the digital

stream of music thanks to efforts in legislation that have brought the industry forward,

and legislation that prevents the illegal use of works. Acts such as the Digital

Performance Right in Sound Recordings Act have even been created to meet the needs of

creators of content in an ever-changing technological landscape, while the Digital

Millennium Copyright Act has provided a safe harbor for technology companies.

These efforts were truly just the beginning of a much larger battle. Rising in

equity with the popularity of digital music streaming websites are the issues surrounding

them. Real changes need to be made to ensure that the technology companies and

creators of content and their advocates are all treated fairly as the music industry moves

forward into the digital age. As of right now, technology companies, which include

digital music streaming websites, terrestrial radio, and others, have the upper hand within

the music industry and with legislators due to their clout. The digital music streaming

system is also unbalanced in favor of the technology companies, which has led to the

devaluation of creators of content within the entire industry. However, creators of content

are starting to be heard by legislation and possibilities for changes to the current system

are in sight.

11
THE SONGWRITER’S EQUITY ACT

Rep. Doug Collins (R-GA), a member of Congress, introduced the Songwriter’s

Equity Act in the early part of 2014 (Christman, 2014a). If passed, the Songwriter’s

Equity Act would provide creators of content with more fairly based royalties for the use

of their works in the digital music streaming marketplace. Specifically, the Songwriter’s

Equity Act would allow the Copyright Royalties Board, which determines the mechanical

royalty rate, to consider other royalties when setting new royalty rates, and would allow

for an increase to the current mechanical royalty rate of 9.1 cents. ASCAP writes, “The

Songwriter’s Equity Act is an important step toward modernizing the music licensing

system and leveling the playing field to ensure that songwriters, composers, and

publishers are appropriately compensated for the use of their intellectual property

(ASCAP, n.d.).” As digital music streaming websites attract more users, the need for a

fair and clearly defined royalty rate is essential. If passed, the Songwriter’s Equity Act

would provide fairness to creators of content, subsequently bringing value back into the

goods they provide.

THE RESPECT BILL

Another legislative effort that has recently come to life is the RESPECT Bill. This

bill was born from the fact that creators of content are no longer receiving royalties for

the digital stream of their sound recordings that were made before February 15th, 1972.

The copyright law that applies to songs written prior to 1972 is different from today’s

songs, and digital music streaming websites have translated the copyright law

surrounding these recordings to mean that a license is not needed for the public

12
performance of the sound recording for songs falling into this category. Paying out

royalties to these creators of content for use of the sound recording, therefore, is not

mandatory. Organizations such as SoundExchange, on the other hand, view these

recordings as essential to the development of music as a whole, citing that these

recordings represent “the hitmakers of Motown, the legends of Jazz & Blues, and the

people who gave birth to Rock & Roll (Project72, n.d.).” SoundExchange also estimates

that $60 million has been lost to the industry just in the year 2013, and half of those

dollars should have gone directly to the respective artists and songwriters who created

those works (Project72, n.d.). The good news for these creators of content is that this bill

has more of a likelihood of becoming a reality due to the fact that it addresses only one

concern in the music industry, instead of trying to conquer multiple issues (Peoples,

2014b).

Although there are efforts in place to establish fairness within the music industry,

real legislation takes time to develop and to be passed. This process can take years to get

underway, and each step that a new legislative effort must go through to be passed

presents a threat to the possibility of that legislation becoming a reality (Spahn, 2013).

Furthermore, it is not usually one party that is able to reap the benefits of legislation, but

rather a compromise over what each party believes should happen. Without a doubt, the

fact that Congress is starting to open its eyes to the issues that plague the music industry

today is promising – but these efforts only scratch the surface of the changes that need to

be in place for creators of content to thrive in the digital music streaming marketplace.

13
2014 MUSIC LICENSING HEARINGS

It has become apparent that Congress is willing to take the issues within the music

industry seriously enough to start affecting change. June 10th, 2014 marked the first of

two hearings set to take place regarding the current state of music licensing. Several key

players in the music industry, such as Neil Portnow, President and Chief Executive

Officer of the Recording Academy, David Israelite, President and Chief Executive

Officer of the National Music Publishers Association, and Michael O’Neill, Chief

Executive Officer of BMI were present to tell their sides of the story. The topics at hand

included potential changes to the current licensing system, how and when each party

expected these changes to occur, and what benefit each of these proposed changes would

have for the future of the music industry as a whole. Specific topics included the

Songwriter’s Equity Act, the RESPECT Bill, and terrestrial radio, among other topics

(Peoples, 2014c).

Mr. Portnow, Mr. Israelite, Mr. O’Neill, and Mr. Lee Thomas Miller, songwriter

and President of the Nashville Songwriter’s Association International, all expressed to

Congress the dire situation facing creators of content today. Each representative also

shared with the U.S. Judiciary system just how imperative it is that changes occur quickly

in order to keep the music business thriving. Mr. Portnow said in his opening argument,

“We are not asking for special treatment. We are simply asking for what is fair. Fair

market pay, for all music creators, across all platforms. A simple concept. A single bill. A

just framework for music licensing (USHR02: Music Licensing under Title 17 part one,

2014).” Despite several counterarguments from technology company executives such as

Mr. Lee Knife of the Digital Media Association on the rise in royalty payouts creators of

14
content have seen over time, Congress appeared to be interested this time in hearing from

those who represent the creators that copyright law was created to protect. The next

hearing will certainly be telling as to whom Congress is listening to (Peoples, 2014c).

15
 DIGITAL MUSIC STREAMING SERVICES

The later part of the 20th century saw some very important developments in

copyright law with respect to music streaming over the Internet, including the creation of

PRO’s, and many changes are clearly still ahead. Much of the issue surrounding today’s

digital music streaming debacle is based on the necessary licensing of copyrighted

musical compositions and sound recordings so that songs may be legally broadcasted. To

understand why updates are so important to the digital music industry as it continues to

develop its online market, an understanding of the role that copyright plays in digital

music streaming must exist.

Today, there are several different types of digital music streaming available to

users. The most basic type is referred to as non-interactive, which applies to both Internet

and Satellite radio only, when speaking digitally, although this discussion focuses solely

on digital music streaming via an internet connection. There are even more ways that a

user can stream music in an interactive setting, as indicated in Table 1 below. A brief

overview of music licensing as it pertains to the digital world follows.

16
Table 1. A Breakdown of Digital Music Service Types

Service Description Required Licenses Service Download

Type Example Abilities?
Paid Consumer pays to Mechanical license, iTunes Yes
Download download a song or paid by the
album; unlimited consumer
listening
Free non- Consumer can Blanket Pandora (free No
interactive listen to choice performance right subscription
streaming of stations with for musical only; paid
with ads ad interruptions; composition; subscription
no paid sound recording eliminates ad
subscription performance right interruptions)
required
Interactive Consumer can Blanket Spotify (paid Yes (paid
streaming listen to choice performance right subscription and mobile
of stations or for musical only; free subscriptions
artists without composition; service has ad only;
ads; paid sound recording interruptions) downloads
subscription performance right; disappear
required mechanical when
license paid by payment
service provider stops)
Digital Consumer can Blanket Sirius XM No
Satellite listen to choice performance right Radio
Radio of stations for musical
anywhere at any composition;
time; paid sound recording
subscription performance right;
required mechanical
license paid by
service provider
Interactive Consumer can Blanket Spotify Yes (paid
Streaming listen to choice performance right Mobile (paid and mobile
with of stations or for musical subscription) subscriptions
Tethered artists without composition; only;
Down- ads or may sound recording downloads
loads download performance right; disappear
content; paid mechanical when
subscription license paid by payment
required; service provider stops)
downloads (Donnelly,
disappear when Aguirre, Munoz,
payment stops and Sparkler,
(HFA, 2013a) 2014)
17
THE BEGINNING OF DIGITAL MUSIC STREAMING

The first digital radio platform to exist was satellite radio, which has its

beginnings in the early 1990’s. The first satellite radio company to exist was XM Satellite

Radio, followed quickly by Sirius Satellite Radio. Satellite radio offers consumers

channels to choose from much like terrestrial radio, such as a news channel or a genre-

specific channel; unlike terrestrial radio, a user can choose from over 150 stations.

