Last.fm and 21st century payola
p2pnet news view | music:- It appears p2pnet is becoming a battleground in a growing controversy about Last.fm and its licensing practices.
Bill Wilson, of hardcore punk label Blackout Records, asks some pretty pointed questions in his blog saying, among other things:
It pains me to write this, as I’m a huge fan of Last.fm and what they’ve done (or could do) for indie labels, bands and music fans. However, it seems that their new media conglomerate sugar daddies are having an influence on their policies already. I was on their site today, doing some cleanup of my catalog that I offer for streaming and looking for some plugins to put on the upcoming revision of my label site. What I discovered should make anyone who is trying to build a career in indie music very concerned about their future.
Interestingly enough, the same Russ Garrett who rushed to Last.fm’s defense on p2pnet also tries to answer Wilson, doing even worse over there than he did here.
Wilson’s arguments made me revisit the license, and it finally dawned on me what the fundamental problem is with the deal Last.fm is offering, and why the whole license is a gimmick that permits Last.fm to not pay any indie artist for their music.
Here’s why I think so . . .
On the Last.fm forum that Garrett linked to in his comment, Jonas Woost, the Last.fm “Head of Music” says the company pays SoundExchange. That’s good. SoundExchange pays artists.
Unfortunately, what Woost says just isn’t true for indie artists who sign a license, if the terms of the license are to be believed.
There’s a direct contradiction between Woost’s statement about Last.fm paying SoundExchange and the express language of the license. His statements are meaningless in determining an artist’s legal rights under the license, so we have to pay more attention to the license itself because, if he’s telling the truth, there wouldn’t be any need for a license in the first place.
If Last.fm wanted to stream indie artist music and agreed to pay SoundExchange, they’d notify SoundExchange that they intended to pay the statutory royalty rates, play your music, and send in the royalty and the airplay report to SoundExchange.
That’s it.
They don’t need a license from the artist to do that, just like any other webcaster doesn’t need a direct license from an artist or label.
As long as they agree to pay the performance royalty set in the Federal regulations, and send SoundExchange the check, they can play ANYONE’s music without your permission.
The only time a webcaster needs a direct license is when the webcaster wants to change the terms of the statutory agreement. last.fm has announced that it has negotiated direct licenses with the major labels that permit them to pay less than the statutory rate (and, as a side effect, probably cut the major label artists completely out of the royalty stream, but last.fm probably doesn’t want to discuss that part).
They just need the direct licenses in order to pay the less-than-statutory rate.
So, why does Last.fm want the indie artist to sign a license? What’s the statutory term they want to change in dealing with indie artists?
Here’s a hint: There’s a reason why the license uses the term “royalty free.”
The only royalty that must be dealt with in Internet broadcasting is the performance royalty. For artists, the only royalty that applies to Internet radio is the performance royalty payable through SoundExchange.
If Last.fm wants a “royalty free” license, that’s the only royalty they need to be “free” of. They only need the license so they don’t have to pay you or SoundExchange on your behalf. If they were actually paying SoundExchange on your behalf, as Woost would have you believe, they don’t need your license at all.
If you think the license is a good deal, and the exposure on Last.fm is worth it, go for it. It’s 21st century payola; you’re giving up the right to get paid in return for the chance your music will be played on their service. No money actually changes hands, but that’s the charm of the arrangement for Last.fm.
Without the license, they’d have to pay to broadcast indie music. This way, they get to keep that money. You’re the only one who can decide if the tradeoff is worth it.
And what Last.fm is doing is completely legal. Woost may not have been completely accurate in his comments, and Garrett may not have been completely forthright in letting Woost’s statement stand unclarified, but neither of them broke any laws.
As artists, you’ll have to decide if you want that to be the standard of conduct you work under.
Frankly, it also makes good business sense for Last.fm to get as much content for free as they can, because even though they’re paying less-than-statutory rates to the major labels, they’re still paying them something, and they can make part of that up by playing music they get for free from indie artists..
As has been common for decades, broadcasters offer indie performers the short and very dirty end of the stick and call it a “mutually beneficial relationship.”
Meet the new boss …..
Fred Wilhelms - p2pnet
[Wilhelms is an entertainment attorney based in Nashville, Tennessee. You can contact him at fred.wilhelms @ gmail.com.]
Also See:
blog – Last.Fm Pulls A Clearchannel And Tries To Screw The Indies Out Of Royalties, July 22, 2007
rushed to Last.fm’s defense – Last.fm and music licensing, July 24, 2007
Use free p2pnet newsfeeds for your site. It’s really easy!
Subscribe to p2pnet.net | | rss feed: http://p2pnet.net/p2p.rss | | Mobile – http://p2pnet.net/index-wml.php
Net access blocked by government restrictions? Use Psiphon from the Citizen Lab at the University of Toronto. Go here for details. Download here.
July 27th, 2007 at 1:10 am
Very interesting article. I’m dissapointed to see Last.fm going down this road since being bought.
This is not exactly payola though, at least not in the sense of payola we had before. Last.fm does play artists who have not licensed their music there AFAIK but I would guess that having someone find all indie artists and upload their music would be impossible.
Furthermore I had the impression that Soundexchance is not exactly the best way for indie artist to retrieve their money.
For the time, I’m still watching the situation but I’ve also opened a Foosic account just in case