The online music economy has so far exhibited a winner-take-all dynamic in which a few large labels and superstar artists collect most of the royalties. However, there is a very long tail of creative entities who can barely make a living with the music they make. This is not only unfair but also a direct threat to cultural heritage, e.g. to music that represents various (sub)cultures in a country.
At Music360, we understand the true value of music not only from a scientific perspective but also from the perspectives of creators and music users. We focus on the professional use of background music. Users of music, such as shops, bars, restaurants, sports clubs, cafés, radio & television stations, and other venues, play background music to improve customer well-being, create a brand identity, and ultimately increase revenue. Background music may be live music, music broadcast by radio, streamed music, or music distributed through other means, such as tape or disc
While playing background music, venues are obliged to pay a fee for making music public to artists (called neighboring rights on recordings) and to text & song writers, and composers (called author rights on works). These fees are often mandated by national intellectual property laws and collected by Collective Management Organizations (CMOs). CMOs operate on behalf of all right owners (artists, text & song writers, and composers) in a country and distribute the collected money to these right owners. CMOs may differ in the intellectual property rights (IPR) they collect. Since the decline in sales of CDs and MP3s, neighboring and author rights have become an important source of revenue for rights owners.
Fees should be fair, both in payments to the right holders and in the amount to be paid. This leads to the following three objectives of Music360:
A fair distribution of neighboring and author rights based on the actual use of music. There should be a criterion for dividing the collected money among the eligible right owners. Currently, this is distributed using reference data such as the top twenty radio stations in a country. For each recording (and, related to that, the works), the number of seconds it was played during a time period is counted. That number determines the amount of money right owners receive; the money is distributed proportionally. Because only the top twenty radio stations are considered, this leads to an unfair distribution of money, as local artists who are played in local restaurants, bars, and shops but are not on the radio do not receive money.
There should be fair compensation for the use of music. In the past, many lawsuits were filed over what a reasonable fee actually is. We advocate that this fee be based on the actual value of the music performed at a venue. The current practice is that a shop pays a fee based on its square meters (which has a very inaccurate relationship to the number of people listening to the music). A better metric would be the contribution of music to the customer's positive decision to buy something, or even the increase in revenue.
Information about the value of music should be made widely available and transparent, while respecting confidentiality requirements. Users of that information are the right holders, the venues, but also policymakers. Policymakers often lack insight into the effects of new legislation on both music creators and users. Policymakers at the national and EU levels also need more data, as the importance of cultural heritage at the local level is not measured. Also, during the COVID-19 pandemic, almost all venues closed, and royalties from background music fell significantly. Without data on which music is created, distributed, or used where, policymakers were in the dark about the impact on musical heritage.
