Amazon's Streaming Contract is Entirely Unacceptable!

Original article Thursday, April 10, 2014 by Ari Herstand http://www.digitalmusicnews.com/permalink/2014/04/10/amazons-streaming-contract-entirely-unacceptable

After speaking with the president of one of the
largest independent publishing companies in the world, who has 20+ years of
experience in the field (who wants to remain anonymous because of NDA
agreements), his takeaway from Amazon’s Music Publishing Rights Agreement was
“this is entirely unacceptable.”


Digital Music News published the contract in full
earlier this week.


This publisher who I spoke to, let’s call him Joe Pub, explained that Amazon
is trying to bypass Section 115 of the US Copyright Act
and define its own royalty rates.


Amazon is trying to bypass US Copyright law and define its own royalty
rates
Section 115 of the US Copyright Act is the rate, set by the government, that
defines the mechanical royalty rates. Most people know that the statutory
mechanical royalty rate is currently 9.1 cents per
download or physical “phonorecord” under 5 minutes (and then 1.75 cents per
minute thereafter), but few know what the rate is per stream. That’s because the
streaming rate is based upon the streaming service’s number of subscribers and
users. More subscribers to the service equals higher mechanical royalty
rates.


For the record, Spotify, Beats and the other streaming services all follow
Section 115 of the US Copyright Act and follow the defined mechanical royalty
rates.
You can read what the (government-set) streaming mechanical royalty rates
are here.


Once a publisher signs off on this agreement, Amazon can set their own rates
AND CHANGE THEM AT ANY TIME without renegotiating with the publisher. Amazon is
trying to pull an iTunes-esque user agreement with publishing rights. Big no
no.


Joe Pub told me that he has been staring at the contract on his desk for the
past two weeks “grumbling about it.” He doesn’t think any of his other
independent publisher friends are going to sign this either.


Amazon also included a clause that forbids the publisher from removing their
songs from Amazon if they keep them up on any of the other streaming services
(like Spotify, Google Play or Beats).
Meaning, Amazon could say “actually remember that 21% we promised you for
mechanical royalties – naw we meant 2.1%. Take it or leave it! But if you leave,
you MUST leave ALL the other streaming services as well. Or we’ll sue you.”


If a publisher removes their catalog from Amazon, but leaves it up on the
other streaming services, Amazon could theoretically sue this publisher for as
much as they want. BUT the publisher may only sue Amazon for a maximum of
$50,000.


Yup! Amazon snuck in a Limitation of Liability clause of $50,000.


And from what I hear, the distribution/label agreement is just as shady.
Don’t expect Amazon to launch their streaming service any time soon. And if they
do, it most likely will not contain the catalogs of most independent publishers,
labels and artists.


Thanks, but no thanks, Amazon.

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