TV and Film Composers Say Netflix, Other Streaming Services Insist On Buying Out Their Music Rights - Hollywood Reporter PDF

12/12/2019 TV and Film Composers Say Netflix, Other Streaming Services Insist on Buying Out Their Music Rights
Their Music Rights | Hollywood Reporter
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MUSIC
TV and Film Composers Say Netflix, Other

Streaming Services Insist on Buying Out
Their Music Rights
12:27 PM PST 12/11/2019 by Kathryn Kranhold, Billboard
  
Courtesy of Netflix
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https://www.hollywoodreporter.com/news/tv-film-composers-say-netflix-streaming-services-insist-buying-music-rights-1261940 1/11
12/12/2019 TV and Film Composers Say Netflix, Other Streaming Services Insist on Buying Out Their Music Rights | Hollywood Reporter
 
"We’re committed to paying our creative partners

fairly regardless of how the industry evolves," says
Netflix spokesman Jonathan Bing.
At the end of October, close to 90 composers and songwriters from around the world traveled to
Budapest to discuss a contentious issue: streaming services’ efforts to upend how composers
are compensated for their work.
Headlining the two-day International Council of Music Creators (CIAM) General Assembly was top
Netflix music lawyer Carolyn Javier, who sought to defuse composers’ concerns over licensing
contracts, known as buyouts, in which the streaming service pays them a one-time fee for all or
most of the rights to their work, precluding them from receiving any backend royalties in the
future. It has long been standard procedure for composers to be paid royalties for their
compositions each time one is performed in a public setting: on the stage, at a bar, in a network
TV or cable series, and now in audiovisual content streaming worldwide.
Sources who attended closed-door meetings that Javier held with composers and songwriters
say the attorney sought to reassure those in the room that Netflix does not require buyouts,
even if independent producers working with the streaming asked for these terms.
BMO Capital Markets media analyst Daniel Salmon estimates that in 2019, Netflix could spend as
much as $15.1 billion on licensing and creating original content — up from $12 billion in 2018 —
to its 158 million subscribers worldwide. The entertainment giant has locked up such reliable
hitmakers — producers, showrunners and filmmakers — as Shonda Rhimes (Grey’s Anatomy,
Scandal), Ryan Murphy (American Horror Story, Pose), Martin Scorsese (The Irishman) and Game of
Thrones creators David Benioff and D.B. Weiss with multiyear deals reportedly valued as much as
$300 million. Netflix is also increasingly ramping up local production overseas to sign up non-
English-speaking consumers as its subscriber base grows faster outside the U.S.: Seven million of
the 7.6 million subscribers Netflix is expected to add in the fourth quarter 2019 will come from
 
outside the U.S.
The streaming service is not nearly so generous when it comes to the songwriters and
composers that score its programming, however. According to more than three dozen
composers, agents and lawyers interviewed for this story, Netflix and other Hollywood players
are seeking buyouts via contracts that require composers to give up all or most rights to their
work and any future royalties for its use in exchange for a one-time payment.
Netflix is not alone, nor is it the first, in its efforts to seek buyouts from composers. But given the
company's power and influence in the entertainment industry, the practice has spurred North
American composers to push back. Earlier this year, one group, led by award-winning composers
including Carter Burwell (The Ballad of Buster Scruggs; Three Billboards Outside Ebbing, Missouri),
John Powell (Solo: A Star Wars Story, The Bourne Identity) and Miriam Cutler (The Ghosts of Abu
Ghraib; Love, Gilda) started an online initiative called Your Music, Your Future, to educate their
peers about their rights to their music. To date, it has attracted more than 3,700 signatories.
Although most sources interviewed for this story over several months asked to remain
anonymous to avoid a pubic battle with Netflix and for fear of losing work, several prominent
composers who have not been affected by buyout contracts spoke adamantly against the
practice, calling it a threat to composers’ livelihoods and intellectual property rights.
"This is not acceptable. No one should have to accept" a buyout, says Burwell, whose recent
scores have included one for Joel and Ethan Coen's 2018 Netflix release, The Ballad of Buster
Scruggs. He adds that if Netflix, or any other streaming service "came to my agents with a deal
like that, it wouldn’t last long.”
Netflix does not use the term "buyouts" to describe contracts in which it buys a musician's rights
to a composition for a flat fee. The company instead uses the term "direct licenses" to refer to
deals, in which the streaming service and affiliated production studios directly negotiate with
composers, circumventing performing rights organizations that negotiate fees and collect
ongoing royalties on behalf of composers.
Still, it says these agreements aren't mandatory. "It is not true," says Netflix spokesman Jonathan
Bing, that for composers to work on a Netflix production "their only choice is to sign a direct
license."
"We’re committed to paying our creative partners fairly regardless of how the industry evolves,"
he says.
But music industry sources say Netflix and its producers appear to target mostly young
 
