Why Spotify’s ex-Global Head of Music Publishing thinks streaming services should be paying songwriters more money - Music Business Worldwide

Why Spotify’s ex-Global Head of Music Publishing thinks streaming services should be paying songwriters more money – Music Business Worldwide

The following MBW op/ed comes from Adam Parness, the former Global Head of Music Publishing at Spotify from 2017 to 2019. Parness left Spotify just as it was revealed that the service was appealing a 44% pay rise for songwriters and music publishers from streaming in the United States, a legal process that is still ongoing.

Prior to joining Spotify, Parness was Head of Publisher Licensing and Relations at Pandora, as well as holding music and content-related roles at Amazon, Rhapsody International, and RealNetworks. Today, he is a music industry consultant and sits on the advisory board of companies including Audoo and Prescient.

Parness’s words below are based on a keynote speech given at the most recent Annual General Meeting of IMPEL – a network of independent music publishers who collectively license their rights to digital platforms.

We now find the state of the digital music business in times that are more exciting and yet more challenging than ever for songwriters and independent music publishers.

How do we as an ever-changing industry ensure that we’re continuing to grow, nurture and support the livelihoods of the creative communities that allow music streaming to exist in the first place?  Livelihood means more than exposure and celebration of the craft of songwriting, though I do think that is absolutely important as well. But exposure and visibility don’t go nearly far enough.  

We as an industry – publishers and streaming services and record labels and others – need to collectively ensure that it is economically viable for songwriters to do what they do best.

While revenues from various streaming formats have been a much welcomed boon for the music industry, let us never forget that there is no “streaming sound”, no “Spotify sound”; the sounds we hear come from songs that pour out of the hearts and minds of songwriters.

We’ve seen now from reporting and earnings data that music streaming services are almost purpose-built for the times in which we live. They are, thankfully, almost COVID-proof. Listening habits are shifting in step with the changes in our daily routines, but we’re still seeing record digital growth in users and revenues from nearly all regions of the world.

“The sounds we hear come from songs that pour out of the hearts and minds of songwriters.”

Key to the business performance and user growth of music streaming services is the vibrant songwriter and independent music publishing communities. As with their independent label counterparts, independent music publishers are experiencing record growth – especially in streaming.

According to the IMPF, independent publishers now constitute a 27% market share of the global value of the music publishing business. And in some areas where local content is particularly key, independent publishers healthfully over-index this figure.

Some of the markets in which local, independent content plays a particularly key role are those markets most poised for digital user and revenue growth in the next 3-5 years and beyond.

It’s great to see independent publishers performing at this type of strength with increased market share. And it’s great that we’ve now stood up a healthy digital ecosystem that is able to withstand most effects of COVID-19 and related business shutdowns. So, why, do we still have so many gaps and areas of friction between the songwriting / publishing communities and music streaming services?

Let’s start with what really needs to be said: Streaming services should be contributing more revenue to songwriters and independent music publishers.

Volume and growth levels of royalties from streaming services are not the only pertinent metrics. Streaming rates globally need to increase – and they absolutely can increase from their current levels without creating untenable situations for music streaming services.

“Streaming services should be contributing more revenue to songwriters and independent music publishers.”

Economic terms need to be more favorable to songwriters and publishers than they currently are. We need to grow the overall pie and the percentage of the pie that goes to songwriters.

No music equals no music streaming services. If we’re to get to a better vision for songwriters and music publishers, we need to see more of a genuine understanding from the music streaming service community concerning the very real and measurable values that songwriters and publishers bring to their platforms.

Music is not fungible; and songwriters and independent music certainly are not fungible. Songwriters and music publishers are more than a market share number on a spreadsheet.

The value of songwriters’ and publishers’ intellectual property in the streaming ecosystem should be measured by the very real contributions made to the platforms’ success. Not shoehorned into a commercial licensing model that suits a platform’s desire to monetize (or not monetize) and grow users in a particular manner that may very well undervalue musical works.

The works of songwriters directly contribute to user growth, revenue growth, conversion rates, and engagement on music streaming platforms and associated devices. This means that in addition to improving the economics and structures under songwriters and independent music publishers are currently paid, we will need to continue to find new and innovative ways to license that recognize the direct value that these musical works are bringing to the growth of streaming and subscription platforms. And, to be clear, being independent doesn’t mean you should be afforded lesser rates or other terms.

“The value of songwriters’ and publishers’ intellectual property in the streaming ecosystem should be measured by the very real contributions made to the platforms’ success.”

Even in the digital economy, you are more than your market share. Independent music publishers continue to be the creative and economic stewards of songs, developers of songwriters in the earliest stages of their professional careers, and should be compensated in the digital era in ways that reflect the measurable value that they bring to digital music platforms’ revenues and user growth.

