Label's trade body the British Phonographic Industry and some of the United Kingdom's leading online music services on June 29 referred to the country's Copyright Tribunal their dispute with music pub


LONDON -- Label's trade body the British Phonographic Industry and some of the United Kingdom's leading online music services on June 29 referred to the country's Copyright Tribunal their dispute with music publishers over online licensing terms.

The BPI and seven online services are objecting to the royalty rate British authors and publishers' collecting society MCPS-PRS Alliance is planning to charge for online downloads of musical works on the Internet and on wireless devices. The Alliance manages common operations of the Mechanical-Copyright Protection Society and the Performing Right Society.

The seven online services are AOL, Apple iTunes, MusicNet, Napster, RealNetworks, Sony Connect and Yahoo! They contend that there is a discrepancy between the royalty fees charged by the Alliance for physical, broadcast and online products.

Mechanical royalties on physical products stand at 6.5% of retail price (or 8.5% of the published wholesale price); broadcasting rates range from 3%-5.25% of radio station's net advertising revenues.

The BPI and the online services object to the Alliance's online tariff proposals, which would set the rate for online usage of compositions at a rate of 12% of gross retail revenues. This rate is subject to a temporary discount of 8%.

They also contend that the Alliance's rates do not take into considerations the diversity of the business models applicable for online services. It also applies to services offering Webcasts.

The BPI said the filings to the Copyright Tribunal follow several years of negotiations between the Alliance and the BPI and online music services. However, they said they had not been able to "achieve acceptable terms." It is understood that labels and online services were pushing for a rate closer to that of physical products.

MCPS-PRS Alliance Group CEO Adam Singer said the tribunal reference "could have been avoided." He added, "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."

The MCPS-PRS Alliance said it launched in 2002 the Joint Online License and since then has made agreements with more than 100 music service providers to its terms.

Two days later during the annual general meeting of PRS in London, the Alliance's CEO Adam Singer on July 1 accused BPI of "driving down the value of music."

Singer said, "The question I am asking the BPI is that you may have analyzed the upside on the micro economics of what you are doing but have you really analyzed the downside on the macro economics?"

"The music that underpins much of the digital growth, the jobs, the economy, must not be taken for granted or, more to the point, taken for nothing," said PRS chairman Ellis Rich. "Whether it's music from your mobile, from iTunes, as podcasts or any other means of transmission or delivery, whenever you hear some notes, someone should be paying for them."

Singer explained that currently on CDs, MCPS-PRS collects about 6 pence (10.6 cents) per track, and roughly the same amount from Apple's iTunes Music Store. "In this network world there are no storage costs, no shop rental, no plastic boxes, no transport costs, no silver discs, and our crime is, like Oliver when faced with thin gruel, we had the audacity to ask for more. The MSP's and record companies will now plead poverty, but in this battle those arranged against us have a market value of $250 billion -- that's a quarter of a trillion dollars. "

BPI declined comment.

Questions? Comments? Let us know: @billboardbiz

Print