MUSIC CANADA ’ S AMY TERRILL
There is also a lot of fretting over how much streaming services pay “ artists .” Technically speaking , in most cases , streaming services don ’ t pay artists anything . The services pay “ right holders ,” which are publishers , songwriters , and labels . The artists – or “ performers ” – get paid by their label subject to the terms of their record contract , which we ’ ll get into later ).
Let ’ s start with the publisher / songwriter side , where there is significantly more transparency . Keep in mind we ’ re talking only about on-demand streaming services ( i . e . Spotify , Apple Music , Google Play Music , etc .).
“ From a licensee ’ s perspective , when an online service comes to the table , in Canada in any event , there are really four rights that need to be licensed . I would describe it as a quadrant . Half of the pie is for songwriters and music publishers who administer the rights to the musical composition , and the other half is for record companies and performing artists who administer the rights to the sound recording . Sometimes the rights to the composition and to the sound recording for a single track are all controlled by the same person but in most cases they are not , and the composition and sound recording need to be separately licensed . Then within each of those halves , you have the reproduction right and the performing right ,” explains CMRRA President Caroline Rioux . “ In our environment , SOCAN looks after the performing rights on the songwriter / music publisher side and CSI ( SODRAC and CMRRA together ) look after the reproduction side for songwriters and music publishers .”
While the image of a quadrant may make it seem like royalties and revenue are divided evenly , that is not the case . The most recent tariff certified by the Copyright Board of Canada dictates that on-demand streaming services must pay 12.78 per cent of gross revenue to publishers and songwriters , with 5.18 per cent to CSI and 7.6 per cent to SOCAN . But that tariff does not cover every aspect of a service ’ s functionality , particularly those launched after the tariff was certified – such as Spotify , Apple Music , and Google Play Music . To allow those services to legally operate in Canada until a new tariff is certified , which is expected to happen in the fall , CSI and SOCAN negotiated licensing agreements with each service individually based on the same tariff rate but with different splits to account for the change in usage . For example , according to SOCAN ’ s VP of Licensing , Jennifer Brown , when the service offers on-demand streaming with the ability to cache songs , what she terms “ hybrid services ,” then the total remains 12.78 per cent but the split is 5.43 to SOCAN and 7.35 to CSI . The negotiated percentage rates , any applicable minimum rates , and the ratio split between SOCAN and CSI vary from service to service based on the different functionality and offerings to users . “ For streaming services that operate as part of a subscription paid by a consumer , the revenue is a percentage of revenue alongside certain minimum rates so that when there are free trials or heavily discounted rates given for whatever promotion the service says is needed , then there are certain minimum rates that kick in , in order to not erode the value of the works ,” says Rioux of the CMRRA and CSI . The royalties SOCAN and CSI receive is then divided between their respective members . The members ’ royalties are divided according to the number of streams their compositions have received on the individual on-demand services . Those royalty payments also depend on whether songs were streamed as part of a free ad-support tier or as part of a paid subscription . Streams on the paid tier currently pay out a higher royalty rate than streams on the ad-supported tier because , in part , the revenue pool from paid subscriptions is divided by a much smaller number of streams . “ There is always going to be a
CMRRA ’ S CAROLINE RIOUX
pool of rights holders who are just very difficult to reach out to ,” says Rioux . “ Under the tariffs and our agreements , the services have to send us all of their usage data .
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