Furthermore, these stations travel with the user and can be heard clearly at any location in

the U.S., as the stream of satellite radio is connected to a satellite orbiting above Earth

(Frenzel, 2012).

In 2008, the two existing satellite radio companies merged to form Sirius XM

Radio. Satellite radio is perhaps most known for its presence as an added bonus feature

found in many new cars (Reuters, 2010). Satellite radio has become an important part of

the access versus ownership of music debate due to its presence in new cars, making

access to music instant and available at any place, anytime. The presence of satellite radio

in new vehicles has led to over 25 million paying subscribers for digital music

(SiriusXM, 2014).

NON-INTERACTIVE DIGITAL MUSIC STREAMING

Thus far in the development of the digital music streaming industry, non-

interactive streaming seems to be the most preferred among users (Holmes, 2014). As

previously mentioned, there are two copyrights involved in the stream of each song,

regardless of whether the stream is played under an interactive or non-interactive setting.

The first copyright protects the musical composition, and the second protects the actual

18
sound recording that the user hears when the song is streamed. Non-interactive streaming

relies on temporary copies of songs that are stored as “ephemeral” copies on the

website’s server. This allows one song to stream as the next song to be streamed is

loading. This type of streaming also prevents users from being able to illegally duplicate

the song onto their computer or other device at any point during the stream (Donnelly et

al., 2014).

When a digital music streaming website wants to add a song to their non-

interactive streaming catalogue, they must obtain two licenses. First, a license to be able

to legally and publicly perform the musical composition on a digital platform, which is

issued by the PRO representing that particular song, is required. PRO’s generally award

digital music streaming websites a blanket performance license for use of any song

contained in their catalogue for a specific amount of time. Also required is a license to

have the ability to legally and publicly perform the sound recording on a digital platform.

SoundExchange issues this license. Both PRO’s and SoundExchange pay royalties to the

proper parties for the monitored usage of licensed works, based on the number of streams

each song generates on a particular digital music streaming website (Donnelly et al.,

2014). Spotify works a little differently, as it pays royalties based on an artist or

songwriter’s percentage of total plays rather than on a per-stream basis. Thanks to this

model, creators of content have seen a gradual increase in Spotify royalty rates over time

(Spotify, 2013). An artist or songwriter must reach a minimum number of plays for their

works in order to be compensated (Donnelly et al., 2014).

A user does not need to pay for an ad-supported non-interactive streaming

subscription; therefore, the user does not have as many capabilities as they would with a

19
paid subscription. The non-interactive streaming system follows the same skeleton as

terrestrial or AM/FM radio – a user may pick a specific station based on an artist or

genre, but the user is not able to call upon a specific song or artist and have their

choice(s) played on demand. A subscription fee is required by most digital music

streaming websites to be able to stream songs on-demand.

INTERACTIVE DIGITAL MUSIC STREAMING

Although based around the same idea as non-interactive streaming, interactive or

“on-demand” streaming works a little differently. There are several different types of

interactive streaming, but this paper focuses on “on-demand” streaming without

downloading only. In an interactive streaming setting, a user may call upon any song or

artist in the catalogue at will and immediately hear the selection. Unlike non-interactive

streaming, the user is in complete control and can determine which song or artists they

want to hear next. Because of the way this system works, the user is required to maintain

a paid subscription with a digital streaming service in order to have access to this type of

streaming, without ad interruptions.

Three licenses go into the play of a song over an interactive streaming site. A

digital music streaming website must pay the licensing fees for the public performance of

the musical composition and for the public performance of the sound recording, just like

in a non-interactive streaming setting. However, the streaming website must additionally

pay for a license to digitally reproduce the musical composition, also known as a

mechanical license. When a digital music streaming websites wants to add a song to their

20
interactive catalogue, a mechanical license must be supplied by the Harry Fox Agency or

by the copyright owner of the musical composition (Donnelly et al., 2014).

The difference between non-interactive streaming and interactive streaming is that

a song is reproduced when a user ‘demands’ the song, hence the need for a mechanical

license for the reproduction of the musical composition. Due to the fact that the user has

no knowledge of the song that will follow in a non-interactive setting, an “ephemeral”

copy suffices. For interactive streaming, the entire catalogue needs to be able to be

accessed immediately, which makes a mechanical license a necessary component of this

type of streaming.

Digital music streaming is a complicated process, but it has become an easy

service for users to access when and where they want. Artists are therefore available the

instant a user wants access to them, which has pushed the music industry to develop a

new market and expand upon current revenue possibilities. Thanks to the Internet,

creators of content and fans are able to connect in ways that were not possible in the past,

leading to increased listening time by users. Creators of content and technology

companies should be cashing in on increased listening and their good fortune – yet the

many issues currently surrounding the digital stream of music means the music industry

is in a troubling state of despair.

21
 ISSUES AFFECTING DIGITAL MUSIC SERVICE PROVIDERS

Although the technology companies represent a larger entity within the music

industry that hold more clout than creators of content, digital music streaming websites

and terrestrial radio alike are facing their own challenges. Many digital music streaming

websites have yet to become financially successful businesses, despite their immense

popularity with users. Pandora has been at the forefront of the issues that plague

technology companies as the music industry changes to a digital market. Pandora has

even pushed for legislative action to try and change the distribution structure of royalties,

affording them greater compensation to cover the overhead costs they have struggled to

pay.

THE INTERNET RADIO FAIRNESS ACT

Since Pandora cut the ribbon of its digital ‘open’ banner in 2000, the company has

fought left and right to keep as much revenue as possible. Pandora has been so public

about its financial battle that it is doubtful that any consumer who knows about Pandora

does not also know how hard it has fought to become profitable. The Internet Radio

Fairness Act, heavily backed by Pandora as well as others technology companies, was

introduced to Congress in 2012 to create fairness within the digital music marketplace. In

truth, Pandora backed this act with the intention of making it legal to pay creators of

content less of its revenue, putting more revenue into its pocket to create profitability. In

the end, the Internet Radio Fairness Act was not passed, but it did reveal that certain

22
technology companies, including Pandora, are more interested in their own profits than in

helping creators of content keep the music business alive.

The Internet Radio Fairness Act of 2012 stated that its purpose was, “To adopt

fair standards and procedures by which determinations of Copyright Royalty Judges are

made with respect to webcasting, and for other purposes.” The IRFA was founded under

the idea that the licensing fees that digital music streaming websites are required to pay in

order to stream music have translated into a reality where technology companies are not

able to exist profitably (Lewis, 2012). The IRFA sought to create an even platform

between the royalty rates that digital music streaming websites pay out to creators of

content and the royalty rates that terrestrial radio stations must pay to music publishers,

which are traditionally very low due to the ‘promotional value’ of terrestrial radio play.

At its core, the IRFA was created to financially benefit technology companies such as

Pandora, leaving creators of content with, literally, pennies for use of their works.

MusicFIRST is an open group of music lovers that has been dedicated to the fair

pay of creators of content since its start in 2007 (musicFIRST, 2014a). MusicFIRST

discusses the math regarding the proposed biased bill, stating that 85% of the profits that

go to artists and songwriters would have been cut if the IRFA had passed (musicFIRST,

2014b). Clearly, the money that would no longer be paid out to artists and songwriters

would instead stay with technology companies, which hardly seems fair. This would

certainly solve the technology companies’ profitability issues, but it would do so at the

expense of creators of content. That puts artists and songwriters out of money, and out of

the inspiration that the Copyright Act sites as being necessary to promote the continuous

creation of arts (U.S. Const. art I, § 8).

