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Digital Service Platforms: Evolution of Music Distribution & History of Music Streaming & Royalties

Music, Law, Entertainment Law, Intellectual Property Law, Music Distribution, Royalties, Streaming, IP, Copyright.


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Business, Law, Leadership, Entrepreneurship. Digital Service Platforms: Evolution of Music Distribution & History of Music Streaming & Royalties
Oyemaja; Digital Service Platforms: Evolution of Music Distribution & History of Music Streaming & Royalties

INTRODUCTION


Over the years, entertainment has taken various forms ranging from music, drama etc. Music can be said to be the most popular entertainment option due to its accessibility. Music is an integral part of the day to day life of most people and has arguably played a prominent part in the evolution of the human species. Music has been used to convey and portray different ideas and emotions at different points in time.


During a time in our history, people had to travel to a certain place to hear music but now music itself and the means through which we listen to it has evolved. From phonographs to vinyl players to cassettes, down to MP3s, CDs and DVDs, music distribution has taken several forms over the years until it reached the age of music streaming.


This article seeks to educate readers on the evolution of music distribution and history of music streaming and royalties, and how it has changed the landscape of music publishing and distribution.


HISTORY AND EVOLUTION OF MUSIC DISTRIBUTION AND STREAMING


Before the advent of music streaming and digital distribution, the major means of distribution of music was through the record companies. The recording companies were in charge of publishing, marketing and distributing the songs after an artist had recorded. Before Thomas Edison invented the phonograph and microphone in 1877, music was distributed in the form of sheet music, which involved the purchase of copies of a preferred musical piece printed on sheets of paper. After Edison’s invention, audio recordings were stored and distributed in wax cylinders (later disks) until the first 78 RPM (revolutions per minute) vinyl record was introduced in 1948, which was superseded by the compact disk (CD) in 1982.[1]


The story of Music streaming however began in January 1993 with the launch of the Internet Underground Music Archive (IUMA) as the first free online music archive of MP3 downloadable songs.[2] IUMA provided a venue for unsigned artists (independent artists) to share their music and communicate with their audience. The purpose was to let them distribute their music via unconventional channels rather than distributing through a record company.[3] The MP3 format came into existence the same year IUMA was established. It was a breakthrough in audio technology achieved by the Moving Picture Experts Group (MPEG). MP3 enabled compressing sound sequences into small file sizes for digital storage and transmission.[4] Even so, internet-downloaded MP3s did not become commonplace until Napster was founded by Shawn Fanning and Sean Parker in May 1999. By October 1999, it had over four million songs in circulation and by March of 2000, the Napster community had over 20 million members.[5[] One of the most notable features of Napster was that it provided a platform for music lovers to not only download albums for free, but also gain access to rare live versions, alternate cuts, and demo versions of their favourite artists.[6] Despite its popularity, Napster presented many ethical issues regarding the copyright and ownership of works by musicians and only four months after the website started, the Recording Industry Association of America filed a lawsuit against Napster, and musical giants Metallica and Dr. Dre both filed lawsuits against the website after unfinished versions of their tracks were leaked onto Napster in 2000.[7] Napster eventually shut down in 2001 but not without sowing the potential of online music sharing. After the exit of Napster, Apple launched the iPod in 2001 and by the next year Last.fm was introduced, which made use of an algorithm called ‘audioscrobble’ to take user’s favourites and build a profile for them according to their musical taste. In 2003, Apple launched the iTunes store, an online music library to be used with their iPod where users could download a full catalogue of music for $0.99 per song. Pandora Internet Radio came into existence in 2005 and introduced personalized audio streaming and also introduced the ‘freemium model’ where users can listen for free with ads or pay 10 dollars a month for uninterrupted streaming.


In December 2007, Soundcloud entered the scene as a project that allowed different artists collaborate and let them distribute their tracks for free while also allowing artistes and fans to communicate and share feedback. Bandcamp made an appearance in January 2008 with a customizable microsite where artistes can upload music, and either share them for free or offer an option to purchase the trackor album at a preferred price. In October 2008, Spotify was launched as a digital service platform that offers music streaming with digital rights management (DRM) protected content from record labels and media companies. Rather than get paid per download, artists would receive part of a royalty payment each time their song was streamed. Spotify's business model relied on driving revenue from 1) advertisements played on Spotify's free version, and 2) subscription fees incurred to access Spotify's ad-free Premium service.[8] Apple music was launched in 2015 and offered paid-only services for new subscribers after the initial 3 months period, an attribute which stands it out among other streaming platforms.


EVOLUTION OF ROYALTIES


Music royalties are the payments made to rights holders, including songwriters, recording artists, and intermediaries like labels, publishers, or producers for the licensed use of their work.[9] The music industry relies on royalties generated by the licensing of copyrighted songs and recordings as a primary form of payment for musicians and other stakeholders in the music business.[10] It should be noted that there are multiple types of royalties in the music business, and each royalty stream is dependent on the kind of copyright it is associated with. Every song has two copyrights: the Composition (Songwriter rights) and the Sound Recording (Master rights). The Composition copyright is held by the songwriter and it covers the song as it is written while the Sound Recording copyright refers to the copyright created when the song is recorded and it is held by the person or group who recorded the song.[11] Both copyrights generate royalties based on different uses of the composition or recording.


