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Know your digital rights: Streaming services

Whether you are considering releasing your sound recording on a streaming service like Spotify or you've already ended up on a few of Spotify's high-profile playlists, there are steps you should take now to ensure you are properly compensated for your work.

In an ideal world, every artist would have their music available and be paid handsomely by those who listen to it. But the reality is far from that. Part of the reason is that entertainment law is more complex than ever.

Artists used to have to sign away their publishing rights to a major label in order to become a recognized name. Commonly, artists would retain the mechanical rights (reproduction of a song on record) and public performance rights (payment when it was played on the radio or TV). But artists also had to give up and/or share revenue streams with record labels and publishing houses in exchange for the market access provided by such companies. Today, many artists emerge into the public eye through digital means, including streaming services. Whereas the law regarding compensation through record labels is fairly developed, the laws surrounding entertainment on the Internet remain nebulous at best.

That's why, no matter how you want to spread your music, talking with an entertainment lawyer is so important - particularly if you want to make money doing what you love.

An example: Spotify

Spotify, an online music streaming service, has paid out more than $3 billion in royalties, but the estimated paid amount per stream to artists is less than half a penny. The company claims to pay 70 percent of its total revenue to the rights holders, but a majority of this goes to the bigger artists, leaving smaller grassroots artists out in the cold (see this article). In other words, the Rolling Stones' millions of plays are paid for, but your hundreds of plays may not be.

A current lawsuit against Spotify by musician David Lowery is attempting to require Spotify to obtain mechanical licenses for songs rather than simply paying performance royalties. He is not the first or last artist to question the compensation structure of streaming services.

What can you do?

1. Determine what your priorities are

Ask yourself what your priorities are and then discuss them with an attorney. Are you comfortable with Spotify and other companies exploiting your music? Perhaps you think of it as a free marketing tool to develop an audience and are less concerned about compensation. Or perhaps you want to join the likes of Taylor Swift, who refused to stream her album 1984 (and only authorized the sale of digital downloads and physical phonorecords).

If you have an extensive catalog of music that has a certain profile with music lovers, or you retained the rights to your music after a deal with a record label expired, then chances are much better that money from your streaming service will be forthcoming.

2. Protect yourself through contracts

In this era of shifting formats and media with the accompanying revenue streams, it's always a good thing for artists and small labels to protect themselves by going into each deal, arrangement or partnership with a contract that covers all conceivable contingences.

It may seem like no big deal to let a streaming service have the music for exposure or let an ad campaign or film use a song. But the ease and speed of digital distribution as well as the broad range of media options has taught us that a song can end up anywhere with a wide audience appearing seemingly out of thin air.

Retaining your rights, or at least being aware of exactly what you are giving away, is always the smart play. Sometimes, contracts from a streaming service can be presented as a "take it or leave it agreement." In these and many other situations, it's best to consult an attorney who is on top of this quickly shifting field of digital rights and entertainment law to make sure you are protected to the fullest extent of the law. By working with you and the streaming service, an attorney can help you negotiate a fair deal that reflects your experience and the marketability of your work.

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