composers or those who aren't as much in demand as, say, Burwell or Cutler — and can't afford
to pass on the work or complain about the terms for fear of being blacklisted. One award-
winning composer says he agreed to a buyout because it was his only option if he wanted to
score a Netflix documentary.
Composers and lawyers also point to what is referred to as a handbook that has given to
producers that is titled "Netflix Delivery Requirements." The document spells out production
specifications, including a composer agreement. The document, obtained by Billboard and
reviewed by music lawyers, instructs producers that it must provide a "work for hire" agreement
with composers. Among the specifics, the agreement allows Netflix to use the compositions,
lyrics, performances and recordings "without limitation" and "throughout the universe in
perpetuity." Netflix says that these requirements can be negotiated by producers and that they
are not final.
Composers from other countries, especially continental Europe and Britain, have stronger
copyright protections than the U.S. and other parts of the world, but sources say those rights are
now being tested as well. Netflix music executives have been meeting with music industry
organizations across the continent and in the U.K. to address differences in contracts and
compensation models.
In France, executive producers working for Netflix do not have the legal right to negotiate
buyouts directly with composers, but that doesn’t stop them from attempting to do so, says
Cecile Rap-Veber, director of licensing, international and operations for the non-profit French
rights group Society of Authors, Composers and Publishers of Music, or SACEM. Rap-Veber says
SACEM’s members have declined what she refers to as an American agreement when they are
approached by local producers working with Netflix.
SACEM, which was started as a music authors and composers collective in 1851, also collects
payments for American composers when their work appears on French television, movie
theaters or streaming platforms. SACEM then distributes the royalties to the U.S. performing
rights organizations, such as ASCAP and BMI, who in turn pay their members.
Rap-Veber is concerned that Netflix could try to push the U.S. buyout business model worldwide.
"What I want is to get fair remuneration for my rights holders," Rap-Veber says. "The numbers of
subscribers, of streams and Netflix revenues have dramatically increased in the world thanks to
the works of our creators. They should then benefit from that success, too, which is the case for
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In Europe, music industry advocates and composers point to the passage earlier this year of the
 
