Published 04/24/2015

By Jean-Robert Bisaillon

The Songwriters Association of Canada recently began proposing that the concept of fair trade be applied to music. In doing so, the association had no choice but to take a long, hard look at the parameters that would define what’s fair or unfair in our creative industry. As is the case for the certification of value chain actors in the coffee industry, this begins with the fair compensation of small producers — namely songwriters, in the case at hand. In the field of fair foodstuffs, certification is based on a floor price, product traceability throughout the transportation chain, as well as transparency when it comes to agreements and wages. As Fair Trade Proof so aptly put it, “Transparency makes fairness possible because it makes hiding the truth impossible.”

Digital distributor IODA (Independent Online Distribution Alliance), which operated from 2003 until it was acquired by Sony in 2012, and since merged with The Orchard, had seized on this variable and created quite a stir in industry practices by offering the labels it carried access to the delivery agreements it had concluded with its partners. What distinguished IODA from others in the field was the online, real-time dashboard it offered its customers. Among the data it allowed one to consult was the percentages paid to IODA by online services.

Transparency_IODA

In its presentation of Fair Trade Music, the President of the Songwriters Association of Canada, Eddie Schwartz, identified four different sources of income for streaming services: ad revenues from impressions on free user accounts; income from monthly subscription fees; income from data mining sales (data on listening and general usage habits of users); and equity appreciation. While revenue streams from advertising and subscription are similar to the pre-digital broadcasting industry, revenues from data mining are completely new. Stakeholders in our industry will require a high level of transparency to report on the value of streaming plays.

A study by independent economist Pierre É Lalonde titled Fair Compensation for Music Creators in the Digital Age evaluated that only four percent of the sums paid to the industry by streaming services was devoted to the creative side of the industry (songwriters, composers and music publishers), the balance of this going to the producers of sound recordings. To reverse this situation, competition between the stakeholders of legal online offer will have to be based on a much higher level of transparency.

Transparency_CSV_V2

The .csv table above presents the aggregation of sales for a digital catalog as it is transmitted by a distributor. Just as in the old days, when account statements made absolutely no sense to the uninitiated, we are faced once again with a torrent of gibberish. Moreover, trafficking data in a .csv is child’s play. So who will vouch for the validity of the data? Is trust in our commercial partner a sufficient business guarantee? To ask the question is to answer it.

Sooner or later, diligent accounting procedures of music statements will have to be regulated. Just as this type of control applies to business and individual revenues through tax and accounting legislation, we will need to take a long, hard look at the accountability of online digital content use. A good example of this is France’s Transparency Rights Management, which is certified based on similar principles, by the Fédération des tiers de confiance.

In other words, transparency doesn’t happen on its own; it needs to be coaxed.