23
 Luckily for creators of content, Congress saw through any mention of the word

‘fair’ by technology companies to the true nature of the IRFA, and the act was not passed.

One article notes of the hearings, “Lawmakers criticized the National Association of

Broadcasters representative for seeking lower online royalty rates even though terrestrial

radio stations do not pay sound recording owners a performance royalty (Peoples, 2013).”

The IRFA quickly faced its demise and was even abandoned by Pandora due to its failure

(Peoples, 2013). Efforts to undercut creators of content through legislation made it clear

that technology companies have no interest in the success of the creators of content that

they take from. Holding more revenue when creators of content are already seeing so

little payouts reminded the public of the true interest of big business – itself.

PANDORA FIGHTS TO DEFINE ‘FAIR’ IN A FREE STREAMING MARKET

In 2012, Pandora had enough of its fight for prosperity and went so far as to file a

lawsuit against performing rights organization ASCAP. In filing suit, Pandora’s goal was

to establish a royalty rate that would be more fairly based for their services. Pandora

believed it had been overpaying the artists and songwriters represented by ASCAP for

use of its catalogue within Pandora’s streaming catalogue, which includes songs streamed

for free. If the court battle turned out to be successful, Pandora believed it could keep

more revenue and finally become a profitable company.

At the start of the infamous 2012 trial, Pandora’s chief executive at the time,

Joseph Kennedy, testified that Pandora was to “pay artists and labels almost $250 million

this year – that’s more than 50% of the company’s revenue (Knopper, 2012).” That

number is staggering, but it does not translate as clearly as Kennedy makes it seem. The

24
money that is paid out by digital music streaming websites must be split in a number of

different ways. So, Pandora is not paying out to artists and record labels directly as one

might interpret from Kennedy’s statement. While Pandora may actually be paying out

50% of its revenue, by the time any profit reaches an artist or songwriter, it has been

divided multiple times, often translating to a royalty rate of fractions of one penny per

stream (Peoples, 2012). Furthermore, the 50% of revenue that Pandora claims to be

paying out pales in comparison to the approximately 70% of gross revenue that Spotify

pays out to creators of content each year (Spotify, 2013).

Keeping in mind that PRO’s are paid for both the free and paid stream of music in

a digital music streaming setting, the breakdown of where this revenue goes is as follows.

Any group that has administered publishing rights to Pandora is entitled to royalties that

are earned based on the number of songs streamed and the number of times each songs

was streamed, per each PRO’s catalogue. Pandora keeps what is not paid out to

performing rights organizations and the Harry Fox Agency. Once the profit is distributed

to these three PRO’s and the HFA an administrative fee is kept to keep the PRO’s

functioning, and a fee is kept by the HFA. The remaining profits are then distributed out

to the proper creators of content. The division of which specific creators of content get

what, at this point in the division process, is not an even percentage; cite the previous

breakdown of how SoundExchange divides royalties paid to the various creators of

content. Still, Pandora believed the rate it was required to pay ASCAP for use of its

catalogue was too high.

The motivation behind Pandora’s decision to target ASCAP in its lawsuit was

questionable. Pandora was seeking to have its required royalty rate for publishers match

25
that of terrestrial radio, which is currently set at 1.7% for the use of catalogued songs

(Sisario, 2014b). In 2013, Pandora paid only 4% of its revenue to publishers, of which,

ASCAP only saw 1.85% (Sisario, 2014a). That means ASCAP, and thus the artists and

songwriters it represents, are receiving crumbs. Pandora’s claim seems outrageous due to

the fact that, in any form of a digital music subscription, Pandora’s programming does

not provide users with the same overall content format as AM/FM radio. Terrestrial radio

has DJ’s with daily talk shows in between the play of songs, news features, weather,

traffic, and other features that Pandora simply does not offer. Claiming that free digital

music streaming is the same as terrestrial radio because it is free to users seems to be

another way to undermine an already distressed portion of the music industry.

ASCAP’s goal for the lawsuit’s outcome was for artists and songwriters to see a

higher licensing payout to match the success of digital streaming websites and to more

fairly compensate artists and songwriters with the decline of downloads. Due to the

decline in downloads and the rise of digital music streaming, artists and songwriters will

soon begin to see digital streaming royalties as their main source of income. As the

digital market continues its expansion, it will become even more important that artists

and songwriters are more fairly compensated.

The president of the National Music Publisher’s Association, David Israelite, has

said of the suit, “It’s outrageous Pandora would try to reduce the already nominal amount

they pay songwriters and music publishers, when Pandora’s business model is based

entirely on the creative contributions of those songwriters (Sisario, 2012).” By choosing

to pay songwriters what is less than a fair rate, ASCAP argued that Pandora was

devaluing the role that songwriters and other artists play in the music industry, and

26
especially in Pandora’s success as a household name. Certainly, Pandora could find a

way to balance the monetization of digital music streaming with their overhead costs

without de-valuing the parties it takes from, although that was not what Pandora chose to

do.

Unfortunately for ASCAP, Judge Denise L. Cote sided with Pandora in her

March 2014 ruling. Yet the ruling did not truly play out in any particular party’s favor.

Pandora is still required to pay out the same 1.85% of revenue to ASCAP that it was

paying before the suit. ASCAP, on the other hand, will not see a gradual rate increase in

Pandora’s payout over time, as it desired (Sisario, 2014b). This case could have set a

benchmark for the word ‘fair’ as it pertains to digital streaming rates paid to music

publishers, adding even a little value to work that creators of content do; instead, the only

benefit that will come out of the case is that Pandora and ASCAP will not be able to fight

as much over royalties.

The issue regarding Pandora’s continuous battle to become profitable is not the

fact that Pandora and other digital music streaming websites are attempting to become

profitable; the issue is that these companies have attempted to create profitability at the

expense of the creators of content they exploit. Like Pandora, Spotify has yet to become a

profitable digital music streaming website, yet the company has not been at the forefront

of efforts to make itself profitable at the expense of creators of content. After review, it

seems that all efforts by Pandora to become profitable have attempted to take profit away

from the creators of content whom Pandora and other digital music streaming websites

rely on to exist in the first place.

27
 Financially undercutting creators of content is not the only way that Pandora

could eventually become a profitable digital music streaming website. Pandora opened in

2000, yet it has not considered raising the rates it charges paying subscribers until this

year, 2014 (Pagliery, 2014). Instead, it has sought other ways so that consumers are not

inconvenienced by Pandora’s attempts to break a profit. Although Pandora is the most

popular digital music streaming website and a potentially strong revenue stream for

creators of content, each effort to lower royalty rate payouts puts Pandora in a bad light.

Pandora’s efforts have in part left a bad taste in the mouths of certain music industry

members, including certain artists and songwriters, especially considering creators of

content have other battles to face within the changing landscape. The irony of the

situation is that, for all of their efforts to take revenue away from creators of content, the

technology companies still are not able to profit. But to be fair, if digital music streaming

websites are not able to eventually become profitable, creators of content may have

bigger issues to contend with, such as what their next sustainable revenue stream will be.

28
 ISSUES AFFECTING CREATORS OF CONTENT

The result of recent technological developments that have led to the popularity of

digital music streaming websites means that creators of content should be thriving. As the

industry shifts from owning music to accessing it, the possibilities for new revenue

streams for creators of content have soared. Even the digital music streaming sites that

remain in business are constantly attracting new users, providing creators of content with

the promise of a prosperous future. Chief Executive of the International Federation of the

Phonographic Industry, IFPI, Frances Moore recently wrote in the annual IFPI Digital

Music Report (2014), “The music industry has become a mixed economy of diverse

consumer channels and revenue streams. This has been an amazing transformation,

dramatically expanding the way artists reach their fans across the globe.”

