Ray Hair, president of the American Federation of Musicians, argues in a Billboard bulletin that the licensing deal between record label Naxos and the streaming service Pandora is unfair to artists. ‘This is just the latest example of exploitation toward artists and musicians that Congress and AFM seek to prevent,’ he writes. Read his full argument below.

 

Guest Post: Is Pandora’s Licensing Deal With Classical Label

Naxos Unfair to Professional Artists?

BY RAY HAIR, AMERICAN FEDERATION OF MUSICIANS

Members of the American Federation of Musicians (“AFM”) continue to be deeply

concerned about greed and profiteering in the music industry, at the expense of those who

create music. Professional musicians deserve to be treated better. We make all the music,

but it seems like everyone else makes all the money.

We are alarmed by the agreement recently reached between Pandora and Naxos, the

world’s leading classical music label, on a multi-year US license for the entire Naxos

catalog. We were concerned when their joint announcement was notably silent on any

mention of fair and direct payment of royalties to artists. As AFM members who record

classical music are keenly aware, professional musicians receive royalties directly

and immediately when Pandora uses the statutory license. Pandora has repeatedly and

publicly boasted about the supposed benefit it provides to artists, including in their sworn

testimony to the House Judiciary Subcommittee, just a few months ago. They praised the

statutory licensing process as an efficient, transparent solution that “must be preserved,”

and specifically applauded the fact that the statutory license ensures that artists and

musicians “actually receive their fair share of the hundreds of millions of dollars in

royalties that services like Pandora pay each year.”

Indeed, direct pay to artists and musicians was supposedly a significant part of Pandora’s

agreement with Merlin, an independent consortium of record labels — there was an entire

paragraph in the Billboard article on the agreement about the fact that artists would still

be paid directly, even if they were on a label subject to that agreement. But nothing in the

Naxos announcement mentions anything about SoundExchange administering payment to

the artists.

Under the law, 50 percent of performance royalties are paid to featured artists, session

musicians and background singers. The other 50 percent of the performance royalties are

paid to the owner of the sound recording (i.e., the owner of the “master”), which can be

a record label or an artist who owns their own masters. So when it comes to orchestral/

classical recordings, the revenue at stake in the Pandora/Naxos deal affects a far greater

number of musicians than what flows from traditional artist recordings, featuring a solo

artist or a group.

That’s why we ask: Where is the commitment from Pandora and Naxos to compensate

the artists and musicians who performed the music in the Naxos library? Have Pandora

and Naxos decided to dump the statutory license to hide the ball and cheat hardworking

artists and musicians out of royalties they’ve rightfully earned?

If so, it appears that Pandora and Naxos want the benefit of a statutory model only when

it suits them — except when they can make an extra buck at the expense of those who

actually make the music.

If Pandora and Naxos executives want to ensure that musicians receive their fair share of

payments, they should require that any direct deals be contingent on labels agreeing that

SoundExchange will continue to administer the artist payments according to the statutory

process.

Unfortunately, this is just the latest example of exploitation toward artists and musicians

that Congress and AFM seek to prevent. When labels and music services deliberately

avoid the statutory license, they erode the value of everyartist. These dark deals hurt the

very people who perform the music that Pandora’s business depends on.

These are hardly the actions of an industry partner seeking to earn the trust and support of

hard working musicians. It sounds more like the same old song, second verse.

Professional musicians and our industry deserve better.

Ray Hair is president of the American Federation of Musicians.

© 2015 Billboard