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Indie sector hits out at Sony’s bid to control 90% of EMI Music Publishing

By | Published on Wednesday 23 May 2018

EMI Music Publishing

Getting in quick, the indie community in Europe has already hit out at yesterday’s news that Sony Corp has agreed terms on a deal that would see it take control of 90% of EMI Music Publishing.

Sony led a consortium to buy the publishing side of the old EMI major music company back in 2012. Involved in that acquisition were Sony’s then partners in its own Sony/ATV music publishing business – the Michael Jackson Estate – as well as a bunch of other financial backers led by an entity called Mubadala Investment Co. It’s the latter that Sony now proposes to buy out, formally making EMI Music Publishing a Sony subsidiary.

Sony/ATV has administered the EMI Music Publishing catalogue since the 2012 deal, meaning that in practical terms they have basically operated day-to-day as one company for six years now.

However, critics say that the Michael Jackson Estate’s interest in Sony/ATV, and the involvement of Mubadala Investment Co and its allies in EMI, nevertheless constrained – a little – the dominance of Sony Corp in the wider music rights sector. The entertainment conglom also owns, of course, the world’s second biggest global record company in Sony Music, as well as separate music businesses in home country Japan.

Sony bought the Michael Jackson Estate out of Sony/ATV in 2016. Under the newly proposed deal it would now buy all but the Estate out of EMI. Some reckon that the Jackson Estate may well also be interested in cashing out of the EMI Music Publishing business in the not too distant future, making EMI wholly owned by Sony.

Responding to yesterday’s news, IMPALA – the body representing the independent music community in Europe – said the proposed deal would inevitably “face regulatory opposition because it would stifle competition online and offline”. The deal is still subject to regulator approval, with European Union competition regulators likely to be most rigorous when investigating the proposals.

IMPALA says that Sony’s new bid to buy most of its partners out of EMI “confirms the concerns expressed by IMPALA back in 2012 when the European Commission cleared the acquisition of EMI publishing by a consortium including Sony/ATV, and then again in 2016 when the Commission cleared Sony’s move from joint to sole control of Sony/ATV. It shows that ultimately, Sony is taking complete control of EMI publishing, while the initial deal was structured as a consortium to get this bid approved by the regulatory authority”.

IMPALA boss Helen Smith added: “Today, Sony is already by far the world’s largest music publisher and an indispensable trading partner controlling over 2.3 million copyrights. If this sale was to happen, its market power would be reinforced with serious competition issues, including excessive bargaining power when negotiating with collecting societies and the authors they represent, as well as other actors in the value chains such as labels and online services”.

Sony is likely to argue that when it comes to the licensing of song rights, especially in continental Europe, it is often the collecting societies rather than the publishers that have the power, and that its own influence in the collecting society domain is constrained by the way song rights are assigned and societies governed. Though with the all-important Anglo-American repertoire, direct licensing by publishers has increased with the rise of digital.

Meanwhile – on the talent side – songwriters arguably now have more choice than ever when picking business partners, because of the increase in companies focused on rights administration rather than rights acquisition, and the emergence of online platforms that make self-publishing a more viable option. Although the majors still have an advantage in a market where cash advances remain attractive to many writers.

It remains to be seen what kind of attitude Sony finds in the EU – and elsewhere – to its latest bid to strengthen its position in music publishing in particular, and music rights in general. If regulators look concerned about the deal, the customary solution is for the acquisitive music major to propose to sell off a certain portion of repertoire.

If that happened, and if it was older works that ended up on the block as part of some regulator remedy deal, that would put a new focus on a still unresolved dispute in which Sony/ATV has been a key player.

That dispute is whether European songwriters who signed life-of-copyright deals with publishers in the 1970s and 1980s can exercise the so called termination right under US copyright law, regaining access to the rights in their work in the US market. The answer to that question will impact on the value of legacy rights. So, fun times ahead then!