Although it seems that digital music streaming websites are merely giving

consumers what they want, or acting as a medium that brings artists and fans together to

generate profit for all involved, it is the technology companies that are devaluing creators

of content and the actual content itself because no one involved is making any money.

For every new revenue stream that opens its digital doors, it seems that there is another

way in which creators of content are actually losing profits when they should be thriving.

The future of the music industry remains largely questionable as the industry

continues its struggle with the issue of making digital music streaming a profitable

venture. The issue is not the technology itself – the benefits of streaming websites means

an optimistic future for the music industry is possible – the issue is with the technology

29
companies, also known as big business, which seek to lower royalty and licensing

payouts to creators of content and instead keep the profits that are generated for their own

prosperity.

THE ACCESS VERUS OWNERSHIP DEBATE

With technological advances making consumer access to music an instant

experience, consumers are starting to move away from ownership of music, or the

purchase of music, altogether in favor of access to it. The IFPI’s annual Digital Music

Report (2014), which tells of 2013 global music trends, indicates this shift with the

statement, “Revenues from downloads globally fell slightly by 2.1 percent in value, the

decline being offset by increases in streaming and subscription revenue to generate

overall digital revenue growth in the majority of markets.” This could actually be good

news for creators of content, because digital music streaming websites have serious

potential to eventually become a more profitable alternative for the music industry than

downloading, even when downloading occurs legally. It has also been noted that, “The

subscription model is leading to more payment for music by consumers, many of whom

appear to be shifting from pirate services to a licensed music environment that pays

artists and rights holders (International Federation of the Phonographic Industry, 2014).”

The shift from “owning music to using music” means creators of content earn a

royalty payment each time one of their songs is streamed (Simson, &Abdo, 2014). This

happens regardless of whether the user maintains a paid account with a legal music

streaming site or chooses to make use of a free yet licensed stream. In the past, the sale of

an album or digital download represented one royalty payment per consumer. The

30
payment received by the creators of content for a download is a mechanical royalty, with

a distribution fee deducted by the downloading service, for the licensed copy of the song

(Brabec & Brabec, 2011).

The ownership model differs from the access model in that, with ownership, the

consumer pays the mechanical royalty with their purchase. In the access setting, the

service provider pays. For every 99-cent download on iTunes, Apple keeps roughly 30%,

and the record label and others who must be paid divide this number further before an

artist sees any profit (Hansell, 2008). After the sale of a download, no more royalties can

be generated from that one consumer concerning that particular song, yet the consumer is

able to listen to the song as many times as desired.

Each time a song is streamed on a licensed music streaming website either in a

non-interactive or interactive setting, a royalty payment is also generated for the owner of

the musical composition and the owner of the sound recording. It can be assumed that a

single user will access the same song multiple times over the course of their streaming

site use because, by their very nature, streaming sites are designed to play songs that a

user likes multiple times. With the widespread shift from ownership of music to a

preference for access to music, consumers are spending more revenue-inducing listening

time. The industry is therefore generating more instances of royalties occurring for

creators of content, even though this higher percentage does not yet translate into a higher

royalty payout. As a result, access to music rather than ownership of it provides a greater

possibility for higher royalty payouts to creators of content in the future.

31
APPLE GETS THEIR PIECE OF THE PIE

The shift from ownership to access has recently caught the attention of Apple

Inc., one of the world’s largest technology companies and owner of iTunes music. Apple

Inc. announced in May 2014 that its plan to purchase Beats Electronics for $3 billion has

become reality, and the deal will finalize in September 2014 (Adegoke, & Gensler,

2014). Beats Electronics was started by Dr. Dre and has focused primarily on the sale of

audio equipment. Earlier in 2014, Beats launched a subscription streaming service to

compliment its headphones and speakers, and Apple immediately took notice (Simpson,

2014). When the deal is finalized, Apple will gain control over Beats’ audio products, but

more importantly, Apple will also gain control of the new Beats subscription music

streaming service (Sisario, 2014c). The completion of this purchase puts an end to the

access vs. ownership debate, because it marks the date that the creator company and

owner of the most popular digital download market iTunes, which built its success upon

on the basis of consumer ownership of music, recognizes that access is truly the future of

the music industry.

Billboard predicts a shift in revenue for Apple from downloads to interactive

streaming over time, and there exists real possibility for this to be the case (Adegoke, &

Gensler, 2014). Billboard has reported, “Streaming music has yet to stem the tide of

industry revenues’ general decline, down worldwide by $600 million last year. That, in

spite of a 51% increase in revenues from streaming (Billboard Staff, 2014).” A

threatening situation could occur for creators of content if they must continue to fight to

keep what little profits they receive if the consumer switch from ownership to access

remains this unbalanced. Creators of content need their royalty rates to rise fairly quickly

32
to offset the change in market. Still, with the possibilities for a more prosperous future

with digital music streaming, downloading may eventually become just a story we can

tell our grandchildren.

PRIVATE CLEAR CHANNEL DEALS WITH RECORD LABELS

Apple is not the only company making changes to its financial business structure.

Clear Channel, known as a titan of terrestrial radio with 850 stations in its arsenal, sent

shockwaves through the music industry when it announced in 2012 that the company was

making private deals with record labels to pay revenue from play on Clear Channel

terrestrial stations to artists on those labels. Traditionally, royalties are not paid to all of

the creators of content for terrestrial radio play due to what is considered a promotional

value. This value has been projected to lead consumers to purchase the music heard on

the radio. Clear Channel’s efforts mark a change to the way terrestrial radio traditionally

handles payment to creators of content. Currently, Clear Channel has made deals with

Warner Music, Big Machine Label Group, and Wind-Up Records, among others,

regarding royalties for terrestrial radio play only on Clear Channel radio stations

(Christman, 2013).

The exciting part of this news was that the idea that artists should receive royalties

for all radio play, regardless of how it is transmitted, is now becoming a reality. Deputy

Director for the Future of Music Coalition Casey Rae (2012) wrote enthusiastically of the

deals, “Clear Channel has signaled that broadcasting sound recordings is worth

something in the ‘willing buyer, willing seller’ market, and that terrestrial airplay can

33
trigger compensation.” Yet these deals could leave creators of content with major issues

to content with in the near future.

While private Clear Channel deals with labels can be viewed as a success for

creators of content, these deals could actually do more harm in the long run than good.

Although Clear Channel is paying out for terrestrial radio play on its stations, it is doing

so at the cost of digital royalty rates. In other words, Clear Channel is lowering their

payout of digital royalty rates for play on their online stations in order to create what

appears to be another revenue stream. In actuality, this is not a new revenue stream for

artists and songwriters, but more of a big business scam to make Clear Channel look like

the hero in the music industry. Clear Channel will go down in the books as the first

terrestrial radio broadcaster to pay for the terrestrial play of songs, but what these deals

will ultimately do for artists and songwriters as the digital music streaming industry

evolves is unclear.

Making matters worse, record labels have agreed to a cap on the amount of

royalties that are allowed to be collected from Clear Channel’s online radio stations

(Busch, 2012). This could end unfavorably for creators of content if, for instance, a Clear

Channel station continues to play a recording artist’s hit in order to meet the demand of

listeners after this ‘cap’ is filled, yet does not feel obligated to pay royalties on this play.

Record labels such as Warner Music and Big Machine have signed away their rights to

these royalties, which will ultimately be to the detriment of artists and songwriters if such

an instance occurs.

Another major concern for artists and songwriters is how these deals will be

affected by the growth of digital music streaming and the decline of terrestrial radio.

34
Much of the available data has pointed to the fact that terrestrial radio has been slowly

fading out for almost a decade, and listeners are switching to digital streaming (Sommer,

2014). In theory, accepting a lower royalty rate in exchange for an apparently new

revenue stream seems like a worthwhile strategic move by the record labels. In reality,

Clear Channel deals are another ploy for big business to avoid having to pay for ‘free,’

putting the financial burden on creators of content while appearing to be an industry

leader.

