Business News Digital Labels & Publishers Top Stories

Sony/ATV boss says complete withdrawal is an option in US collective licensing dispute

By | Published on Friday 11 July 2014

Sony ATV

The big boss of the biggest of all the music publishers, Marty Bandier of Sony/ATV/EMI, has formally re-affirmed the threat to withdraw from the collective licensing system in the US if the Department Of Justice doesn’t agree to revise the rules that regulate the two main American collecting societies for song performance rights, ASCAP and BMI.

As much previously reported, the bigger publishers in the US are keen to stop licensing digital services like Pandora via the collective licensing system, because collective licensing is always subject to extra regulation designed to counter the competition law fears that occur when the music industry licenses as one.

Said regulations weaken the negotiating hand of the bigger publishers, meaning they can’t secure the rates or kickbacks that the record companies have enjoyed when they licence directly (though in the US the labels too are obliged to licence Pandora-type services through the collective licensing system, though not Spotify-style platforms).

Elsewhere in the world the big publishers have already started dabbling with some direct licensing in the digital domain (and the labels do most digital deals directly), but in the US Sony/ATV and others were told that the so called ‘consent decrees’ that govern ASCAP and BMI meant that they couldn’t withdraw digital rights from the collective licensing system, not without withdrawing from the collecting societies completely.

The publishers want the consent decrees rewritten to allow the withdrawal of just the digital rights, and have hinted in the past that if that doesn’t happen in the near future they would consider complete withdrawal. And in a new letter to songwriters, seen by the New York Times, Bandier has confirmed Sony/ATV would indeed seriously consider “the potential complete withdrawal of all rights from ASCAP and BMI” if the company doesn’t get its way on the decree review.

It’s possible Bandier is still bluffing though. Because while, with so many radio stations in the US now owned by one of a small number of broadcasters, it wouldn’t be too tricky for Sony/ATV to do radio licensing itself, no publisher really wants to have to have relationships with every gig promoter and music-playing bar in the country.

Of course, if the publishing sector could ever get a working Global Repertoire Database off the ground, open to all, then there’s almost certainly a third party tech solution that could handle all that, possibly more efficiently than the current collecting society framework. But, as reported yesterday, the ambitious GRD project has just fallen off a cliff, and ain’t happening anytime soon.

Though in his letter Bandier does indicate that Sony/ATV is already making some provisions for an era beyond collective licensing Stateside, just in case. That likely means the firm is planning on following the lead of the Universal music publishing business and making a user-friendly version of its entire catalogue available online for licensees to browse, download and ingest.

The letter to songwriters itself – while possibly a gesture to look tough and therefore strong arm the Department Of Justice into rewriting the BMI and ASCAP rules – might also be part of Sony/ATV’s preparation for collective licensing withdrawal.

Not least because some lawyers have already questioned whether Bandier and his counterparts at Universal and Warner/Chappell actually have the power to withdraw their entire catalogues from BMI and ASCAP, in that some songwriter contracts might prevent such a wide-ranging move. So if withdrawal is really an option, the publishers need the songwriting community onside.

While “we need to license direct to get you more money” is a compelling argument to present to songwriters, given how much resentment there is in the songwriting community over the royalties they are receiving from streaming services, some might point out that the digital firms are already pumping the majority of their revenues into the music rights sector.

Songwriters might then argue that the real problem is that most of that money goes to the labels, royalty splits in digital having been pretty much based on what happened in the CD era. Which means that, while Bandier might be able to convince songwriters that the nuclear option in the US digital licensing dispute is in their interest, they might want some commitment that the next battle will be closer to home, with Sony/ATV taking on sister company Sony Music Entertainment.

Good times.