US music biz urges Government to back EU proposals to squeeze YouTube ‘value gap’

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More than 20 US music industry organizations have called the US government to support copyright proposals in Europe which will potentially reduce the ‘value gap’ created by payouts from YouTube.

Groups ranging from SESAC to SoundExchange, the RIAA, BMI, ASCAP and Azoff MSG Entertainment have jointly written to U.S. Ambassador to the European Union, Anthony L. Gardner, and other offices, calling for them to back Article 13 of the recent EC Copyright Directive.

The letter explains: “We enthusiastically support passage of Article 13 of the recent proposed EC Copyright Directive, which will benefit American creators by directly addressing what has been called the ‘Value Gap’.”

As is now customary from such music biz lobbying, it compares the levels of per-user payouts to the music business from Spotify and YouTube.

You can read the letter in full below:


November 1, 2016
The Honorable Anthony L. Gardner
United States Ambassador to the European Union
United States Mission to the European Union
United States Department of State

Dear Ambassador Gardner,

We are CEOs representing the American music industry, which comprises well over a million people, provides products enjoyed by hundreds of millions of people globally and fuels a crucial segment of our economy.

We write to ask that our government support the interests of its creative music community by supporting Article 13 of the Copyright Directive recently proposed by the European Commission, which was a welcome and enormously important development for American music and the entire American creative economy.

As you know, American copyright industries generate over $1 trillion of economic output and account for nearly 7% of the GDP as a whole. They employ nearly 5.5 million workers and contribute in excess of $156 billion in foreign sales and exports, exceeding that of many other industry sectors.

An important part of this creative sector is the American music industry. As U.S. Ambassador to the EU Mission, you are keenly aware not only of protecting our country’s economic interests, but also of conveying America’s creative leadership, including our significant contributions to business and culture worldwide. In this respect, American music is perhaps one of our strongest representatives, recognized and valued throughout the world.

To maintain this outsized contribution to the U.S. economy and stature, it is necessary to ensure that practices overseas promote and protect American creators and their works. That is why we enthusiastically support passage of Article 13 of the recent proposed EC Copyright Directive, which will benefit American creators by directly addressing what has been called the “Value Gap.”

The American music industry has transitioned to a digital marketplace faster than any other media for-mat, now accounting for 80% of our total revenue. Subscriptions to streaming music services, in particular, have begun to guide the industry out of a 15-year slump.

Protecting this growing digital-access model is imperative. Unfortunately, this advancement is threatened by a growing divide between the online consumption of our content and the revenue it generates – a Value Gap. This gap is largely due to a narrow group of businesses that exploit analog-era laws intended for passive online conduits in order to obtain below-market licenses never intended for active music distributors like them.

How dramatic is this gap? By way of example, while Spotify paid music creators $18 per user in 2014 (the last year of available data), it is estimated that YouTube (which exploits the DMCA to acquire be-low-market rates) delivered less than $1 per user to music creators in 2015. Of course, various music rights holders may have different views of the precise economics of Spotify, or any subscription service for that matter. But this example illustrates just how much the DMCA benefits platforms like YouTube and disadvantages companies that do not base their business on users uploading the content they dis-tribute. This unfair competitive advantage was unintended, and harms American creators.

Article 13 of the proposed EC Copyright Directive recognizes the importance of correcting this disparity, essentially requiring those that act as music distribution services to negotiate free-market licenses or take meaningful action to prevent unlicensed works from appearing on their services. This is a perfectly reasonable instruction, placing all services on a level playing field that protects creators and the digital marketplace itself.

Notably, this proposed Directive is not anti-technology. On the contrary: it will establish a fertile and fair environment where many different technologies and services – including American services – will have an opportunity to stake their ground and grow. And it will protect and properly value the many, many American creators whose works are being used and consumed without proper – and necessary – compensation.

We want to thank you for your understanding of this important issue. We hope and expect the Ameri-can government will protect its vibrant music industry and all American creators by supporting Article 13 of the proposed EC Copyright Directive.

Sincerely,

American Association of Independent Music
American Federation of Musicians
American Society of Composers, Authors and Publishers
Americana Music Association
Azoff MSG Entertainment
Broadcast Music, Inc.
Christian Music Trade Association
Church Music Publishers Association
Global Music Rights
Gospel Music Association
The Living Legends Foundation, Inc.
Music Managers Forum – United States
Music Publishers Association
Nashville Songwriters Association, International
National Music Publishers’ Association
The Recording Academy
Recording Industry Association of America
Rhythm & Blues Foundation
Screen Actors Guild – American Federation of Television and Radio Artists
SESAC Holdings, Inc.
Songwriters Guild of America
SoundExchange

cc: The Honorable John Kerry, Secretary of State
The Honorable Danny Marti, United States Intellectual Property Enforcement Coordinator, Of-fice of Management and Budget, Executive Office of the President
The Honorable John P. Holdren, Office of Science and Technology Policy, Executive Office of the President
The Honorable Penny Pritzker, Secretary of Commerce
The Honorable Bruce H. Andrews, Deputy Secretary of Commerce
The Honorable Michelle K. Lee, Under Secretary of Commerce for Intellectual Property and Di-rector of the United States Patent and Trademark Office
The Honorable Lawrence E. Strickling, Assistant Secretary of Commerce for Communications and Information and Administrator, National Telecommunications and Information Administration
The Honorable Karyn Temple Claggett, Acting Register of Copyrights, United States Copyright OfficeMusic Business Worldwide

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