WASHINGTON (Dec. 8, 2015) – Musicians and songwriters are hampered in their ability to profit from emerging digital music models by an opaque system in which online streaming services can’t access complete and transparent catalogs of who owns which copyrights, making it difficult to pay appropriate royalties, according to astudy released today by the R Street Institute.
Under a century-old system, music publishing rights are managed by performance rights organizations (PROs) like the American Society of Composers and Publishers (ASCAP) or Broadcast Music Inc. (BMI).  The PROs serve as agents to receive royalty fees that ultimately are paid out to the artist.

“As time has progressed and new technologies have been developed, our means of listening to music have evolved from terrestrial broadcast radio to vinyl record to tape to compact disc to satellite broadcast radio to digital download to, most recently, digital noninteractive radio and digital interactive radio,” said R Street Associate Fellow Sasha Moss, the study’s author. “With each new medium, new ways are found to manipulate the system of copyright and muddy the waters when it comes to artist royalties.”

For decades, the system of licensing performance rights in music generally has been governed by antitrust consent decrees reached with the two largest PROs. However, recently, disputes have erupted with streaming services, as major labels have withdrawn their rights from the PROs without disclosing their full catalog of songs. Particularly given how complex claims of music copyright prove to be, this has thrown the market into a kind of chaos.

“If a publisher chooses to withdraw its catalog from a PRO, but does not disclose which songs are part of that catalog, digital services are faced with a choice of shutting down their business or facing crippling copyright infringement liability,” said Moss. “Knowing this, labels have used this tactic to force broadcasters to accept overzealous royalty terms.”

Moss suggests that an open, transparent and fully monetized catalog, making use of crowdsourcing technology, would be the best method for content companies and technology companies to work together.