Downtown Music Publishing Talks Rates, Tech, and the Power of the Song

Our CEO and VP of Business Affairs & Operations recently sat down with Music Ally to share some of the things we talk about here at Downtown.

L to R: Justin Kalifowitz, CEO; Andrew Sparkler, VP Business Affairs & Operations

“Publishers today are playing an extraordinary part in the artist development ecosystem. Yet the remuneration for our involvement, when the record companies are paid so much more than we are for a stream, is not where we would like it to be.”

As VP of business affairs and operations at Downtown Music Publishing, Andrew Sparkler works for a firm whose arguments for a rethink of music-streaming splits goes beyond simply claiming that the existing model is unfair.

“We are playing a pro-active role in the community on the artist development side. We need to do a better job of articulating that. We’re investing early, and we should be compensated accordingly,” he told Music Ally.

Artist development may be traditionally associated with labels, even though publishers have always played an important role in helping emerging songwriters to flourish.

One of the trends of the last 12–18 months, though, is publishers taking a greater role — financial support included — in the early careers of writer-performers, in an area that was once the domain of labels.

In Downtown’s case, that has seen the publisher sign a number of young songwriters out of its Nashville office, with deals that enable them to hone their craft “without having to worry about their day jobs or rent”.

“We’re now watching them pick managers to add to their team, write top 10 hits, and really express their creative vision. It’s really rewarding,” said Sparkler.

“We are able to get in a bit earlier to sign things, and support them so that they have the opportunity to grow. That doesn’t really exist as much with labels as it used to, so you’re seeing publishers coming in at that earlier stage of the development process.”

Sparkler added that modern publishers are increasingly taking a key role in helping songwriters who are also performers build out their teams: agents, managers, lawyers and record labels included.

We’re not bashing the labels: they do still take risks and make bets. But the freewheeling ‘take a lot of bets’ has slowed down, and I do think you’re seeing more publishers making those early bets,” said Downtown CEO Justin Kalifowitz.

Downtown is known for making early bets and taking risks on technology as well as on songwriters. In-house rights management platform Songtrust has The Orchard and CD Baby among its clients, as well as hundreds of thousands of musicians who use it to collect their royalties.

“We do believe there are benefits to managing copyrights at scale, and we very strongly believe there are benefits to opening up our platform to everyone,” said Kalifowitz.

He suggested that the publishing industry has traditionally focused much of its effort and investment on “the top 1% of songs and songwriters”, and not enough on the sector’s longer tail of creators and works.

“We’re seeing the value of building a platform that works for everyone. The other 99%: songwriters and production companies first getting started. They may just want a tool to collect their money! It’s not revolutionary: this is just bringing the ease of other industries to our industry,” said Kalifowitz.

Downtown has also become one of the more prominent firms in the debates around how the music-publishing and technology worlds interact, from blockchain tech to startup partnerships.

Kalifowitz is optimistic about new technology being able to solve some of the most intractable problems of the publishing sector, fragmented rights databases included.

Music is a very collaborative artform, and to get anything done on the business side it needs to be collaborative as well. Post the GRD concept falling apart, there were a lot of people who felt very dejected: like we’re never going to solve this problem,” he said.

“That’s one school of thought: ‘We’re never going to solve this problem of copyright’. But other people were more ‘What are you talking about? Look at the technology out there…’”

Downtown falls into the second category, but is keen to assess its options rather than to plunge down the wrong path.

“We’re agnostic as to what the best solution is, but we certainly want to push them all forward, working collaboratively,” said Sparkler, referring to the global rights database challenge.

If the publishers choose to bicker amongst themselves and treat songwriter splits, which is like a phonebook level of information, as sacrosanct, then the DSPs will do it. And if the DSPs build it, it will not be on terms that the publishers like,” he said.

“It would be better to get buy-in and build a consensus with everybody. Blockchain has some drawbacks, but not enough to say this isn’t going to work. If nothing else, it makes conflicts easy to resolve, and cuts down on the administrative friction.”

