Spotify Brings Music into Podcasts

(This is my first article in a while; I have been working on a larger-scale writing project over the past couple of months, about which I hope to be able to share more soon. I am also in discussions with the Copyright Society of the USA about the next Copyright and Technology conference; we are moving it from January to September 2021, in hopes that we will be able to do it in person. Stay tuned for an exact date and venue.)

Spotify announced earlier this week that it is enabling users of its Anchor podcast publishing platform to use music–entire tracks from Spotify’s massive catalog–in their podcasts. This “Music, Meet Podcasts” campaign indicates not only the current sorry state of music licensing for podcast use but also Spotify’s ability to circumvent the difficulties.

Podcasts have become extremely popular: the latest Edison Research/Triton Digital Infinite Dial survey, from just before the start of the pandemic, shows that over 100 million Americans age 12 and up listen to podcasts regularly. Podcast revenue is starting to reach significant levels, too: the Interactive Advertising Bureau estimates that 2020 U.S. ad revenues in podcasting will approach $1 billion. Total podcasting revenue is more than that because additional revenue comes in through sponsorships, crowdsourcing, and subscriptions. That’s not much compared to $15 billion for music, but podcast ad revenue is growing at almost triple the rate of music.

There are many interesting issues of content licensing around podcasts. On the one hand, with a small (yet growing) number of exceptions, podcast publishers make their podcasts available to podcast apps and users with no licensing at all–they are free to everyone without restrictions.

On the other hand, there isn’t much music in podcasts. Most of it is either specially commissioned for individual podcasts or gotten from libraries of pre-cleared production music such as PodcastMusic.com or from Creative Commons music libraries. That’s because there is no simple licensing mechanism for commercial music in podcasts.

Good background on this topic can be had from–what else?–a podcast. On his latest Musonomics podcast, Larry Miller–head of the Music Business program at NYU, where I teach–discusses this in detail with several guests. Here’s a brief explanation.

Licensing recorded music requires licensing both sound recordings and the musical compositions they embody. Licensing sound recordings requires negotiation with record labels, who can refuse to license. Music publishers are generally required by law to license musical compositions for reproduction and distribution (mechanical licenses). But the industry considers the use of music in podcasts to require sync licenses–the same type of license used for music with video, such as movies, TV shows, or TV commercials. There is no simple mechanism for obtaining sync licenses, and music publishers can refuse to offer them at all.

So, podcasters have to negotiate with both record labels and music publishers to license each piece of recorded music for podcasts (unless they want to rely on fair use arguments). Apart from the fees that licensors charge, this is a grossly inefficient process. There is no blanket license available for podcasts, as there is in (for example) radio broadcasting from PROs like ASCAP and BMI. Nor is there a law that obligates copyright owners to make the material available (compulsory license), as there is in mechanical licenses for music downloading or streaming through agencies like the Harry Fox Agency.

Two of the guests on Larry Miller’s podcast express different views on this. Music clearance expert Deborah Mannis-Gardner says that music publishers aren’t motivated to create a simple mechanism for licensing because they don’t see enough revenue opportunities in the near term. On the other hand, music supervisor Scott Velazquez says that music publishers are currently discussing how to make the process easier. He predicts that it will be possible to license most commercial music easily and cheaply for podcasts, with the exception of “premium” music (songs by big-name artists or songwriters).

A possible solution to this problem would be to create a special category of sync license that delineates podcasting from more typical video use cases, such as “sync for audio only.” The National Association of Music Publishers and/or the RIAA could set up an agency to manage these licenses, as the NMPA did with Harry Fox for mechanical licenses back in the 1920s, or as the RIAA did with SoundExchange to handle sound recording licensing for digital radio in 2000. (Both Harry Fox and SoundExchange subsequently became independent organizations.) Podcast publishers might have to form an organization to negotiate collectively for rates, as the Radio Music Licensing Committee does for broadcast radio or as DiMA does for mechanicals on streaming music services.

It will take a while to sort this out. In the meantime, the lack of easy music licensing mechanisms in podcasting leads, for example, to iHeartRadio not offering its syndicated American Top 40 radio show in podcast form, even though it offers dozens of other syndicated broadcast radio shows as podcasts.

Spotify is one of the few major podcasting platforms that has full music licensing. This raises an interesting question: do Spotify’s existing music licenses (for reproduction, distribution, and public performance) cover podcast cases where rights holders would claim that sync licenses are needed? Spotify’s position is that they do. It’s not clear whether Spotify arrived at this position unilaterally or after discussion with rights holders.

In any case, only paying Spotify subscribers can hear songs used in podcasts; they aren’t available to Spotify’s free subscribers. It’s also not clear whether Spotify put that restriction in place for licensing reasons–Spotify has different license terms with record labels for free vs. paid subscribers–or because Spotify wants another way to steer free users to paid subscriptions.

Other major music services have greater or lesser degrees of podcast publishing capability. Apple and Google have podcast apps, but neither of them offer podcast publishing or hosting services. Amazon recently launched a podcast feature within Amazon Music that features a few exclusive podcasts as well as all of the freely available ones; but it doesn’t offer podcast publishing or hosting tools per se.

The only other major music services that are also significant podcast publishers are Pandora and iHeartRadio. Last year, Pandora launched a feature called Stories, which enables artists to create spoken-word pieces around playlists of their music, and enables third-party podcasters to use music from a selection of pre-cleared tracks.

In other words, Pandora is taking a more conservative view than Spotify on whether its existing music licenses cover the podcasting case. One reason for this is that Pandora Stories are accessible to all Pandora users, the vast majority of whom use its free service, which is only licensed for “non-interactive” (radio-like) and not on-demand music playing; and podcasting is an inherently on-demand medium.

As for iHeartRadio, it publishes several popular podcasts about music, but they don’t include much music in them. iHeartRadio is similar to Pandora in that the vast majority of its users use a free service that is only licensed for non-interactive music use.

Apart from these exceptions, the lack of commercial recorded music in podcasts is a big hole. This is especially true for those (like presumably iHeartRadio, as well as NPR) who believe that podcasting is the future of radio. The longer podcasts go without straightforward access to commercial music, the more established practice it will be to rely on free or low-cost production music, and the more lost opportunity there will be for music rights holders. Spotify’s new campaign gives it an advantage over its competitors in terms of the content it can offer in podcasts for its paying subscribers. It’s yet another example of Spotify’s strategic focus on podcasts. But that advantage shouldn’t last forever.

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