A Progressive Charge Improving Label-Sampler License Relations Brittany Coombs 4/19/2012
Coombs Progressive Charging 2/9 For the past few decades, music in the West has been wrestling with many interrelated problems: how to incentivize musicians to create; how to compensate their creativity; how to encourage novelty and resourcefulness while largely blocking access to the copyrighted works of the cultural archive. Troubles of the Digital Music Era thus funnel to one common denominator word: mashup. Mashups are the premiere site of warfare between modern musicians, who defined the Naughts with their desire to mine for samples (and long to do so legally), and record labels, which use yellow tape and networking to cut would-be samplers off at the pass. In Creative License, Kembrew McLeod and Peter DiCola argue that four things complicate modern-day sample licensing: how much money it costs artists to pay for licenses; how slowly labels move in determining if they want to give licenses; how much time, money and energy it takes labels to reach that determination; and the fact that labels and artists rarely have a preexisting relationship to fall back on. Monetary expense, as the most concrete measurable of the licensing process, is likely its biggest obstacle for aspiring samplers. Artists who wish to sample the copyrighted work of another artist typically have to obtain two licenses: a license to the master recording and a license to its composition. Industry attorney Dina LaPolt hardly sees a difference between the two types of licenses. [T]here s the really fucking expensive type, she says, and the really, really fucking expensive type. 1 McLeod and DiCola make a finer distinction. For sampling artists, they claim, gaining access to a work s composition is not terribly hard more often than not, it is the task of trying to obtain legal rights to its master track that proves impossible. The master side is the one that you almost always get hit hard for because that s the side that s controlled by the record label, Brooklyn hip hop artist El-P explains in Creative License. And anyone who s really litigious or gives a fuck about sample clearance usually that s a major label. Reality is situated most likely somewhere 1 McLeod, Kembrew and Peter DiCola (2011), Creative License, Durham and London: Duke.
Coombs Progressive Charging 3/9 between LaPolt s pessimistic view of the licensing landscape and McLeod and DiCola s estimation that one type isn t so bad. Regardless, however, an undeniable fact is that small-time artists are victims: whether they seek the rights to a composition, to a master track or to both, artists who grind on a day-to-day basis and have yet to find mainstream success (the vast majority of artists) have grown more and more unlikely to sample, as it has become more and more exorbitantly expensive for them to obtain sampling licenses. 2 One solution to this primary problem of expense is for the music industry, with or without federal coercion, to institute a progressive rate of charge for rights to its master tracks and compositions. Basic economic theory defines a progressive tax as a tax rate that increases as the base amount that is subject to taxation increases. As Adam Smith explains in Wealth of Nations, society is comprised of a multiplicity of classes, and it is not very unreasonable that the rich should contribute to the public expense. 3 There are millions of musicians vying for a chance to have their work heard and appreciated by various audiences many of these artists don t even dream of breaking onto radio, but would settle for fame by word of mouth (or word of Spotify through Facebook). It would be possible for artists who want to create recordings that sample copyrighted works to do just that if the glass ceiling of expense were broken in a music industry that, by structure, presently favors artists who have more money to spend on sampling licenses. There are two ways in which progressive charging for sampling licenses can be implemented within the music industry. In the first scenario, the music industry can take it upon itself to review legal documents provided by musicians who wish to sample that prove their annual income. With this information, industry lawyers will only have to implement the 2 McLeod and DiCola, 159. 3 Smith, Adam (2009), The Wealth of Nations, Thrifty Books.
