Now this is an interesting one. Tensions between the recording and publishing sectors of the British music industry moved up a gear yesterday when the BPI, the trade organisation that represents 300 odd record labels, announced it was taking the Mechanical Copyright Protection Society and the Performing Right Society, which represent the interests of publishers and songwriters, to a copyright tribunal. All serious stuff.
The dispute is over what percentage of online music sales should go to the publisher/composer (as opposed to the record label, retailer, distributor etc). At the moment publishers get 6.5% of the any physical CD's retail price. However, ever since the arrival of digital music sales MCPS-PRS have been looking to push up their share. They want a 12% royalty on digital music sales, although they say they will accept 8% for a set period while key players in the digital sector invest to develop a market that will benefit everyone.
The BPI and all the major digital music players (AOL, Apple iTunes, MusicNet, Napster, Real Networks, Sony Connect and Yahoo) oppose those moves. They argue that MCPS-PRS is in danger of hindering the legitimate download sector with their demands, just when the legit players need to maximize their assault on illegal file sharing. They argue that the demands would mean a discrepancy between online and physical music sales, putting the online retailers at a disadvantage. And anyway, they continue, the digital market place provides songwriters and their publishers with valuable new revenue streams (in particular the resale of all that back catalogue in digital form) which have been developed at the record label and download company's expense (the publishers haven't invested in building the download platforms or encoding the music, so why should they get a bigger slice of the pie when that investment pays off?).
Negotiations between the BPI, digital music platforms and MCPS-PRS on this topic have been rumbling on for years, but things are getting more pressing now that the digital music space is really taking off. Hence why the BPI have decided to take the extreme measure of going to a copyright tribunal.
Announcing their plans yesterday, the BPI's counsel, Geoff Taylor told reporters: "The licence the alliance is trying to impose for online music is unreasonable and unsustainable. It is charging a royalty rate on a download that is double the rate it charges for a song on a CD. It applies this excessive rate to a whole range of online music services, without taking into account their different characteristics. The Alliance's tariff threatens to seriously harm the development of the legal online and mobile music markets."
BPI chairman Peter Jamieson added: "We are very disappointed that we have been forced to resort to the Tribunal on a matter that we hoped would be settled by negotiation. However, we are confident that the Tribunal will find that the Alliance's tariff is unreasonable."
MCPS-PRS quickly responded to the BPI's legal moves, though their statement didn't go into the actual royalty debate in any great detail. Instead the organisation's top man, Adam Singer, pointed out the irony that the BPI's decision means, essentially, major record companies will be taking legal action against major publishing companies, even though they are owned by the same parent companies. Singer: "This is a disappointing Tribunal reference by the BPI and the DSPs [digital service providers] and one that could have been avoided. Industry observers must be baffled by record companies taking the publishing divisions of their own companies through a Tribunal procedure - spending millions that neither side can afford. This Tribunal reference does tremendous damage to the Industry as a whole, not least in the eyes of Government. For a creative industry this demonstrates a complete lack of imagination."
It will be interesting to see how this all turns out. Personally I propose a fist fight at dawn between the chief execs of the record labels and the bosses of the main publishing houses. Might not produce a fair result, but it would be a lot cheaper.