National Music Publishers' Assn. (NMPA) president/CEO David Israelite issued a call to action on three major fronts - music video payments, consent decree reforms and digital provider licensing. The move came at the organization's annual meeting in New York on June 13, and the publishers' group is already moving forward on two of the issues, sources say.
During the meeting, held at the Marriott Hotel in Times Square, Israelite asked that Congress fix Section 115 of the U.S. copyright law, allowing the industry to construct a more efficient mechanical licensing system to simplify how digital service providers pay for music. He also pushed for consent decree reforms that regulate how ASCAP and BMI operate. And he said the industry must pay publishers for songs used in music videos.
According to sources attending the meeting, concerns were raised about online video sites like Vevo, owned by Sony Music Entertainment and Universal Music Group in a joint venture with Abu Dhabi Media, which only pays select music publishers, favoring the majors over independents.
When music videos boomed in the '80s, they were considered promotional tools and publishers agreed to allow their songs to be used without compensation. Now, however, the clips are simply used as free content, filling up commercial websites and cable channels worth millions.
"Today you have Vevo talking about reaching $150 million in revenue and wanting to grow to $1 billion," Israelite said at the meeting. "A large amount of the music videos being played are not getting licensed, and publishers are not being paid. NMPA is going to put an end to that."
Since two majors constructed Vevo's business model and EMI licenses its clips to the site, music videos owned by the publishing arms of the major labels usually receive some compensation. But all other publishers that own songs or shares in music used in videos do not receive payment.
"You can have a song in a user-generated video paying a synchronization royalty to the music publisher, thanks to the settlement negotiated by NMPA with YouTube," which has nearly 5,000 publishers signed up, a publishing executive says. "But the [website playing the] official video of that song isn't paying the independent publishers, only the majors."
Vevo and Sony declined comment, while Universal didn't respond to requests for comment by press time.
On other issues, Israelite began his address to the membership by showing a chart demonstrating how music publishers derive 36% of revenue from mechanical royalties, 30% from performance royalties, 28% from synch licensing and 6% from other sources.
Currently, interactive music streaming accounts for only about 4 percentage points of mechanical licensing royalties, or just 1.4 percentage points overall. However, interactive streaming will grow quickly, so the NMPA is focused long term on making licensing deals easier for digital service providers.
Israelite displayed other charts proving that the new digital models will be vital to music publishers in years to come. For example, both physical and early digital distribution models for downloads of songs and albums paid publishers royalties totaling only 10% of the label's song revenue and 13% of album revenue, while interactive streaming publishers receive an equivalent 15% of label revenue. Other new business models - including music lockers, bundles and mixed service bundles - fall under a newly negotiated settlement (still in need of approval by the Copyright Royalty Board) that results in music publishers receiving rates in the 17%-18% range of label revenue.
Currently, digital service providers can license most music from the majors and contact the Harry Fox Agency for publishers they represent. But to cover all other music publishers, the digital service provider must hire a company like Music Reports to plaster the industry with notices of intent, so they can compulsory license songs controlled by those smaller concerns. "We need to fix Section 115 so that we can empower these new companies," Israelite said.
Industry sources say music publishers, digital service providers and the latter's trade group the Digital Media Assn. mostly agree on how to reform Section 115, but they need labels to come aboard, but so far that's been difficult.
"The only way Congress will enact changes to Section 115," another executive says, "is if we bring them an industry-negotiated solution with all parties willing to sign."••••