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Sony/ATV chief writes to Nashville songwriters about a tricky development in consent decree reform

By | Published on Wednesday 9 September 2015


Sony/ATV overlord Marty Bandier has written to all of the major publisher’s Nashville-based songwriters urging them to attend a meeting being staged by the National Music Publishers Association in the city later today where they will be updated about ongoing efforts to rewrite the so called consent decrees that regulate collective licensing in the US, and in particular a proposal that has emerged of late to which the American publishers are very much opposed.

As previously reported, it was the music publishers themselves which lobbied for the decrees that govern the two biggest performing rights organisations in the US – ASCAP and BMI – to be reviewed and ultimately rewritten.

There are various changes the publishers would like to see, although for Sony/ATV objective number one is getting clearance for ‘partial withdrawal’ from the collective licensing system, so that publishers could continue to licence radio, live performance and such like through the collecting societies, but would be able to negotiate with digital services like Pandora directly, as already happens in Europe. Direct dealing with digital services would increase the publishers’ negotiating power and therefore the rates they could demand.

The major publishers in America tried to pull digital out of collective licensing a few years back, but were told by the US courts that under the consent decrees they either had to license everything collectively or nothing collectively. Hence the demand from Sony/ATV et al that the decrees be reformed.

It seems likely that the US Department Of Justice, which oversees the consent decrees, will give the publishers many of the reforms they want. Though one proposal that surfaced recently – dubbed “100% licensing” – has not been welcomed by the music publishing sector. The proposal relates to co-written and therefore co-owned songs, which is many songs.

Currently if BMI controls half a song and ASCAP the other half, a licensee needs a licence from both societies to exploit the work. But under the proposed new system either society could offer a licence for the whole song, providing they then pass 50% of the money onto the other PRO.

Crucially, this would mean that if Sony/ATV started licensing Pandora directly, the digital service could still exploit any songs in the Sony repertoire where part of the copyright was still controlled by BMI and ASCAP without having a deal in place with the major. Which could weaken Sony/ATV’s hand at the negotiating table (assuming Pandora was willing to remove from its service any songs wholly controlled by the Sony publisher).

Now, technically under US copyright law it is already possible – away from collective licensing – for one publisher to entirely license out a song in which it has a stake without consulting the other stakeholders, providing it passes on any revenue pro-rata, which is why DoJ officials are proposing applying this system to the PROs. Though in practice, even in the US licensees usually need to get agreements from each stakeholder separately. The DoJ’s proposal, the publishers therefore argue, shows ignorance of common practice in the way song licensing deals are done.

Either way, Bandier is not impressed. In his letter to songwriters this week, he explains: “You may have written a song with a writer affiliated with a different PRO. Under 100% licensing, a streaming service could bypass you and your PRO and go to your collaborator’s PRO to obtain a license for the entire song without your consent. You would then be subject to that PRO’s royalty rate, even if it is lower than your PRO’s rate, and you may have to depend on the other PRO, with which you have no relationship, to collect your share of royalties and account to you”.

He goes on: “This would substantially disrupt the well-established practice of licensees entering into agreements with each PRO representing whatever piece of a song they control and create significant accounting inefficiencies as PROs would have to pay royalties to songwriters not affiliated with them”.

Such a system might also hinder the creative process via which songwriters choose who to collaborate with, he adds: “Would you want to collaborate with someone signed to a different PRO if it meant you would be subject to a lower royalty rate? In addition, how would a writer whose song is licensed by a PRO that he or she is not affiliated with have any assurance that their royalties would be properly paid or paid at all?”

Concluding, Bandier writes: “These potential changes go to the heart of how performance rights have historically been licensed and how songwriters have always been paid. Requiring PROs to grant 100% licenses would be an unprecedented change to well-established licensing practices, create widespread administrative confusion and potentially undermine a songwriter’s relationship with his or her chosen PRO”.

So, to conclude, the US music publishing sector wants significant reform to the American collective licensing system, but not to that bit.

The major’s Nashville writers are encouraged to attend today’s NMPA meeting to learn more about the proposed changes and to “learn how you can potentially help”. Though given Bandier’s letter does a pretty good job of explaining what 100% licensing is and why he’s against it, you sense that the real purpose of the NMPA meeting is to rally support so that songwriters and publishers can shout towards Washington as one about this particular bit of consent decree reform.