split of the 4 percent total, allotted for the non-featured artists from the Sound Recording
Fund. The instrumentalists’ portion of the non-featured artists’ fund is administered
by the American Federation of Musicians, or the AFM. And the vocalists’ portion is administered
by the American Federation of Television and Radio Artists, or the AFTRA, A F T R A.
The Musical Works Fund, which is as you remember 33.3 percent of the total DART royalties,
is split in much simpler way. The split of those 33.3 percent is 50/50 between the composers
and the publishers. That’s it. 50/50 down the line. The problem there is that the funds
are to be collected from the Copyright Office and distributed to composers and publishers,
as we mentioned earlier, by the PROs (ASCAP, BMI, and SESAC), the Harry Fox Agency, and
the Songwriters Guild. These three sides, for years couldn’t agree how to split the
fund among themselves, until the Copyright Arbitration Royalty Panel was called in and
made the ruling. The Musical Works Fund was thus distributed for the first time in 2001,
almost ten years after the Act went into effect.
Now, there is another, simpler way to look at, and break down all the official splits
of the DART royalties. If we relate everyone’s portion of the royalties to all the DART royalties,
to 100 percent of it, the splits are perhaps easier to follow. So relating every party’s
percentage cut to 100 percent of the DART royalties, we end up with these numbers:
Music Publishers: 16.65 percent; Composers: 16.65 percent; totaling 33.3 percent for
the composers/publishers side, of the Musical Works Fund, as it is called, right? Then we have:
Labels: 38.4 percent; Featured Artists: 25.6 percent; non-featured instrumentalists
: 1.74 percent; non-featured vocalists: 0.92 percent; totaling 66.7 percent for the artists/labels
side, or the Sound Recording Fund as it is called. Combine the Musical Works Fund and
the Sound Recording Fund portions and we have 66.7 plus 33.3, which is 100 percent of the
DART royalties.
So, see, that’s simpler to follow. It’s just that doing it that way, the percentages
seem almost random, and it is not immediately obvious as to how the splits were created.
But it is a useful way to look at this whole funds division issue nevertheless.
Anyway, although the DART royalties are by no means a significant income stream in the
industry (only 45 and a half million dollars have been collected since 1992), the Audio
Home Recording Act, which is the basis for these royalties, is a significant industry
regulation. Its strengths and shortcomings have determined a meaningful portion of the
industry’s path and direction in the digital age. Because of its strong provisions regarding
the serial copy prevention system, the manufacturers are forced to include such systems in their
digital recording devices. But the consumers, by and large, rejected devices with the serial
copy protection, and moved on to the alternatives. Thus the Digital Audio Tape died, and the
Mini-Disc died, as well as the Digital Compact Cassette.
On the other hand, because the Act’s language does not affect computer devices, such as
hard drives, data CD drives, and so on, or computer data media, but only expressly digital