If Clear Channel wants to start paying for the play of songs on terrestrial radio,

the real question becomes this – at what point in the decline of terrestrial radio will Clear

Channel change the terms of its deals with record labels to match the growth of digital

music streaming? Music business writer Bobby Owsinski (2013) writes, “In exchange for

a few dollars of terrestrial radio play, [the labels who accepted a private Clear Channel

deal] bargained for a lower digital payout. Does anyone really think that digital streaming

is not going to increase in the next few years?” The motives behind the record labels’

decision to accept these deals is somewhat unclear.

If all of radio, meaning terrestrial radio as well as digital radio, decides to follow

Clear Channel’s lead and negotiate deals on their own, the market would certainly turn

into a free-for-all, leaving creators of content behind. Rae (2012) writes, “If every label

pursued direct deals with broadcasters, we might end up splintering the marketplace

while simultaneously leaving artists high and dry… Without a basic guarantee of artist

compensation, we’re moving backwards.” For all of the possibly negative outcomes, the

Clear Channel deals have one thing right – these private deals point to the fact that

someone, specifically legislation, needs to step in and control the market before it truly

35
goes out of control. A prosperous future for the music industry is certainly possible, but

many steps need to be taken in order for that to happen.

THE COST OF FREE

A common theme for creators of content regarding the issues that keep occurring

with digital music streaming is who must pay for ‘free’ content. Spotify, one of the top

digital music streaming websites, is only able to boast that after nearly six years of

operation, a mere 25% of its 40 million subscribers maintain a paid subscription

(Brustein, 2014). That means 75% of Spotify users, or roughly 30 million people, are

using a streaming system that has no predetermined or legally mandated royalty rate for

creators of content. This is due to the fact that a mechanical license for the reproduction

and distribution of a song is not needed for the streaming system that 30 million

subscribers are using. Few consumers are willing to pay for what they can get for free,

and there are still too many free options available for substantial or consistent profits to

be generated for creators of content or the technology companies.

Furthermore, the gross discrepancy between the large amounts of traffic that

digital music streaming sites boast and the little to no profit they are claiming to able to

keep is that someone has to pay for ‘free;’ but despite how the situation appears, it is not

the digital music streaming sites that are paying. It is true that streaming sites are not

generating enough in-house profits, but the real issue with the current way that digital

streaming sites function lies in the fact that creators of content, not necessarily the

technology companies, are the ones who have to pay for ‘free.’ Until Congress steps in

36
and sets standards for the how much digital music streaming websites should be paying

out for free digital streaming, the music industry will continue to fracture.

Famed guitarist Jack White said in an interview with Robert Levine in his 2011

book, Free Ride, “If the music is free and no one’s buying the record, who’s paying for it

to be made?” The Internet has created an atmosphere where the do-it-yourself album is

often encouraged, but consumers want to hear professionally produced works that require

a hired team of professionals. Offering free digital music streaming seems like a great

idea in theory, but so many have taken advantage of it that free streaming has minimized

the value of creators of content and their outputs in turn. If digital music streaming

websites can attempt to justify before a court that paying artists such little royalties per

stream in order to compensate them for ‘free’ play is fair, it brings the value of the artist

and songwriter down with it. Regardless of what technology companies believe, the

public performance of any work should always translate into a royalty for those who

poured their heart into making the work.

Now more than ever, advocates for creators of content are needed to keep the

industry in check and to push for new legislation. It seems for every potential move

forward that creators of content see there are five steps backwards. Without advocates

striving for fair market value of content, the thought of bringing value back to creators of

content and all they provide the music industry with will remain an impossible task. But

unfortunately at this moment, even the advocates are being threatened out of existence.

37
THE FUTURE OF PERFORMING RIGHTS ORGANIZATIONS

Performing rights organizations are essential to the success of artists and

songwriters due to their advocacy for rights within the music industry. However, PRO’s

have recently come under fire, and their relevance to the way the music industry

functions today is being questioned. Publishers backed by labels such as Sony/ATV have

decided not to renew their terms with ASCAP in favor of negotiating deals directly with

digital music streaming services (Warren, 2014). By negotiating directly with streaming

websites rather than having to go through ASCAP, certain publishers, especially those

backed by large labels with clout, can potentially strong-arm more of a profit for both

artists and songwriters.

Direct negotiations with digital music streaming services sounds like a benefit to

artists and songwriters, yet if labels are negotiating these rates instead of PRO’s, which

pay artists directly, artists and songwriters may be forced to deal with stagnant royalty

rates while their labels cash in, or may even have royalties held against their advances,

never seeing their earnings. Additionally, the court’s decision to rule against ASCAP in

the Pandora v ASCAP suit sent a message to the music industry that PRO’s are not

effective in advocating for artists and songwriters, and may no longer be needed as the

landscape of the music industry evolves.

The combined effect of a lost court battle and publishers turning away from

PRO’s has not helped the case of performing rights organizations. Both of these gestures

symbolize the idea that PRO’s may not have the authority they once did to protect artists,

and PRO’s may eventually even disappear altogether. The loss of this vital infrastructure

has the potential to send the music industry further backwards, leaving songwriters and

38
artists behind while big business profits off of a form of creativity that is not theirs.

Several major players in the music industry have expressed concern. Ben Sisario of the

New York Times writes, “Big music publishers like Sony/ATV and Universal are calling

on the government to overhaul the [Internet radio] system, and technology companies are

accusing the publishers of trying to skirt the federal rules meant to protect them (Sisario,

2014a).” The only way to regulate big business and create peace is through legislation,

and Congress is needed to protect those who advocate for the authors that the copyright

statutes were created to support.

A REVIEW OF PERFORMING RIGHTS ORGANIZATION CONSENT DECREES

The U.S. Department of Justice has recently announced that it is taking the future

of PRO’s into its own hands, and is reviewing the consent decrees that have been in place

much longer than the Internet has. These consent decrees define how ASCAP and BMI

function, and are somewhat responsible for the issues that music publishers have been

having with PRO representation. For instance, a music publisher cannot have partial

digital representation from a PRO – the entire catalogue must be in the PRO’s digital

catalogue, or there cannot be any representation from that PRO. This has frustrated music

publishers who have sought to negotiate digital rights deals on their own yet want PRO

backing for other licensing purposes, especially when the publishers believe they can do

it better on their own. A review of the existing consent decrees could move PRO’s into

the present, or they could potentially threaten their existence by labeling PRO’s as

outdated and too difficult to fix (Christman, 2014c).

39
A SAVING GRACE FOR PERFORMING RIGHTS ORGANIZATIONS

A new proposed deal is offering hope for artists and songwriters represented by

performing rights organizations. For the past six months, SESAC has been looking into

the purchase of the Harry Fox Agency, the organization responsible for issuing

mechanical licenses to digital music streaming websites. The deal between SESAC and

the HFA is remarkably significant for its potential to combine the necessary digital

licenses for digital streaming websites, creating a multi-purpose licensing entity for those

who need multiple licenses to function legally. If ASCAP and BMI eventually disappear,

all would not be lost for artists and songwriters, so long as these creators of content are

accepted by SESAC under their member standards (Christman, 2014b).

The combination of SESAC and the HFA would provide both organizations a

distinct advantage. The possibility for the new organization to bundle the required

mechanical licenses with blanket use licenses that digital music streaming websites need

could result in a better licensing atmosphere for artists and songwriters. Additionally, the

multi-purpose setting could make both SESAC and the HFA more successful operations.

Music publishers have already made it clear that they are quickly becoming less

interested in PRO representation due to negotiation drawbacks concerning digital music.

If ASCAP and BMI do fade away as it has been predicted, artists and songwriters would

still have representation from a performing rights organization (Christman, 2014b).

