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SXSW Music 2014

The Digital Music Performance Royalty Apocalypse

The digital music streaming market is over fifteen years old, and yet in all that time not a single music service has ever posted an annual (much less cumulative) profit. Is it possible, as content owners claim, that this is due solely to mismanagement by digital music services and their inability to devise a workable revenue model? Or is the rent just too damn high?

This presentation will discuss the complex web of music licensing issues facing digital music services, the history of those services and recent developments threatening to drive digital music royalty costs even higher in 2014 and beyond. The presentation will also cover the problems created by the divergent business goals of musical content owners and digital music services, and possible solutions to those problems.

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  1. Just how many different kinds of licenses do digital music services have to get and what is the total royalty burden from all of these licenses?
  2. What are the differences between directly negotiated licenses and the statutory licenses available with rates set by the Copyright Royalty Board?
  3. Why has no music streaming service ever been able to turn a profit, and what changes would be required to make that happen?
  4. What impact will the upcoming statutory sound recording performance royalty rate proceeding for webcasters likely have on the industry?
  5. Starting in 2013, various music publishers (including all of the major music publishers) began the process of selectively withdrawing their catalogs from the ASCAP and BMI repertories, but only with respect to certain digital music services. Why have they done this, and what impact will this move ultimately have on the digital music market? On songwriters and publishers?



Paul Fakler, Partner, Arent Fox LLP

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