[Keeping Tempo With Music Biz] — The Intricacies of Music Licensing for Podcasts with OneHouse’s Jim Griffin

Podcasts are the new norm for many, with more than half of Americans listening to a podcast in the past year and the format’s “share of ear” doubling since 2014, according to Edison Research. Because of this sharp increase in popularity, more and more industries are looking to grow their piece of the revenue pie from the format. There are unique opportunities that the format holds for our industry, as radio-style podcasts benefit from having songs or song clips inserted in episodes, and because shows with a niche audience can be used as a targeted marketing tool for new music promotion. But how has the industry handled creating a synergistic relationship with podcasters, particularly in reference to licensing efforts? We asked OneHouse Managing Director Jim Griffin to help us sort out what’s happening right now in the podcast licensing space, and what steps can be taken to create a mutually beneficial relationship for content creators and rights holders.

MB: Would you give us an overview of the current state of music licensing for podcasts — what some would call the “Wild West?”

JG: If as they say it’s the “Wild West,” it’s because it’s about $500+ per hour gunslingers dueling at the expense of artists and listeners. Licensing music for a podcast today involves a pair of lawyers papering a deal little different legally from a phonorecord delivery, but nowhere nearly so lucrative on average. It’s direct, and not subject to radio or webcast rules that provide blanket or statutory licenses. The same licensed radio show that is a licensed webcast — the exact same content — is not yet easily or efficiently licensed for podcast use, leaving money and exposure on the table.

MB: As it stands right now, how should a podcaster go about accessing a specific song for their show?

JG: Hire a lawyer! The rights holder has one, too. Price the deal accordingly, then find public domain music! Seriously, locate the rights holders (song and sound recording) and seek a license, track by track.

It’s important to emphasize that one size does not fit all. There are many types of podcasts — some emanating from the center of the media world, and others from the edge. The center has easy access to lawyers; at the network’s edge, anything that requires a lawyer is not practical.

MB: This brings up the “Fair Use” concept, which has gained prominence since the early days of YouTube. Is there any instance where Fair Use protections for music apply to a podcaster?

JG: Fair use is a defense, not a license strategy. If you need to defend the use, you’ve already lost. Find a strategy better than claiming not to need a license.

MB: Podcasting has harkened back to the days where talk radio format was much more prevalent, often including intro and outro music. What difference exists between talk radio and podcasts that makes licensing more tricky — or is there not one?

JG: As McLuhan oft repeated, the medium is the message. The medium of radio is very different from digital delivery — digital can deliver the same digits as a CD of the same content, unless you agree to down-sampled versions, talk over the beginning or end of the song, use no more than half the song, and so on. There’s also the moral right of attribution to address, access to the podcast data, truing up the licensing fee if the show’s audience exceeds expectation, and so on.

MB: Where does the responsibility lie to facilitate conversations about the right way to include music in podcasts — do music rights holders need to better inform podcasters that they must legally license their music, or should podcasters be aware of the need for legal use and approach rights holders with that in mind?

JG: We need to make it faster, easier and simpler to pay for music in the hopes that when it is easier, more people will pay. Any podcaster of consequence is keenly aware of infringement risk. If we want money and/or exposure, it’s our job to awaken podcasters to license opportunities.

MB: How can we as an industry raise awareness of the need for podcasters to properly license content for their shows in a proactive way, before litigation becomes necessary?

JG: Unfortunately, we’ve sent the message that we don’t care. That we’re not interested in making it fast, easy or simple. If we cared, it would be as simple as licensing music for a webcast. Here’s the irony: in some of the most favorable use cases, the content is precisely the same, down to the digit. Podcasters want to license the same content that they broadcast and webcast. 

MB: This also raises the question of the role that podcast platforms play in the licensing discussion. What role do platforms like Spotify, Stitcher, Apple Podcasts and the like play in current licensing discussions? 

JG: They can act as proxy for their podcasters, making it more efficient and offering easier reporting. Many of these same players — Spotify, Apply, and so on — already pay for music and podcasts are diluting the pool of money generated by content. In a real way, we need to compete for a portion of that pool diversion and the exposure it generates.

MB: Is it even the place of podcast host platforms to get involved in licensing talks? And if so, in what ways could they support podcasters?

JG: They have the aggregated power to get the job done with efficiency, offering more centralized negotiations for rights holders who might wish to avoid the expense of one-on-one negotiations.

MB: Towards the end of last year, SoundExchange announced the launch of PodcastMusic.com, which would allow for podcasters to purchase licenses on a one-to-one basis or via a subscription model. Based on the groundwork of this solution, what do you think the future of licensing deals for podcast will look like?

JG: It will be created by a Venn diagram of sound recording and song owners who opt in to these deals and perhaps a series of tiers for the intended licensed use. Some will wish it were statutory, much as is SoundExchange’s principal webcast license, but that’s an opportunity or challenge for Congress to address. That works in the U.S., but podcasting is a truly global business. Opt-in has the advantage of striking truly global deals and I think SoundExchange will do well with this model. Once optimized, it may serve as a pattern of licensing for the next new formats that follow podcasting. SoundExchange has low administrative fees and deep expertise licensing digital. 

MB: Do you think a future exists where new blanket or statutory licensing deals exist that allow smaller podcasters to access music without worrying about payments?

JG: If rights holders want it, this can happen. The Music Modernization Act, after all, passed without dissent, but the industry’s traditional opposition to statutory licensing stands in the way, along with problems associated with national deals in a world with more than 160 countries. National law is a clumsy and blunt tool for global media licensing. A legal approach also requires resolving very real antitrust concerns.

MB: With so much effort going into restructuring compensation for creators in the U.S. via the passage of the Music Modernization Act, do you think the licensing opportunities that podcasts offer the music business call for copyright law to be revisited? Or does it serve that medium fine as is?

JG: As mentioned above, the law is slow and inherently sovereign — every podcast reaches more than 160 countries. It is also important that Congressional action eats any potential antitrust sins. Best of all will be copyright law that anticipates exponential change, perhaps with rulemaking authority for the US Copyright Office to act as it sees fit.

Podcasting as a medium is already a decade and a half old, and there will be countless new mediums in the decades and centuries ahead. The challenge facing the podcast medium is to set a pattern that music licensing can follow to react more quickly to change for the next new format, and beyond. This will not be the last licensing drill of this kind, and we should learn to license with alacrity.

You can read past “Keeping Tempo” articles via the portal linked here. And, stay tuned for more insightful discussions from our members and partners from across the industry!