Traditionally, music Royalties took four basic forms which were: royalties from “print rights” of sheet music from classical and film composers, mechanical royalties from the recording of composed music on CDs and tape, performance royalties from the performance of the compositions/songs on stage or television through artists and bands, and synch (for synchronization) royalties from using or adapting the musical score in the movies, television advertisements, etc.[12] However, with the gradual phasing out of CDs and Tapes alongside the advent of the Internet and digital streaming platforms, the industry saw the birth of newer forms of Royalties like Digital Sales (Streaming Royalties & Download Royalties) and Digital Performance Royalties. This has forever changed how a lot of artistes earn money because these days more people are willing to stream music from platforms such as Spotify, Apple Music, Deezer, Pandora, Tidal, YouTube Music, and Amazon Music by either paying for the premium service or using the app with ads.


Every time a song is played publicly or streamed, the songwriter is due a payment in the form of Royalty. However, it should be noted that artists hardly deal with streaming platforms directly. Instead, they use a distributor (who is usually the record label) who will then take care of getting their music to the platforms. When music is streamed, royalties will be due to the right holders which could be the artist themselves if they are independent, or the record label if the artist is signed to one.[13] If the artist is signed, the distributor and/or label will then collect the corresponding royalties from the streaming platforms and pay those who are due to receive them (or a share thereof), such as the artist, depending on the terms of the recording contract.


Artists are also encouraged to belong to a Performing Rights Organization (PRO) which would also aid them in collecting their royalties. PROs are responsible for collecting income on behalf of songwriters and music publishers when a song is publicly broadcast, streamed or performed. In Nigeria for example, Musical Copyrights Society of Nigeria (MCSN) collects Performance Right Royalties for a range of uses of Musical Composition in Nigeria. The Musical Copyrights Society of Nigeria (MCSN) is governed by the Copyrights Acts (Cap C. 28 Laws of the Federation of Nigeria (LFN 2004) and is an approved collecting management organization (CMO) on the statutory authority of the Nigerian Copyright Commission (NCC) as directed by the Hon. Attorney General of the Federation.[14]


CONCLUSION


Music is more than just an art form, it has evolved into a business that continues to yield benefits for everyone involved in the creation an distribution. In a world where more and more people have begun to get involved in the making of music, it has become necessary to recognize music as not just as a means of expression and art but also as a business that must have profit. The basic knowledge of how streaming and royalties work is an essential condiment in the stew that is music distribution.


 

Endnotes

  1. Jacob Anderson ‘History of Music Distribution’, (Virtuoso, November 23, 2021) < https://playvirtuoso.com/blog/the-history-of-music-distribution/18 > accessed September 27, 2023

  2. Lauren Gil ‘History of Music Streaming’, (Sutori) < https://www.sutori.com/en/story/history-of-music-streaming-- zqSr2qQSuWhuDsXbmAUxfi6Y > accessed September 27, 2023

  3. Debarpita Banerjee ‘Online Music Streaming: Past, Present and Future’ (MUVI, August 22, 2017) < https://www.muvi.com/blogs/evolution-online-audio-streaming > accessed September 27, 2023

  4. Ibid

  5. Dianna Yassin ‘A Brief History of Streaming Services’, (The Michigan Daily, December 22, 2019) < https://www.michigandaily.com/music/brief-history-steaming-services/ > accessed September 27, 2023

  6. Will Brewster ‘The History of Music Streaming’, (Mixdown, August 21, 2023) < https://mixdownmag.com.au/features/the-history-of-music-streaming/ > accessed September 27, 2023

  7. Ibid

  8. Lauren Gil ‘History of Music Streaming’, (Sutori) < https://www.sutori.com/en/story/history-of-music-streaming-- zqSr2qQSuWhuDsXbmAUxfi6Y > accessed September 27, 2023

  9. Usoro Glory Esther, ‘Explainer: How music royalties are earned and shared’,(Business Day, March 15, 2023) accessed October 6, 2023

  10. ‘Music Royalties 101 – Intro to Music Royalties’,(Royalty Exchange, February 10, 2021) accessed October 6, 2023

  11. Ibid

  12. Simisolu Soyombo ‘Demystifying the Concept of Music Royalties’,(DOA-Law, May 01, 2023) accessed October 6, 2023

  13. Elio Quinton ‘How Artists Get Paid From Streaming’,(The Pudding, 2022)accessed October 7, 2023

  14. Mayowa Ekundayo, ‘Performing Rights and Royalties: Overview’,(MCSN Blog, December 15, 2022) accessed October 7 2023



Originally published by Aisha Idris on LinkedIn

Also view publication by Johnpaul Uchenna Anyaegbuna on LinkedIn




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