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The music industry has been upended by the digital revolution over the past decade. Yet despite tremendous changes in the way music is distributed and consumed in the digital world, the industry is still subject to music licensing and songwriting regulations dating back 75 years, much to the detriment of the creative community.
Performing rights organizations representing this community have been trying to overhaul this outdated licensing regime for years to create a fairer royalty payout system for songwriters, with the wider music industry looking on to see what further operational changes might be required if efforts paid off.
Recently, the Department of Justice has surprised everyone by not only rejecting the music industry's plea to overturn the outdated 1941 legislation, but also deciding to change a policy known as 100 percent licensing on performing rights organizations.
The new policy means any party controlling a part of a composition can issue a license for the use of the whole thing. If upheld, it will not only create enormous complications for the music industry, both from an administrative and legal standpoint, but it also could create a race to the bottom in royalty rates benefiting corporate interests at the expense of songwriters, particularly given the growing genre-wide trend for multiple songwriters to collaborate on great music. The co-writer of Tim McGraw's chart-topping song, "Live Like You Were Dying", has already said he's not sure if he would have done it if these new rules were in effect when he wrote the award-winning song with his creative partner.
So what does this teach us? Well, the DoJ's decision was a clear response to the meteoric rise of music streaming technology. But legislators need to understand that streaming is here to stay. Streaming has changed everything, giving songwriters great potential to reach new audiences in different parts of the world, helping to break down barriers and giving opportunities to new talent -- demonstrating to the world that great songs can come from anywhere. Streaming can give songwriters the potential to earn from hundreds of millions of more people than those who have bought music in the past.
Criticism of streaming services has grown in the past few years due to the low payouts to even the most successful artists and songwriters. The problem is deals have been struck based on historic delivery models: physical rather than digital distribution.
Too often the industry talks about streaming as though it was just the latest 'format' after downloads and CDs. It isn't.
Streaming has risen by over 97 percent over the past year, while CD and digital album sales have dropped by 11.6 and 18.4 percent respectively, according to Nielsen. The International Federation of the Phonographic Industry reported streaming has not only grown to encompass 19 percent of the global music industry's revenues in 2016, but also represents 43 percent of total digital revenue. Streaming may very well be the industry's primary source of digital revenue in the years to come.
Streaming challenges virtually every aspect of the established music business from the process of breaking a new artist, to the balance of repertoire people listen, to the balance between tracks and albums to the switch to effectively create a micropayment economy for songwriters and artists.
In a way, streaming is the ultimate meritocracy. The old music industry approach to talent looks even more old-fashioned in the streaming age. By embracing fairness, transparency and service we have an attitude tailor-made for the streaming age.
There's no doubt the digital age has transformed access to music and created opportunities for songwriters to be heard by a far wider audience than ever before. Millions of music lovers across the world recognize the huge value of great songwriting and want to see songwriters thrive.
We need to spread the word: We need greater recognition from regulators that songwriters are already operating in a micropayment economy and need their lives made easier, not harder. As pioneers in the music industry, we need to foster digital-friendly services and working environments. The music industry is constantly modernizing itself and will continue to embrace new technologies; discouraging consumers, singers and songwriters from streaming through hostile policies only reinforces a regressive industry state.
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