How to Turn a $147 Song into a $79 million Tour (Or: How Songwriters Are Getting Stiffed On Live Music Royalties)

The following op/ed comes from Los Angeles-based Chris Dampier, Head of Publishing at TuneCore, where he oversees both publishing and sync for the company. Dampier (pictured, inset) previously worked at BMI, where he was Director, Creative: Film, TV and Visual Media. He has also held positions as head of licensing at CMH Records, Inc, and Universal Music Group.

With streaming revenues rising and live performance incomes soaring these are good times for the music industry.

Unfortunately, those that write the music and words are not necessarily singing a happy tune. For example, when a major artist’s recent tour grossed $79 million, the writer of one of the songs was paid an average of just $147 for each performance. That is the harsh reality faced by the authors of some of today’s biggest hits.

It seems that songwriters can’t catch a break, and media companies are even appealing a proposed 44% royalty rate increase by the Copyright Royalty Board. But when it comes to live performance royalties, writers are really getting taken for a ride.

As has always been the case, many of the songs on the Billboard Top 100 were written through collaboration with songwriters. When those artists tour, there could be from one to dozens of songwriters who are due royalties.

Songwriters are paid for the performance of their songs. This happens via an agreement between a performance rights organization (PRO), such as BMI/ASCAP, and the associations that represent concert promoters, such as the North American Concert Promoters Association (NACPA).

Members of NACPA include entertainment monoliths AEG and Live Nation, who, along with their affiliates, control over 70% of the live concert box office in the US. While it’s understandably in their business interest to try and keep royalty rates down, this discounts the fact that the entire music industry is built upon intellectual property created by songwriters.

Under current agreements, NACPA members are only required to pay 0.8% – 0.15% of ticket sales to songwriters.

Last year, BMI sought to increase this to 1.15% of revenue. This would mean not only an increase in the rate, but also an expansion of the pool of revenue from which royalties are deducted. Proposed additions include ticket fee surcharges, secondary market ticket sales, sponsorship, advertising, box seats, VIP packages and concessions.

Unfortunately, BMI and NACPA are now tied up in court.

The plight of songwriters is cast in stark relief by the gulf between the 0.8% – 0.15% royalty in the US and compensation in other major markets. For example, in Canada the royalty is 3%, the UK pays 4.2%, France pays 8.36% and Germany pays up to 6.40%, a rate set to increase to 10% by 2020.

If that doesn’t look grim enough, let’s take the very real $147 per song example cited above and use it to paint a picture of a performance by a hypothetical a-list artist in a 20,000 capacity venue, at a $108 average ticket price.

By that math, this one performance would gross $2,160,000. Where does the money go? According to industry sources, this hypothetical artist and their management would earn nearly 30% and the venue would get the same. Once sundry interests get their piece of the cash haul, chump change is left over for the songwriter(s) of the entire set list, who would end up with just 0.15% of the gross.

Meanwhile, entertainment monoliths like those represented by NACPA would potentially share in upwards of one million dollars with an interest in booking fees, promoter, venue and management income. In our example, the entertainment monolith has shares in revenue from management, booking fees, venue and promoter costs. Their piece of the pie could in reality be as much as 55% when all is accounted for.

Let’s look at how more than $2 million – for just one stop on a tour – would get divided:

  • $108 ticket price x 20,000 = $2,160,000 gross revenue
  • Taxes 5% ($108,000)
  • Booking fees 10% ($216,000)
  • Venue/Fixed costs* 29.9% ($644,760)
  • Promoter 8.3% ($178,200)
  • Artist fee 29.9% ($631,800)
  • Artist manager 7% ($151,200)
  • Tour support** 10.5% ($226,800)
  • Songwriter(s) 0.15% ($3,240)

*Venue rental, venue staff, electricians, scaffolding, stage hands, insurance, etc.
**Musicians, dancers, lighting, catering, tour manager, sound engineers, roadies, hotels, transportation, etc.

The artist performing the songs is taking home a significant amount, and rightly so, but there is an astonishing disparity with what the writers are paid.

With a fee of $631,800, spread over a 22 song setlist, the artist reaps $28,681 per song. The songwriter(s) net a measly $147 per song.

Compare that with what the per-song rate would be in Canada ($2,306), the UK ($3,710), France ($6,608), and Germany ($4,962).

Considering how crucial songwriters are to the entire music industry, there is an alarming and irrational flow of monies in the live concert business. Hopefully BMI and NACPA will correct this disparity.

Regardless of how this plays out, songwriters will go begging while the money pie keeps growing: Pollstar predicts the live concert industry will be worth in excess of $31 billion by 2022. The lion’s share of that will be in the United States.

These are good times for the music industry, and it’s only fair that the writers who make it all happen get to join in the celebration.Music Business Worldwide

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