This is more true than ever before in today’s world of playlisting, programming strategies, and personalized recommendations. Songs hold a higher value in this type of listening environment.

Ultimately what we need to see is a deeper understanding from policy makers and senior-most leadership at music streaming services of the value that songs bring to their platforms, how those songs resonate with listeners, create customer delight, reduce churn, keep users paying and engaged, and attract advertisers and brands. And we need music streaming services to be willing to adopt structures and terms that are truly demonstrative of this tacit understanding.

Songwriters and music publishers should not be treated as a drag on your margin. Compensating songwriters in accordance with the value that they bring to music streaming platforms is good business and good for your business.

“Songwriters and music publishers should not be treated as a drag on your margin.”

In this regard, concrete actions are more important than words and statements – and such actions need to become the litmus tests by which we judge individual partners and whether they’re acting with fairness and respect towards songwriters and music publishers.

Unfortunately, some of the actions we’ve seen deliberately taken by various platforms in recent times to adversely affect songwriter and music publisher incomes are detrimental to the cause of achieving fair pay for songwriters. Ultimately, we need to find a way to drive towards a deeper understanding with the music streaming services around the value that songwriters and songs truly bring to their platforms. Again, compensating songwriters in accordance with the value that they bring to music streaming platforms is good business and good for your business.

It’s great that we’re creating an environment that has brought more recognition and celebration to the songwriters in the rooms and the music publishing community that supports them. We have wonderful podcasts like And The Writer Is… and songwriter hubs on both Spotify and Apple Music that do just that.

It’s great that we have songwriter and other contributor credits on some of the digital platforms, and we should have them everywhere music is streamed. We absolutely love analytics tools that provide publishers with greater insights and understandings about their repertoire performance on digital platforms, and we think those types of tools can open up powerful decision making capabilities.

And we think that publishers should pursue and welcome exciting creative partnership opportunities with streaming services and other platforms that allow songwriters and publishers to play a more active hand in promoting their bodies of work. Let’s do more of all of this.

“The digital music ecosystem simply does not work if we can’t sustain licensing models and royalty rates that make everything else feasible.”

Of course, the ongoing development and improvement of technologies that allow us to deal with the myriad of operational complexities in metadata and matching remains a critical issue. The music publishing community should continue working collaboratively with streaming services and other platforms to improve these systems so that all royalties due to songwriters and publishers songwriters are recognized and distributed with full transparency in an efficient and timely manner.

But each of these things are not mutually exclusive. We need to focus on a vision of operational excellence + opportunities for richer creative participation + economic terms and structures that support the livelihoods of songwriters. We simply cannot accept the first and second without the third. The digital music ecosystem simply does not work if we can’t sustain licensing models and royalty rates that make everything else feasible. Things do need to progress rapidly. No songwriters, no music; it’s that simple.

It bears repeating – streaming services should be contributing more revenue to songwriters and independent music publishers. Streaming rates globally should increase – and they absolutely can increase from current levels without creating untenable situations for music streaming services.

In order to get there, we will need to work collaboratively towards a common and better understanding with music streaming services concerning the very real and measurable values that songwriters and independent publishers bring to their platforms.

“we need to work collaboratively towards a common and better understanding with music streaming services concerning the very real and measurable values that songwriters and independent publishers bring to streaming platforms.”

We are very optimistic for the future of independent music publishers. Despite the COVID impacted world we live in, it’s an exciting time for the music business, songwriters, and music publishers. We’re bullish on the growth of our industry and of streaming music in particular, and believe that we’re still in early phases of that growth.

We’re excited that streaming has globalized our listening habits and allowed us to limitlessly discover new music every day from all around the world with ease – and to rediscover our musical pasts. And we’re bullish on those that serve the independent music publisher community every day with passion and steadfast advocacy for songwriters.

So let’s keep this up, always continue to fight for the rightful value of songs, and let’s work hard to ensure that songwriters are able to celebrate and meaningfully benefit from the economic gains that the fruits of their creations bring to digital streaming platforms.

[Adam Parness delivered an unabridged version of the above at IMPEL’s Annual General Meeting in late 2020. Says Parness: “The invitation came as IMPEL, alongside IMPF, works to improve publishers’ relationships with DSPs and progress the economic standing of independent publishers and songwriters. Both organisations understand that real progress can only come with concrete actions taken by the music community, including the willing participation and action of music streaming services, to improve the economic standing of songwriters and music publishers. I’ve said before that it is my career mission to advance the livelihood of songwriters, artists, and producers, and I am pleased to see IMPEL and IMPF jointly working across this mission.”]

 Music Business Worldwide