Considering that SESAC is a for-profit business that is still a performing rights

organization, publishers may also feel more comfortable working directly with the

organization. If a music publisher places their catalogue within the hands of SESAC they

may be able to obtain the revenue believed to be unobtainable through any ASCAP or

40
BMI efforts. Any negotiations performed by SESAC to generate a higher digital music

payout from digital music streaming websites would also financially benefit SESAC.

Both parties, in this case, would win, and the technology companies may be brought

down to size and forced to start paying their fair share of the digital music streaming

boom. The value of artists and songwriters may even find its way back into music

industry (Christman, 2014b).

Of course, any drawbacks of the potential deal between SESAC and HFA need to

be considered. If ASCAP and BMI do disappear, SESAC and HFA acting as a single

organization could potentially create a licensing monopoly. The results of a licensing

monopoly may mean that digital music streaming websites would be pushed out of the

market due to costs that are too high for these sites to remain in operation. Copyright

protection exists to further creation; but if the price of creation is too high, it may

discourage technology companies and certain artists and songwriters, stifling a certain

realm of creativity that keeps the music industry working.

Although there are consequences for the music industry to consider regarding the

possible deal between SESAC and the HFA, it is unlikely that any negative changes to

the licensing process would happen overnight. Considering all of the recent attention the

music industry is getting, it is hard to believe that a new system would be allowed to

create more chaos. Furthermore, the resulting benefits of SEASAC and the HFA acting as

one organization could be enough to start moving the issues surrounding music licensing

forward. All aspects of this deal need to be considered; but, overall, a deal between two

licensing companies that could result in a bundling of licenses for technology companies

41
seems like a step in the right direction for the music industry, and for creators of content,

at this time (Christman, 2014b).

42
 ISSUES AFFECTING CONSUMERS

Thus far in the shift from ownership to access, consumers have not been forced to

pay the price for free music. Music is easily and instant accessible, and even free in many

cases. Many consumers have opted to pay, such as the 10 million paid Spotify users, but

even more consumers are comfortable sitting through music streaming interrupted by

advertising to keep a free subscription (Spotify, 2014). Yet with an unpredictable future

that could mean higher fees paid by digital music streaming websites to creators of

content, consumers may be asked to pay their fair share too.

Several sources have pointed out that since digital music streaming has become a

reality, there is no shortage of music for users to stream. Spotify has a catalogue of over

20 million songs globally and counting (Spotify, 2014). Pandora offers its users up to 100

personalized stations, with the ability to customize each station according to a user’s

individual preferences (Pandora, 2014). Each digital music streaming website has

something different to offer users in efforts to attract users to their website and, with any

luck, get them to pay for a subscription. After all, access to music is now instant and can

often be reached anywhere, even on a user’s cell phone. In the words of New York Times

writer David Carr (2014), “We are no longer collecting music; it is collecting us on

various platforms.”

Many battles lie ahead of the music industry before the digital music streaming

market becomes a balanced market for technology companies and creators of content,

with each party sacrificing its fair share to keep digital music streaming in business. As a

43
result of these changes, users may be faced with higher subscription fees or a limited

catalogue for free subscriptions to encourage users to pay for subscriptions. For example,

if SESAC purchases the HFA, the cost of licensing fees may rise, and technology

companies will need to find a way to pay for the fees. If the Songwriter’s Equity Act

passes, the mechanical royalty rate paid to creators of content will rise, and again,

technology companies will need to find a way to adjust. Thus far, consumers have been

the only party that has not had to pay for a free and legal digital music streaming reality.

A prosperous future for the music industry may mean consumers have to give up their

“Something for Nothing economy” as it pertains to music to play a role in making the

system work for everyone (Carr, 2014).

44
 CREATING A PROSPEROUS FUTURE

Clearly, the music industry is at a crossroads. It is more important now than it has

ever been for legislation to step in and make changes to the current licensing system so

that a viable market can be made of digital music streaming. More importantly, creators

of content need to start seeing fair market value for their outputs in a way that does not

threaten the digital music streaming structure created by the technology companies.

Sisario notes an important point when he states, “the nature of royalties has changed,

going from larger payments attached to CDs and downloads to fractions of a penny from

streaming services (Sisario, 2013).” At this point, creators of content, which are a highly

valuable part of the success of the music industry, need to start being compensated

accordingly. If the value of what creators of content do and the goods they provide can be

brought back to a reasonable standard, the music industry can begin to move forward

once again.

RIAA SOLUTIONS FOR THE MUSIC INDUSTRY

Recently, the Recording Industry Association of America, or RIAA, has offered

its solutions to the licensing issues that creators of content and digital music streaming

services are currently facing. The RIAA is a trade organization that exists to protect

creators of content and preserve that the music industry be a viable profession for creators

of content (RIAA, 2014). Several of these suggestions, if implemented, could solve

existing issues within the digital music streaming marketplace and bring balance back to

45
an industry that has recently faced much turmoil (Peoples, 2014a). Multiple parties

presented these and other suggestions to Congress in the June 10th, 2014 hearing

(Peoples, 2014c).

The RIAA suggests bundling the necessary licensing rights for digital music

streaming websites could help move the industry forward. If one blanket license existed

for digital music streaming websites that combined the necessary licenses from PRO’s,

SoundExchange, and the HFA, some of the issues in obtaining licenses would disappear,

and court cases such Pandora v ASCAP would remain in history. It would consequently

become easier for PRO’s and technology companies to work together to create a better

digital music market for all involved if rights were bundled (Peoples, 2014a).

An entity that issued bundled licenses would mean both creators of content and

the technology companies could rely on one organization to have their individual needs

met, streamlining the digital music system. As aforementioned, artists and songwriters

who are currently backed by a PRO may even see a better licensing atmosphere with the

bundling of rights and fewer parties involved in the streaming system. Furthermore, if

SESAC follows through with the purchase of the HFA, the idea of bundling necessary

licenses may become a reality for the music industry. Bundling licenses is a good step

forward, but it will not solve every problem within the digital music streaming industry

today.

At the heart of the RIAA suggestions is the importance of establishing set

licensing rates, whether for terrestrial radio or for mechanical licenses (Peoples, 2014a).

This seems to be where the real issues within the digital music streaming market lie. A

system that offers creators of content payment without set rates has allowed the industry

46
to cut the value of creators of content, and has allowed them to be the ones who are stuck

paying for a free market when a free market is not sustainable for anyone. As Kyle

Billings (2013) writes, “Only a legally mandated performance right can bring the entire

industry forward.”

Congress needs to be the voice of reason when it comes to establishing what is

fair in the digital music streaming market. This task, despite the challenges it presents to

legislation, has certainly become necessary in order to keep the music industry flowing

and balanced. Several parties within the music industry have called for help in dealing

with the current issues at hand. Mr. Portnow of the Recording Academy suggested in the

first of two Music Licensing Hearings that Congress adopt a “Music Omnibus Bill” to

establish fair treatment and fair pay for all creators of content, regardless of which

platform their works are presented on (USHR02: Music Licensing, 2014). Such a bill

would allow Congress to solve many issues within the music industry in one fell swoop,

allowing both Congress and the music industry to finally move on and focus on creation

rather than protection or prosperity.

The main issue with current copyright and licensing standards is that the digital

market was not in existence when the current laws were created (Peoples, 2014a). It is

difficult to control a system or bring it into the modern age when legislation simply does

not exist that has previously set the standard for what is acceptable. Both creators of

content and digital music streaming websites have their own belief as to what is an

acceptable royalty rate – it is up to Congress to decide which party’s belief should

become a reality. According to Brian Day (2009), “It is incumbent upon Congress to

ensure that those who host performances that increasingly substitute for sound recording

47
reproduction royalties compensate the copyright holders in an equitable and sustainable

manner.” The key to this sentence is, “equitable and sustainable.” Congress needs to be

the voice of reason when it comes to establishing what is fair in the digital music

streaming market once and for all.