Coombs Progressive Charging 4/9 prearranged rate of charge that is commensurate with the income level of an aspiring sampler. In the other scenario, instead of assessing the income of musicians who wish to attain sampling licenses, record companies can establish a progressive charge based upon the amount of profit that sampling artists make from the work with the samples. That is to say, the more profit that is made by artists for a sample-using song, the larger the percentage of that profit that record companies can claim. Given the improbability of musicians wanting to reveal their finances to labels, this latter scenario seems more realistic. It is therefore from this perspective that this essay will operate. To explain this latter scenario, let s use (in)famous mashup artist Gregg Michael Gillis, better known to digital pirates everywhere as Girl Talk, as an example. Let s say Girl Talk makes a mashup track that samples songs by The Mars Volta, Marvin Gaye and Donna Summer. Let s also assume that mashup songs and albums have become perfectly legal, and can thus be distributed and monitored officially, and on some sort of one-to-one basis, by record companies. Further, we should create a fiduciary given: let s say the music industry has predetermined that songs earning between $30,000 and $44,999 will be charged 14.5 per cent for their licensed use of copyrighted samples, with the entirety of that garnishment going in equal pieces to the labels owning the rights to the songs sampled. If A Gaye Summer on Mars (a song title Girl Talk would never use) nets Girl Talk a profit of $35,000, then the industry receives $5075. If A Gaye Summer on Mars had made $70,000 instead and the industry had predetermined, per progressive charging, that songs earning between $70,000 and $88,999 are to give copyright holders 18 per cent of profits then A Gaye Summer on Mars would have earned Girl Talk $57,400, and various labels $12,600. Precisely speaking, Sony Music Entertainment would have earned $8316, or two-thirds of the pot, because Burgundy and Columbia, both Sony subsidiaries,
Coombs Progressive Charging 5/9 currently own the rights to songs by Donna Summer and Marvin Gaye, respectively. Universal Music Group, which holds the copyright to works by The Mars Volta, would have taken the remaining $4284. There are a lot of minute but significant details that must be considered and ironed out in order for progressive charging to actualize and function well. For starters, profit necessarily exists in perpetuity: The Beatles, Michael Jackson and Elvis Presley continue to earn money for their respective estates despite the fact it has been decades since any of them directly contributed in a relevant manner to the cultural-musical archive. A Gaye Summer on Mars cannot eternally pay a charge on whatever profit it makes to the estates of Marvin Gaye, Donna Summer and The Mars Volta. A time frame must therefore be established regarding the application of the progressive charge. One year, three years, five years there can be various lengths of time specified within various types of contracts, depending upon the potential, popularity or ambition of individual sampling artists as perceived by various labels. Essentially, however, temporal parameters must exist for the sake of samplers. The goal is to adequately compensate the music industry for their having granted access to copyrighted works not to turn musicians who use samples into golden geese that keep on giving. But a new difficulty arises when we go down this path. If there is a capped period of time from which record companies can analyze profit data in order to enact a charge, then artists looking to beat the system may, instead of promoting their sample-using material during that specific time frame, sit on their hands and wait out of the charge period. This means in order for capped time frames to work which are necessary for progressive charging to work there must exist a system whereby the industry can monitor artists that have been granted use of copyrighted
Coombs Progressive Charging 6/9 material, in order to ensure that these artists are realistically but aggressively pursuing the creation and promotion of works using that material. Secondary to the issue of capped time frame is the issue of sampled artist compensation. So far we have explored the profit to be made by record companies that hold the copyright to sampled material, but have said nothing of the musicians on those labels who wrote and/or performed the copyrighted songs that were sampled. The simplest solution to this problem is for record companies to give a percentage of the revenue they receive through progressive charging to the artists on their label who have been sampled. It is possible if not probable that, over time, this financial dynamic will incentivize artists to think more positively about the possibility of their work being sampling. While it is tempting, on this note, to wonder if continued profitparsing will eventually create returns so negligible that neither artists nor labels are incentivized to favor sampling, this logic does not hold. Modern record companies have become the victims and perpetrators of a feedback loop: they overcharge for sampling licenses, which causes fewer artists to legally inquire about getting sampling licenses, which causes record companies to overcharge the artists who do inquire. Money from licensing therefore comes infrequently for record companies, but in large chunks. Progressive charging, though eliminating chunks of profit, encourages many more artists to apply for sampling licenses which not only opens more profit streams, but also makes these streams steadier than they had ever been. A third and final consideration for progressive charging lies with the nature of progression itself. Progressive charging is all about encouraging creativity by establishing a structure that has companies take less money from artists who profit less from sample-using songs, and more money from those who profit more. But in a practical sense, this progression just like its time frame needs a cap. While there is theoretically no limit to how much revenue a