EU Copyright Directive, which is expected to provide protections to composers as it is adopted
over the next two years. Already, there are many questions over how it will be implemented and
enforced. One important rule requires streaming services to report streaming data to enable
artists to get fair compensation if a show is a success. Unlike major film studios and traditional
television networks and cable channels measured by Nielsen, Netflix does not report streaming
data to artists.
One global artist rights organization, the International Confederation of Societies of Authors and
Composers, or CISAC, has been studying the legal ramifications of buyout contracts, and refers
to them as "exploitation." CISAC’s president, French composer Jean-Michel Jarre, wrote earlier
this year, "In this struggle, we face giant opponents — the Goliaths of the tech world."
CISAC’s director general, Gadi Oron, says it’s unclear whether American VOD services can impose
U.S. market practices and contracts on non-U.S. creators that "force the composer to surrender
and waive all rights in all countries. "The organization is investigating whether those contracts
conflict with the legal framework outside the U.S.," says Oron. European and U.K. laws make it
difficult, if not potentially illegal, for Netflix to impose buyouts on composers.
British composer Dru Masters says he received a standard Netflix contract containing a buyout
clause. The contract, however, also had a clause exempting British composers who have
agreements with the country’s Performing Rights Society for Music, which negotiates on behalf
of composers and songwriters and collects royalty payments for them, says Masters.
With the advent of video streaming, actors, writers and even composers that perform their
scores have also dealt with new contract provisions spelling out how they will get paid for their
work, but they are represented by guilds and unions that advocate on their behalf. Composers
were unionized from the 1960s until 1971, but efforts to organize since then have not
succeeded.
Composers say that if buyouts became standard in the industry, it would greatly affect their
earning potential. Composers’ pay is typically broken into at least two components: an initial
upfront fee for their time writing a score or theme song; and the cost of producing the music.
(For example: renting a recording studio and hiring musicians to perform on the score.) The
average fee for a one-hour network show could be as high as $277,500 in the first season,
according to the latest edition of Music, Money and Success, by music lawyers Todd and Jeff
Brabec. A composer could earn as much as $330,000 in a second season of a successful show,
says Todd Brabec, a former ASCAP executive. He estimates composers can earn more than
$500,000 over three years in public performance royalties when a show has a second run on
 
