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Universal Music Publishing confirms direct deal with Pandora for BMI-repped songs

By | Published on Thursday 23 January 2014

Pandora

The shift away from collective licensing in the digital domain stepped forward again yesterday as Universal Music’s publishing business in America announced it had entered into a direct licensing agreement with Pandora.

The US-based streaming service has previously licensed all the rights for its American platform via the collective licensing system. In the US the record companies are forced to license Pandora type services through the SoundExchange collective licensing programme. And the music publishers too, although not explicitly forced to do so by copyright law, initially licensed such services through their collecting societies, ASCAP and BMI, the music publishing sector at large initially adopting a collective licensing approach to most digital services.

But in the last couple of years some of the big publishers have started to withdraw from the collective licensing system in the digital domain, mainly because they reckon that they can negotiate more favourable deals directly, because any arrangement negotiated by a collecting society is subject to extra regulation, and usually, ultimately, a copyright court can step in to set rates. Some digital service providers prefer direct dealing too, and one of Pandora’s most recent new competitors, Apple’s iTunes Radio, did just that.

In the States, the publishers’ move away for the collectively licensing of digital has posed two questions. Can the rights owners withdraw their catalogues from existing deals Pandora has with ASCAP and BMI? And can the publishers opt to withdraw just digital rights from their collecting societies?

Those questions have been tackled twice in court as both ASCAP and BMI have tried to alter the catalogues made available to Pandora through their respective deals with the streaming service. In the ASCAP case, the judge ruled that, because of the wording of the society’s deal with Pandora, the group and its right holder members were obliged to continue licensing their full catalogue to the streaming firm for the duration of the current licence period (even though Pandora had already negotiated some contingency direct deals).

But in the BMI case, the judge ruled that its publisher members could withdraw from the society’s Pandora licence with pretty much immediate effect. Though there was a complication because of the big bad second question, can the publishers just withdraw their digital rights from BMI, but continue to use the society for licensing radio, the live sector and other public performances of their songs? The court hearing the BMI case seems to be of the opinion that no they can’t.

With so much consolidation in the radio industry in the last decade, it’s not unfeasible to suggest that the big publishers could start to do direct deals in that domain too. Indeed on the record industry side, some US radio groups have done direct deals with the record companies (though those arrangements are really about digital services, because the labels aren’t actually due a performing royalty from terrestrial radio services under American law). But it seems unlikely that any music publisher would want to get into direct deal licensing in the live or pub/club/shop side of public performance.

Either way, it’s all a bit of a mess at the moment, leaving the BMI-represented catalogues of some big publishers sort of in limbo – can Pandora use them or not under its BMI licence? It seems certain that no publisher is going to accuse Pandora of infringement for continuing to use their songs in the short term, but nevertheless, the digital firm is busy negotiating direct deals. Even if you sense it sees such deals as a short-term fix, while the publishers consider them a brave new era in online song licensing.

Anyway, Universal has done such a deal, and the boss of the mega-major’s publishing business Zach Horowitz told reporters yesterday: “Our deal with Pandora is another step toward reaching our goal of ensuring that there is a vibrant digital marketplace where both music services and the songwriters and composers who make those services possible can thrive. This arrangement will allow music fans to enjoy our music on Pandora while protecting our songwriters and composers”.

Though a Pandora spokesman told Billboard: “[The recent rulings] created uncertainty within the music industry and threatened to negatively impact songwriters and performers by having their music removed from the largest US internet radio service. With only days to act before a 1 Jan deadline, we moved quickly to reach an agreement to keep their music playing on Pandora. This agreement should be viewed as a specific approach to address a short term-issue resulting from a legal decision”.



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