Coombs Progressive Charging 7/9 song can bring in, in reality there must be a limit to how much raw money can be taken from the pockets of sampling artists and put into those of company leaders and sampled artists. Even if progressive charging were to be written into a contract between recording artists and companies, it is an unseemly and unconscionable situation to imagine a sample-using song becoming so popular that labels take hundreds of thousands of dollars away from sampling artists and are well within their rights to do so. The best solution to this issue is a raw charge cap, which can be instituted alongside a progressive rate of charge for sampling licenses. Unlike time frame capping, for which it seems reasonable to allow flexibility depending on companies and artists involved, a raw charge cap will ideally be an industry standard a foundational rule that never changes, regardless of situation. Sampling artists and license-giving labels have good reason to discuss how long the samplers profits will be monitored: samplers come as well-known as Girl Talk and Danger Mouse, but they also (and more frequently, in the present landscape) come as obscure as team9, The Illuminoids and Hathbanger. Exploitation, however, should be more easily definable. Raw charge capping will protect sampling artists against being bled for money under the perception that they can afford it just because their sample-using work proved very profitable. A raw charge cap will also simply put the minds of samplers at ease something record companies should want, since trusting musicians are more likely to agree to the terms of a sampling license. As we have seen, it is not exactly a straightforward endeavor for the music industry to institute progressive charging for sampling licenses. Complex but necessary considerations like timeline capping, sampled artist compensation and raw charge capping make this clear. Nevertheless, the most significant benefit for record companies if they were to implement the system is that progressive charging helps solve the other three problems with sample licensing
Coombs Progressive Charging 8/9 laid out by McLeod and DiCola: cold relationships between wannabe samplers and labels; bureaucratic inefficiency on the part of labels in approving samples; and poor synchronicity between requests to sample and verdicts on those requests. McLeod and DiCola claim that it is almost impossible for small-time musicians i.e., most musicians to get a sampling license for copyrighted material unless they know people in the music industry who either rank highly in a record company or know a lot about the business internally. Since most artists are not part of such an eminent network, most artists have to pay for a lawyer to fight with companies that own the rights to the samples in addition to paying whatever fee the lawyer manages to wrangle for the samples, which is usually still high since record labels have powerful legal connections. But as previously detailed, progressive charging, if nothing else, inspires trust in musicians who wish to use samples in their work. Progressive charging encourages musicians to request sampling licenses because it forces the music industry to operate on a playing field contoured to the needs of individual samplers. An increase in trust between samplers and labels should go a long way toward civilizing negotiations. Bureaucracy is another obstacle overcome by progressive charging. According to McLeod and DiCola, transaction costs have a way of encumbering negotiations between sampling artists and record labels: Despite the theoretical benefits of licensing, which offers the promise of mutually beneficial exchange, some energy is lost as the necessary motion occurs to get a license done. 4 Smooth negotiations can cost $500 per meeting and negotiations are rarely so smooth as to require only one meeting. Furthermore, record labels will sometimes flatly reject a sampling license request because they feel it would take more time and money to approve the request than the artist can get back in profit from the song. Progressive charging cuts through this yellow tape by making industry standards that, despite their possible variance from 4 McLeod and DiCola, 166.
Coombs Progressive Charging 9/9 company to company, remain artist-friendly, especially poor artist-friendly. Negotiations cannot be done away with completely samplers and labels will always have plenty to discuss, including time frame cap. But smoother, fewer, and more purposeful negotiations are probable. Lastly, progressive charging is likely to quicken the time it takes for record labels to respond to licensing requests from samplers. In the modern music industry, artists who request sampling licenses from record companies are often not just rejected, but are rejected months after their initial inquiry. Unless samplers have connections to the industry or are rich enough to afford talented lawyers who can apply pressure, record labels have no impetus to quickly respond to requests. This leads to musicians going full speed ahead on sample-using projects that must later be scrapped because companies have finally told them no. Progressive charging doesn t eliminate deliberation on the part of record labels, but it does streamline the process by removing elements that have traditionally slowed it down, such as lack of money or industry connections on the part of musicians. Whether their licensing request has been approved or denied, it is easier for artists to create if they just know the answer early in the production process. Progressive charging, by lessening the bureaucratic load, should hasten communication between labels and aspiring samplers in that regard. In conclusion, progressive charging is the direction in which the music industry needs to go if it wishes to encapsulate the spirit of the Digital Music Era, as well as to revitalize trust with sampling artists, sampled artists and consumers. It behooves not only record companies but also musicians for the industry to standardize a licensing model that gives labels compensation that is commensurate, in some fashion, with the wealth of samplers or, as is often the case, their lack thereof. With careful consideration to time frame capping, sampled artist compensation and raw charge capping, industry leaders can revolutionize the way that labels and samplers do business.