48
 CONCLUSION

As the music industry continues to develop its digital market, many changes will

take place within the legislative landscape. Legislative acts were put in place to resolve

specific industry issues in the twentieth century, and new legislative acts will come into

being in the twenty first century too. The benefit of all these changes to the music

landscape is that new revenue streams exist and are being created for creators of content,

and consumers are listening to more music than ever before.

For all of its potential long-term benefits, the digital music streaming industry has

certainly presented many challenges to its players thus far. Technology companies have

struggled to become profitable in attempts to keep up with the necessary licensing fees

and royalties and may continue to struggle as changes are enacted. The efforts of

technology companies to keep profits from creators of content in order to make

themselves profitable may soon have to end as creators of content begin to see fair

market value for their work. Technology companies will face new challenges as they

navigate a changed music licensing landscape. Creators of content may see more revenue

from the stream of digital music, and may even find the value of their creative efforts

restored over time; but there may be consequences to this victory as well.

As the digital music streaming industry works towards providing profitability and

sustainability, even consumers may have to pay a price to keep the digital music

streaming market alive. But in all of the turmoil lies the hope for a prosperous future – a

profitable digital music streaming industry can exist if changes to the current system

49
occur. A balance needs to be established within the music industry so that technology

companies are able to profit without devaluing creators of content, and long-standing

efforts for these changes are beginning to be heard by those with the power to initiate

change. Creators of content can be fairly compensated without putting the technology

companies out of business, but the definition of ‘fair’ as it pertains to the digital music

streaming industry first needs to be established by Congress.

Effort and cooperation by many parties will absolutely be needed as the landscape

changes, but a successful future for the digital music streaming industry is possible. In all

of the chaos, there is still new music to be heard, and there are still consumers who are

eager and ready to listen. As Placido Domingo, chairman of the International Federation

for the Phonographic Industry, wisely reminds us in the Digital Music Report (2014),

“While the formats have changed, the music remains.

50
 APPENDIX A. ABBREVIATIONS AND ACRONYMS

ASCAP – American Society of Composers, Authors, and Performers

BMI – Broadcast Music Incorporated

DMCA – Digital Millennium Copyright Act

DPRSRA – Digital Performance Right in Sound Recordings Act

HFA – The Harry Fox Agency

IFPI – International Federation of the Phonographic Industry

IFRA – Internet Radio Fairness Act

PRO – Performing Rights Organization

RIAA – Recording Industry Association of America

SESAC – Society of European Stage Authors and Composers

51
 REFERENCES

Adegoke, Y. & Gensler, A. (2014, May 28). Apple buys Beats in $3 billion deal: Iovine,

Dr. Dre to join tech giant. Billboardbiz.

http://www.billboard.com/biz/articles/news/digital-and-mobile/6099405/apple-

buys-beats-in-3-billion-deal-iovine-dr-dre-to

ASCAP. (n.d.) Support the #Songwriterequityact: Get the facts. Get involved. ASCAP.

Retrieved from http://www.ascap.com/playback/2014/02/action/songwriter-

equity-act.aspx

Billboard. (2014, May 29). iTunes store customer spending down 24% (report).

Billboardbiz. Retrieved from http://www.billboard.com/biz/articles/news/digital-

and-mobile/6106217/itunes-store-customer-spending-down-24-report

Billings, K. (2013, November 22). A closer look at the Clear Channel and Warner Music

Group licensing deal. Hypebot. Retrieved from

http://www.hypebot.com/hypebot/2013/11/looking-more-closely-at-the-deal-

between-clear-channel-and-warner-music-group.html

BMI. (2014) About. BMI. Retrieved from http://www.bmi.com/about

Brabec, J. & Brabec, T. (2011). Music, money, and success: The insider’s guide to

making money in the music business. New York: Schirmer Trade Books.

52
Brustein, J. (2014, May 21). Spotify hits 10 million paid users. Now can it make money?

BloombergBusinessweek. Retrieved from

http://www.businessweek.com/articles/2014-05-21/why-spotify-and-the-

streaming-music-industry-cant-make-money

Busch, R. (2012, June 28). Look before you leap: Is Big Machine’s new deal with Clear

Channel a good long term strategy? Forbes. Retrieved from

http://www.forbes.com/sites/richardbusch/2012/06/28/look-before-you-leap-is-

big-machines-new-deal-with-clear-channel-a-good-long-term-strategy/

Carr, D. (2014, June 8). Free music, at least while it lasts. The New York Times. Retrieved

from http://www.nytimes.com/2014/06/09/business/media/free-music-at-least-

while-it-lasts.html?ref=business&_r=1

Christman, E. (2013, September 12). Here’s why Warner Music’s deal with Clear

Channel could be groundbreaking for the future of the U.S. music biz (analysis).

Billboardbiz. Retrieved from

http://www.billboard.com/biz/articles/news/5694973/heres-why-warner-musics-

deal-with-clear-channel-could-be-groundbreaking

Christman, E. (2014a, February 25). New legislation seeks to modernize Copyright Act to

benefit songwriters. Billboardbiz. Retrieved from

http://www.billboard.com/biz/articles/news/publishing/5915717/new-legislation-

seeks-to-modernize-copyright-act-to-benefit

53
Christman, E. (2014b, May 23). SESAC parent considers acquisition of Harry Fox

Agency (exclusive). Billboardbiz. Retrieved from

http://www.billboard.com/biz/articles/news/publishing/6099105/sesac-parent-

considers-acquisition-of-harry-fox-agency

Christman, E. (2014c, June 4). U.S. Department of Justice to review ASCAP and BMI

consent decrees. Billboardbiz. Retrieved from

http://www.billboard.com/biz/articles/news/legal-and-management/6106492/us-

dept-of-justice-to-review-ascap-and-bmi-consent

Day, B. (2009). The super brawl: the history and future of the sound recording

performance right. Michigan Telecommunications and Technology Law Review,

16(1), 192 – 211. Retrieved from

http://repository.law.umich.edu/mttlr/vol16/iss1/5/

Donnelly, B., Aguirre, D., Munoz, K., & Sparkler, A. On-demand streaming rights and

rates: How they work and what they are worth. (2014). Paper presented at the

meeting of SXSW CLE 2014, Austin, TX.

Exclusive Rights in Copyrighted Works, 17 U.S.C. § 106 (2011).

Frenzel, L. (2012, October 1). What’s the difference between satellite radio and HD

radio? Electronic Design. Retrieved from

http://electronicdesign.com/communications/what-s-difference-between-satellite-

radio-and-hd-radio#3

Hansell, S. (2008, August 11). The iTunes store: Profit machine. The New York Times –

Bits. Retrieved from http://bits.blogs.nytimes.com/2008/08/11/steve-jobs-tries-to-

downplay-the-itunes-stores-profit/?_php=true&_type=blogs&_r=0

54
HFA. (2013a). Digital Definitions. Harry Fox Agency. Retrieved from

https://www.harryfox.com/public/DigitalDefinitions.jsp

HFA. (2013b). General information: F.A.Q. Harry Fox Agency. Retrieved from

https://www.harryfox.com/public/FAQ.jsp

Holmes, D. (2014, May 21). As Spotify hits 10M paid subscribers, here’s why paying

customers, not ads, will save the music industry. Pandodaily. Retrieved from

http://pando.com/2014/05/21/as-spotify-hits-10m-paid-subscribers-heres-why-

paying-customers-not-ads-will-save-the-music-industry/

International Federation of the Phonographic Industry. (2014). Digital Music Report

2014. Retrieved from http://www.ifpi.org/downloads/Digital-Music-Report-

2014.pdf

Internet Radio Fairness Act of 2012. S.3609, 112th Cong. (2012).

