streaming revenue RIAA still hates the DMCA, even as streaming revenues soar

[Reefa]

 

Things are looking up for music streaming in terms of revenue, but good numbers are little solace for the recording industry that isn't seeing the returns it wants on digital music. And the Recording Industry Association of America is still hoping for a change to the DMCA, which remains a major irritant.

 

According to the International Federation of the Phonographic Industry’s annual report, global revenue from recorded music grew 3.2 percent to $15 billion (£10.5 billion) in 2015. That's the biggest increase over the past two decades, which have seen mostly declining or negligible gains as consumers moved from costly physical formats like CDs to song downloads and then streaming.

 

That boost is due to a 45 percent increase in revenue from music streaming, which now makes up half of the world's digital music revenue. For the first time, digital music revenues surpassed the revenue from physical music sales of items such as CDs. Despite growing revenues, however, the music industry is still unhappy with the digital music landscape. The IFPI's Chief Executive Frances Moore mentions the "value-gap" between the amount of music consumed for free on "user-upload" sites such as YouTube and the money returned to music rights holders.

 

"This should be great news for music creators, investors and consumers. But there is good reason why the celebrations are muted: it is simply that the revenues, vital in funding future investment, are not being fairly returned to rights holders," Moore writes in the report. "The message is clear, and it comes from a united music community: the value gap is the biggest constraint to revenue growth for artists, record labels and all music rights holders. Change is needed...."

 

The big issue is that the number of users consuming music over free, ad-supported sites like YouTube completely outnumbers the users paying to stream music over subscription services like Spotify (YouTube has yet to release any official numbers for its new subscription service, YouTube Red). The report shows that in 2015 there were an estimated 900 million users choosing free, ad-supported sites for music, and that translated to about $634 million in revenue for the global music industry, or 4 percent of global revenue. In the same year, the 68 million paying music-listeners (up from 41 million in 2014) generated about $2 billion in revenue for the global music industry.

 

Record labels have been licensing their catalogs to YouTube for years, mostly because of an adapt-or-die mindset. In the beginning, record labels wanted to get as much revenue as possible from ad-supported plays, but there was (and still is) fear that if they don't license those catalogs, users will upload entire albums to YouTube.

 

In 2008, YouTube rolled out its "Content ID" system which helps crack down on illegally uploaded content, and the IFPI sends millions of takedown notices to remove illegally uploaded tracks. However, the IFPI report comes at an interesting time. Many record labels will be renegotiating contracts with YouTube soon, and while the report shows good things for music streaming revenue, it also shows that free, ad-supported music streaming isn't going anywhere anytime soon.

 

In an interview with Re/code, Recording Industry Association of America President Cary Sherman discussed in depth about how record labels want to get better deals from YouTube in terms of revenue per stream, but they're limited by the 1998 Digital Millennium Copyright Act that protects companies that rely on user-uploaded content.

 

"We accept the inevitability of death," Sherman said in the interview. "It doesn’t mean we have to like it. There is now under way a study of whether the DMCA is actually effective and fulfilling its intended purpose, being conducted by the Copyright Office, and it has given us an opportunity for the community to collect our thoughts about just how dysfunctional the DMCA actually is. And to actually tell the government about it."

 

Also, the threat of removing those catalogs is very real, as record labels still fear multiple user-uploaded tracks and albums. "There are 100 copies of a song," Sherman explains. "We can’t just say to YouTube 'we didn’t license this Pharrell song, take it down.' They will not just take down all 100 copies. They’ll take down only the one file that we’ve identified. We have to find every one of them, and notice them, and then they’re taken down, and then immediately put right back up. You can never get all the songs off the system. If we had a system where once a song was taken down, you had a filtering system that prevented it from going back up, we wouldn’t have to be sending hundreds of millions of notices on the same content over and over again."

 

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