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Penny Fractions: Always Read the Contract, Always Read the Fine Print

Hello, y’all I hope this week is going well. This week’s newsletter heads down a slightly different p
Penny Fractions
Penny Fractions: Always Read the Contract, Always Read the Fine Print
By David Turner • Issue #60 • View online
Hello, y’all I hope this week is going well. This week’s newsletter heads down a slightly different path. I’m getting a little more in the weeds regarding a couple recent stories on contracts and labor, rather than specifically music streaming. Hopefully this is interesting, but if not well I know y’all will let me know. Otherwise thanks for reading, continue to share, and let’s dive into this.

On Friday afternoon the Verge published a story that centered on a contract SoundCloud was offering artists for the company’s direct monetization program called SoundCloud Premier. The articles raised a number of concerns about agreements in the contract that not only appear to be out of step with industry standards but appear to be disproportionately on the side of SoundCloud:
Most notably, SoundCloud’s agreement includes the broad release of all claims against the company (called a “covenant not to sue”) and a mandatory arbitration clause. Artists who sign this agreement agree to never sue SoundCloud or even assist in someone else’s lawsuit against SoundCloud, and to take any disputes to arbitration instead of court.
The story went up on Friday afternoon and by Monday, SoundCloud walked back nearly all of the issues that were brought up by the Verge’s reporting. The language about not being able to sue: gone, wording around how long an artist had to dispute SoundCloud payout: removed, and the company even eliminated that an artist must make at least $100 in revenue to be paid by SoundCloud. (I just wanna say all of this was bad, but that particular note was absurd) SoundCloud even posted online updated contract language for all to now see.
I’ve written a number of kind words about SoundCloud the last few months with regards to shifts they’ve made in the artist first direction. Now, I’ll be frank to say I won’t be praising the company for its 180 flip here. The original language presented was unacceptable for a company that is in a rare position to actually help improve the lives of artists in this streaming-first ecosystem. Unfortunately SoundCloud isn’t alone in this type of language, because similar anti-lawsuit language can be found in contracts by a company like YouTube. A reason I do this newsletter is to be critical of these companies that control the monetary flow of thousands of wannabe musicians, but let me shift my attention for a moment towards another story of labor within the music streaming industry.
Lessons from SAG-AFTRA's Recent Contract
Last week, I mentioned how SAG-AFTRA (Screen Actors Guild-American Federation of Television and Radio Artists) agreed to a tentative deal with the major record labels. What was boasted about in this most recent deal was improvements in the minimum wages being offered and an increase in the amount of streaming money towards AFTRA’s Health and Retirement plan. Even though I’ll note they were light on the specific details as the deal hasn’t yet been approved by the union.
Now just to give a little bit of context, this 2018 deal builds on SAG-AFTRA’s National Code of Fair Practice for Sound Recordings, or in simpler terms the “the Code,” which sets the minimum rates for performers and contributors money generated by SAG-AFTRA artists into the guild’s health care funds. In regards to music streaming the revenue generated by streams was first added in the 2015 contract.
AFTRA’s code dates back to the early 1950s and mirrors a model the American Federation of Musicians were able to win after multiple strikes in the 1940s where a percentage of the revenue generated by the record industry was put back into providing work for unionized musicians. These particular union funds can take different shapes, for example here’s an expert from a September 23, 1967 Billboard article describing another fund for workers within the American Federation of Musicians:
Under the agreements each record manufacturer bases its contributions on its sales of records, and each Federation musician who made phonograph records receives an individual payment in the proportion that his annual scale wages from recordings bears to total scale wages paid by the industry to all union musicians.
The Future of Music Coalition a few years ago explained in fuller detail how SAG-AFTRA’s deal worked, particularly in regards to the new medium of streaming music:
Here’s how it works. If an artist has a royalty contract, which most major label artists do, the label makes special contributions to SAG-AFTRA’s fund on behalf of the artists under exclusive contract based on royalties earned, even if unrecouped, and including all those micropennies netted from streams. So if you sold $150,000 worth of records in a 6-month accounting period, but you still have $375,000 in recording costs on their books, you won’t be seeing a royalty check yourself. However, the label will make a contribution to SAG-AFTRA based on the $15,000 you earned.
Even though these deal were set-up long before the record industry fully matured, these funds and deals offer a glimpse at what unions can provide for rank-and-file musicians, who might not make it big but still need health care or a little bit more money to get by. A vision of music that treats its like a 9-5 career, not a pursuit of capitalist passion.
The Power of Collective Bargaining
What I hope is clear from above is that when labels were/are forced to make agreements not with individuals but collective groups of musicians these are some of the material gains that can be made. Where when SoundCloud, or any other platform or label, throw an artist and they can either take it or leave it. There is no collective bargaining with SoundCloud, or another company, over issues found within the deal, there is no public campaign to say these terms are unacceptable artist deserve better. Instead the narrative is instead flipped. SoundCloud or Spotify will position these deals and agreements as offering more choice and freedom to artists but often it is choice given by providing the least.
What frustrating about this situation is that this is supposed to be SoundCloud’s push to be more artist “friendly” yet what I see is a company shedding their responsibilities to artists. Even more brazen is that the company attempted to get in legal writing that artists who engage with this new service agree to never take legitimate action against the company if any wrongdoing were to take place. Before the updated language the company was offering a real actual bait-and-switch, join the artist friendly program but if anything goes wrong the right to hold the company accountable is gone. The same abuse of labor happens with Twitch that positions its community not as workers but a family. A family owned by an anti-union boss worth over $100 billion dollars. I’ve accepted that the model of music streaming is broken for most artists, except for those who win the lotto tickets life throws them, but I don’t want to keep overlooking ways artists should demand more out of the platforms and labels that need their labor.
6 Links 2 Read
I’ll just put this down as a marker to say I should come back and do an update on where Facebook and Instagram are with regards to where they fit in the overall music ecosystem, because they’re starting to become by far the most interesting that most of these companies.
This story left me with two thoughts: 1. The desire for such targeted advertising essentially leading to outright lying is certainly going to be the norm. 2. I don’t think I ever realized just how little “artwork” feels important in music when you’re actually on a streaming platform but how impactful it is on Instagram, Twitter, or even Tumblr. How each medium is able to convey visual information is something I should keep a bit more in the forefront of my mind.
Cherie Hu writes an interest piece looking at what exactly is all of this data doing for people trying to find the next Taylor Swift or Kendrick Lamar. The jury still appears to be out but the amount of money being spent says there must be gold to find.
I’ll get into this another week when my thoughts are a little bit more big picture but I think at this point I just fundamentally disagree with Mark Mulligan here. Spotify isn’t going anywhere but I don’t see it about to pull of a Netflix in the next year unless they start cutting some massive checks.
I wrote a little about people leaving curation jobs and a sense that playlists, while great for marketing, aren’t really all that important.
The Last Format - Real Life Mag
I wrote about the MP3, the history of the record industry planning forced obsolescence, and how the MP3 could’ve reshaped the music industry, but how quickly that moment was lost.

The Penny Fractions newsletter arrives every Wednesday morning (EST). The Penny Fractions artwork was done by graphic designer Kurt Woerpel whose work can be found here. Any comments or concerns can be sent to pennyfractions@gmail.com. If you enjoy this newsletter certainly include it in the fineprint of any contracts you may be sending out this week.
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David Turner

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