network, and then airs on cable and streaming services.
But, Brabec adds, the upfront fee isn’t a lot of money. "If a composer breaks even or makes a
little money, they are fortunate," he says. "The cost of producing eats up the entire amount."
Composers make most of their money on royalties paid for repeated viewings or plays of their
music. Major production companies typically own the copyright to an original score for a film or
television series as part of a "work for hire" contract, but composers retain a financial interest in
the copyright and share in the royalties, also called public performance fees.
Emmy Award-winning composer Jeff Beal, who has scored multiple network and cable shows as
well as Netflix’s first original series, House of Cards (a show that was produced by MRC Studios, a
division of Billboard's parent company), says, "In any given year, the [royalty] amount equals or
exceeds the amount you get upfront. That’s the value of the copyright overtime." He points out
that royalty fees for streaming are much lower than for network shows. (Beal nevertheless
praises Netflix for taking risks. "They really believe in the artists," he says.)
Industry sources say royalty fees range from as much as $300 a minute for a 15-minute score on
a network show to as low as six cents a minute for shows streaming on Netflix.
Composer Joel Beckerman, whose scores include NBC Nightly News With Lester Holt and the late
Anthony Bourdain’s Travel Channel series No Reservations, says he has made the "vast majority"
of his income through royalties on a handful of hit shows. "If you don’t get the backend on your
hits, you can’t make a living," says Beckerman, who is one of the composers leading the Your
Music, Your Future education initiative. "It’s how [composers] put food on the table."
Netflix is hardly the first entertainment company to pursue buyouts with composers: CBS made
an unsuccessful attempt in the 1980s. The Discovery Channel is seeking to directly license music
from composers via buyouts as it rewrites terms of contracts with production studios, according
to industry sources close to the discussions. Discovery has informed composers and musicians
that it will require composers and musicians to sign licensing contracts similar to those used by
Scripps Networks Interactive, which it acquired last year, according to the same individuals.
In a written statement, Discovery’s Nathaniel Brown said, "Our 8,000 hours of original
programming a year drives enormous economic value to the music community. We compensate
countless composers and musicians for their valued contributions, and will continue to do so."
Facebook has also aggressively pushed for buyouts with composers for its "Facebook Watch"
platform,
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ESPN has long bought out composers’ copyrights, paying no royalties, according to composers
and lawyers. But these buyouts are considered less of an issue because the Walt Disney
Company-owned cable sports network uses mostly stock library music and typically does not
have reruns.
In the U.S., composers can trace their right to royalties back to 1914, when composer Victor
Hebert sued a Manhattan restaurant after hearing a song from his comic operetta, Sweethearts,
performed there with an orchestra. The eatery's owners argued that patrons were there for the
food, not Hebert’s music, but the U.S. Supreme Court ruled in favor of the composer.
Around the same time, Hebert and his peers started ASCAP, the first U.S. organization to protect
the rights of composers and songwriters. Since then, songwriters and composers have received
royalties or public performance fees for the commercial use of a copyrighted song or score.
On television and in streaming, creators’ royalties are based on several metrics, including the
length of a composition and how frequently a show featuring the composition is broadcast or
streamed. Studios track compositions in conjunction with third-party systems and PROs.
Composers then get detailed statements that show how often an episode aired featuring their
work.
But while Amazon and Hulu self-report how many times a show is streamed, Netflix does not.
With the rare exception of major hits such as Bird Box and The Irishman, where viewership is
released to the media, lawyers and agents say that Netflix reports only that an episode or film
streamed once, even if it was streamed by millions.
"Where are the metrics?" says one composer who was not required to take a buyout and is
waiting on a royalty payment from a Netflix documentary. "I’m sure they are fudging the data."
The streaming service's lack of transparency when it comes to its streaming numbers may
change in the near future: Netflix has said it would provide more viewership data on its shows,
and the EU Copyright Directive could force it to fully report its data if the company wants to do
business in Europe.
When it comes to negotiating contracts that contain buyout clauses, entertainment attorney Joe
Carlone says, "There’s no blanket rule," and adds that he encourages composer and songwriter
clients to weigh whether it makes sense to take an upfront payment for a limited project that
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success for a TV series was at least four seasons of 22 episodes that would have an afterlife in
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syndication or on cable — which would result in years of royalty payments for a composer. It is
not unusual for Netflix and other streaming services to commission a limited series of eight or so
episodes and cancel the series after its first season. In that case, a buyout may have been a
smarter financial move, says Carlone, explaining, "We factor in the present value of the money,
when and how long [the public performance royalties] would come in."
But another longtime music lawyer says he discourages clients from directly licensing their
music to Netflix. He says the lack of streaming metrics makes it difficult to know how well
streaming series are performing in general, which is important in determining a fair buyout price
to compensate for no backend royalties.
"Everyone is throwing numbers at a dart board," says another veteran music lawyer.
British composer John Powell recognizes young composers, in particular, face a tough decision.
"If you give [your rights] away, you get some money up front," he says. "But if it’s a huge hit, you
earn 10 times or more. It’s a gamble that proves to be very difficult when you are trying to get
your career off the ground."
To manage its increased investment in original content and worldwide expansion, Netflix is
ramping up its music legal and business team globally with hubs in London, Amsterdam and São
Paolo, Brazil. In the last year, Netflix hired Amy Dunning, the former head of music for Lionsgate,
and the streaming service has brought on music licensing veterans from Disney, Sony and
Warner Bros.
It is also looking to cut costs and ensure predictable expense streams, says industry experts, and
reducing what it pays to license music is one way to do so. Disney and Apple's entry into the
streaming business has only amplified concerns that buyout contracts will "become normal
across other streaming services — that like a virus it spreads," says Beckerman.
This story first appeared on Billboard.com.
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12/12/2019 TV and Film Composers Say Netﬂix, Other Streaming Services Insist on Buying Out Their Music Rights

Their Music Rights | Hollywood Reporter

TV and Film Composers Say Netﬂix, Other

"We’re committed to paying our creative partners

This story ﬁrst appeared on Billboard.com.

CONSIGUE EL MEJOR PRECIO

The 'Late Late Show' guest host and supermodel

 answering tough questions on Tuesday's episode of 

Watch the full game below.

Spill Your Guts: Harry Styles & Kendall Jenner

Never miss a story. Stay up-to-date with THR’s Today in

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