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Safe harbour costs US music industry $1bn per year, says study

Original article from: http://www.m-magazine.co.uk/news/safe-harbour-costs-us-music-industry-1bn-per-year-says-study/

The US recorded music business could be missing out on as much as $1bn in royalties per year due to the so-called ‘safe harbour’ legal loophole, according to a new study.

Researchers from the Phoenix Centre For Advanced Legal and Economic Public Policy Studies, a think tank based in Washington DC, have measured the value gap between what YouTube is paying rightsholders and the market value of those rights.

The study claims that ‘market-based royalties for subscription-based services are about eight times larger than that paid by YouTube’.

In their calculation of how much revenue would be generated if the safe harbour law was amended, researchers found that ‘a plausible royalty rate increase could produce increased royalty revenues in the US of $650m to over $1bn a year’.

‘This is a sizeable effect, and lends credence to the recording industry’s complaints about YouTube’s use of the safe harbor,’ it continued.

Entitled Safe Harbours And The Evolution of Music Retailing, the study was conducted by T Randolph Beard, George S Ford and Michael Stern who applied ‘accepted economic modelling techniques’ to simulate revenue effects from royalty rate changes on YouTube.

Using 2015 data it showed that if YouTube were to pay the recorded music industry market rates, similar to what other streaming services pay, its economic contributions to the sector would be significantly larger.

Ford, the study’s co-author and Phoenix Centre chief economist, said: ‘Outdated regulation is determining where and how people listen to music.

‘The fact that DMCA [Digital Millennium Copyright Act] safe harbour exploitation costs the US music industry between $650m to over $1bn a year in lost revenues is a sizeable effect and lends credence to the recording industry’s complaints about YouTube’s use of the safe harbour.’

Cara Duckworth, a spokesperson of the US record label trade body RIAA, told Music Week: ‘The Phoenix Centre study is more fresh evidence that YouTube continues to treat music creators unfairly by hiding behind an outdated DMCA and paying below-market rates.’

Read the full report.

What is safe harbour?

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