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MMF challenges Sony/ATV’s threat to withdraw from collective licensing

By Chris Cooke | Published on Wednesday 16 July 2014

The UK’s Music Managers Forum has responded to the letter sent last week by Sony/ATV chief Marty Bandier to American songwriters allied to the music publisher, in which he said that complete withdrawal from the performing right collecting societies Stateside was an option if current efforts to reform collective licensing rules were not successful.

As previously reported, the big music publishers in the US have called on the country’s Department Of Justice to review the so called ‘consent decrees’ that regulate the collective licensing dealings of American performing right societies BMI and ASCAP in America. The DoJ has now requested information from the societies and big publishers as part of that review.

The current campaign for reform was motivated by court rulings that said that the US publishers couldn’t withdraw just their digital rights from the collective licensing system. The major publishers in America want to start licensing some digital services – and especially Pandora – directly, because they reckon they could get a better deal if they negotiate without the extra rules that govern collecting society deal-making.

Indeed, some publishers, including Sony/ATV and its EMI Music Publishing subsidiary, had already started the direct licensing process before a judge told them they were obliged to licence through BMI and ASCAP. But so keen are the publishers to move into direct licensing for digital, the threat has been made that if the DoJ doesn’t provide the reforms they need, they will seriously consider withdrawing from collective licensing completely. And that threat was reaffirmed in Bandier’s letter last week.

However, some reckon that the threat is a bluff. Partly because no publisher really wants to have to licence every radio station, gig promoter and music-playing bar who plays their works in public. And partly because some lawyers reckon there are all sorts of legal complications with a complete withdrawal from the collecting society system. Indeed, some argue just digital withdrawal of a publisher’s complete catalogue isn’t technically possible either.

The complications come from the way contracts between songwriters and publishers are written, and how deals differ in Europe from the US, especially when it comes to the distinctions made between so called ‘mechanical’ and ‘performance’ rights. Publishing contracts have also evolved over time.

In a statement issued yesterday, the MMF said that it agreed with Sony/ATV that the consent decrees governing US collective licensing were in dire need of reform, and that it hoped the DoJ’s review would do so. But the trade group added that it was “alarmed at the suggestion by any music publisher, especially one with such considerable market power as Sony/ATV, that they would withdraw from the performing right organisations”.

The MMF points out that a move, by the publishers, to direct licensing, where blanket licences are required, would further complicate the music licensing eco-system. Plus the MMF argues that Sony/ATV doesn’t actually have the right to withdraw many of the works in its catalogue by non-US writers, because those writers have likely retained control over the allocation of their performance rights, even though the publisher shares in the revenue.

Where such writers have then appointed a non-US society to administer their performing rights, that society – not Sony/ATV – allows BMI or ASCAP to licence the song in America. Says the MMF: “Publishing contracts outside the USA only give the publisher a right to share in the revenue from the performing right, but not ownership of the right itself. As long as [songwriters] continue as members of their local [societies], no US publisher can issue licences for their work”.

The organisation adds: “As far as we’re aware, the letter from Sony/ATV was not sent to non-US writers, once again highlighting the complications posed for licensees of territorial posturing in a global digital marketplace”.

In addition to the contractual challenges collective licensing withdrawal in the US would cause – which at best would result in a further division of catalogue (with many non-US works having to be licensed differently to US works, which is particularly tricky where you have a co-write between American and non-American songwriters) – the MMF has other reasons to be against moves in the publishing sector to shift from collective to direct licensing. Indeed, the artist manager trade group has previously criticised the record labels for mainly licensing digital directly, and for the same reason.

And that is that when big rights owners licence digital services directly, especially start-ups, they often negotiate large advances and equity, the benefits of which are rarely shared with artists and songwriters. Indeed some managers might argue that while direct dealing with digital may be more lucrative for Sony/ATV, artists and songwriters could be worse off.

The MMF statement says: “Writers’ contracts routinely state that they are not entitled to be paid a share of revenue that is paid as advances, lump sums or is not able to be ‘directly and identifiably’ attributed to their work. How confident can writers be that they will be paid their shares of direct licence monies?”

All of which means that collecting society reform in the US – whether nominal or radical – could have considerable impact beyond the States. And could further complicate the already too complicated music licensing framework.