Knopper, S. (2012, December 3). Pandora clashes with musicians over song payments.

Rolling Stone. Retrieved from http://www.rollingstone.com/music/news/pandora-

clashes-with-musicians-over-song-payments-20121203

Lamy, J., Duckworth, C. & Kennedy, L. (1997). RIAA settles favorably in case against

manufacturer of copyright circumvention device. RIAA. Retrieved from

http://www.riaa.com/newsitem.php?news_year_filter=1997&resultpage=&id=BE

D8AC6A-69B1-7885-BAF6-DFAD4B942C08

Landes, W. & Lichtman, D. (2003). Indirect liability for copyright infringement: Napster

and beyond. Journal of Economic Perspectives, 17(2): 6. doi:

10.1257/089533003765888467

55
Levine, R. (2011). Facing the music: how the Internet devastated the music business. In

Free Ride: How digital parasites are destroying the culture business, and how the

culture business can fight back (pp. 35 – 78). New York: Anchor Books.

Lewis, R. (2012, November 30). Internet Radio Fairness Act debate opens in

Washington. Los Angeles Times. Retrieved from

http://articles.latimes.com/2012/nov/30/entertainment/la-et-ms-internet-radio-

fairness-act-pandora-congress-hearings-20121129

Moser, D. J. & Slay, C. L. (2012). Music Copyright Law. Boston, MA: Course

Technology.

musicFIRST. (2014a). About us: History. musicFIRST. Retrieved from

http://musicfirstcoalition.org/history

musicFIRST. (2014b). Get the facts: Internet Radio Fairness Act. musicFIRST. Retrieved

from http://musicfirstcoalition.org/irfa

Owsinski, B. (2013, September 13). The Clear Channel – Warner Music deal: not what

it’s cracked up to be. Forbes. Retrieved from

http://www.forbes.com/sites/bobbyowsinski/2013/09/16/the-clear-channel-

warner-music-deal-not-what-its-cracked-up-to-be/

Pagliery, J. (2014, March 19). Pandora raises subscription fees. CNN Money. Retrieved

from http://money.cnn.com/2014/03/19/technology/innovation/pandora-fees/

Pandora. (2014). About Pandora. Pandora. Retrieved from

http://www.pandora.com/about

56
Peoples, G. (2012, October 10). Business Matters: The truth about Pandora’s payments to

artists. Billboardbiz. Retrieved from

http://www.billboard.com/biz/articles/news/1083455/business-matters-the-truth-

about-pandoras-payments-to-artists

Peoples, G. (2013, January 3). Internet Radio Fairness Act slips into hibernation.

Billboardbiz. Retrieved from

http://www.billboard.com/biz/articles/news/1510514/internet-radio-fairness-act-

slips-into-hibernation

Peoples, G. (2014a, May 27). Exclusive: How the RIAA would fix music licensing.

Billboardbiz. Retrieved from http://www.billboard.com/biz/articles/news/record-

labels/6099349/exclusive-how-the-riaa-would-fix-music-licensing

Peoples, G. (2014b, May 29). RESPECT Bill would put golden oldies under Federal

copyright. Billboardbiz. Retrieved from

http://www.billboard.com/biz/articles/news/6106225/respect-bill-would-put-

golden-oldies-under-federal-copyright

Peoples, G. (2014c, June 10). ‘Free’ and ‘Market’ often repeated at music licensing

hearing. Billboardbiz. Retrieved from

http://www.billboard.com/biz/articles/news/digital-and-mobile/6114165/free-

market-often-repeated-at-music-licensing-hearing

Project72. (n.d.) About the project. Project72. Retrieved from http://project-72.org/

57
Rae, C. (2012, July 26). Guest opinion: Clear Channel/Big Machine deal is step in right

direction, but not far enough, by Future of Music’s Casey Rae. Billboardbiz.

Retrieved from http://www.billboard.com/biz/articles/news/1084484/guest-

opinion-clear-channelbig-machine-deal-is-step-in-right-direction-but

Reuters. (2010, February 25). Sirius XM posts profit, its first time since merger. The New

York Times. Retrieved from

http://www.nytimes.com/2010/02/26/technology/26radio.html?_r=1&

RIAA. (2014). For students doing reports. RIAA. Retrieved from

http://www.riaa.com/faq.php

Simpson, I. (2014, May 20). Dr. Dre’s Beats Electronics has upended the tech industry.

LA Weekly. Retrieved from http://www.laweekly.com/2014-05-22/music/dr-dres-

beats-electronics-has-upended-the-tech-industry/

Simson, J. &Abdo, K. (2014). From owning to using music: Transactional music

attorneys struggle with a changing landscape and its financial realities. Paper

presented at the meeting of SXSW CLE 2014, Austin, TX.

SiriusXM. (2014, January 7). SiriusXM exceeds 2013 net subscriber target: Issues 2014

subscriber and free cash flow guidance. SiriusXM: Investor Relations. Retrieved

from http://investor.siriusxm.com/releasedetail.cfm?ReleaseID=817666

Sisario, B. (2012, November 6). Pandora opens a new front in its royalty war. The New

York Times: Media Decoder. Retrieved from

http://mediadecoder.blogs.nytimes.com/2012/11/06/pandora-opens-a-new-front-

in-its-royalty-war/

58
Sisario, B. (2013, September 30). Defining and demanding a musician’s fair shake in the

Internet Age. The New York Times. Retrieved from

http://www.nytimes.com/2013/10/01/business/media/defining-and-demanding-a-

musicians-fair-shake-in-the-internet-age.html

Sisario, B. (2014a, February 13). Pandora suit may upend century-old royalty plan. The

New York Times. Retrieved from

http://www.nytimes.com/2014/02/14/business/media/pandora-suit-may-upend-

century-old-royalty-plan.html

Sisario, B. (2014b, March 20). Pandora wins a battle, but the war over royalties

continues. The New York Times. Retrieved from

http://www.nytimes.com/2014/03/21/business/media/pandora-wins-a-battle-but-

the-war-over-royalties-continues.html?_r=0

Sisario, B. (2014c, May 9). Apple’s pursuit of Beats may foretell a shift. The New York

Times. Retrieved from http://www.nytimes.com/2014/05/10/technology/beats-

talks-may-foretell-apple-shift.html?_r=0

Sommer, J. (2014, May 17). The harmony they want to hear. The New York Times.

Retrieved from http://www.nytimes.com/2014/05/18/business/the-harmony-they-

want-to-hear.html?_r=0

Spahn, L. (2013, November). EMI v MP3 Tunes: Business model proposals for the music

industry in the context of emerging technology. Berkeley Journal of

Entertainment and Sports Law, 2(1), 153 – 179. Retrieved from

http://scholarship.law.berkeley.edu/bjesl/vol2/iss1/8/

59
Spotify. (2013). Spotify Explained. Spotify Artists. Retrieved from

http://www.spotifyartists.com/spotify-explained/

Spotify. (2014). Information. Spotify. Retrieved from

http://press.spotify.com/us/information/

The Register of Copyrights before the Subcommittee on courts, the Internet and

intellectual property of the House Committee on the Judiciary, 108th Cong. (2004,

March 11) (Statement of Marybeth Peters).

Thomson, K. (2004, October 13). SoundExchange: A digital primer. Future of Music

Coalition. Retrieved from https://futureofmusic.org/article/soundexchange-

digital-primer

U.S. Const. art. I, § 8.

USHR02: Hearing: Music licensing under Title 17 part one: Subcommittee on courts,

intellectual property, and the Internet, Committee on the Judiciary (2014, June

10) (testimony of Neil Portnow).

Warren, Z. (2014, January 21). Pandora battle over song publishers’ rates set to hit

Federal Court. Inside Council. Retrieved from

http://www.insidecounsel.com/2014/01/21/pandora-battle-over-song-publishers-

rates-set-to-h

60