Kalifowitz also suggested that publishers could do more to give digital music services “some flexibility to figure out their business model” in their early days.

He compared the relationship to that between publishers and independent filmmakers licensing music for projects they’re showing off at film festivals, with “step-up fees” built in to kick off if it becomes a success.

“That has been going on for a very long time. Why we haven’t been able to do that with technology companies is something that is beyond my understanding,” he said. “I would think you would let people give it a go.”

This does not mean Downtown is blind to the potential for the songs and songwriters it represents to be undervalued by some digital services.

We have always had more of a carrot and a stick philosophy with streaming services. They’re always the ones that insist on treating us, all publishers, as third-class citizens. And we respond in kind,” is how Sparkler put it. “If the services genuinely want to work with us, we find those partnerships very valuable.”

Having the in-house tech division helps here: for example, Downtown has a direct licensing relationship with YouTube for performance rights, with no administrator as middleman. Sparkler would like to see other services follow YouTube’s lead in opening up their databases to publishers.

“YouTube has a CMS, Spotify has a very rudimentary CMS that allows us to claim, but the other DSPs aren’t really there yet,” he said. “We’d like to see everybody get up to at least the YouTube standard of letting writers and publishers go into the CMS and claim, and build their own tools to claim.”

Unsurprisingly, Downtown is very engaged with the current debate in the US around the consent decrees that govern the way the three PROs there — ASCAP, BMI and SESAC — operate.

The Department of Justice has sparked controversy with plans to bring in “100% licensing”, where a publisher with a share in a song can license 100% of the track to digital services, rather than the services having to reach agreement with all its rightsholders.

Addressing the general question of the consent decrees, Kalifowitz suggested that the publishing sector continues to get a raw deal.

“Songwriting is the only artform that is regulated like this. It’s crazy, the whole thing: the consent decrees, the rate court. It’s crazy that the recordings can have free market negotiations, whereas songwriters are something that the American public needs to be protected from,” he said.

“If you were building a marketplace from scratch and didn’t have any legacy statutes, would you do it this way? Talk to every member of Congress and they will say of course not,” added Sparkler.

“The licensees, they’re very well organised and they spend a lot of money lobbying to keep our rates low, and to keep the restrictions around our business really tight,” said Kalifowitz, although he added that publishers have been doing a much better job of voicing their concerns — including representative body the NMPA, where Downtown’s CEO is a board member.

“We have a really incredible tool at our advantage that the folks on the opposing side don’t: the power of the song itself, and those who write it. We in the industry need to do a much better job of engaging our songwriting partners in these discussions,” he said.

The power of the song is something that’s been on Kalifowitz’s mind in 2016, and not just for the negative issues sparked by regulation and lobbying. He sees something positive happening around songwriting too.

In popular culture, you’re now seeing the song copyright very much standing along from any individual recording, in so many more visible ways than maybe even 10 years ago,” he said.

He noted that in some ways, it’s a throwback to the period when the ‘Great American Songbook’ was developed, when many artists would cover the same work and put their own spin on it. Perhaps our modern YouTube world isn’t so different to the 1930s, 40s and 50s after all.

“With One Direction, when they dropped ‘Story of My Life’ as a single, that original 1D version had huge success on all the streaming services, downloads, radio,” said Kalifowitz.

“But if you wanted to see activity, go to YouTube where there were thousands of cover versions. More broadly, we’ve had a decade of shows like The Voice and X Factor and Idol with their weekly covers. Look at ad agencies and how they’re using cover songs: John Lewis in the UK, brands like Target and Virgin.”

“And on the digital side, people are uploading covers to YouTube and SoundCloud, and businesses like Musical.ly are built on the back of cover songs. Google is licensing lyrics direct to its search results, and Apple is building out an entire team focused on lyrics.”

Kalifowitz suggested that these are all examples of the separation of the song copyright and the recording copyright in the minds of the general public. Something that may serve Downtown and the songwriters it represents as they continue to navigate their way through the changing digital industry.

This post was originally published on Music Ally by Stuart Dredge.