It is a dynamic time in our industry; it is a time of experimentation and transformation of many of the models which have generated revenue for recorded music and for music publishing, impacting songwriters, composers, publishers, artists and labels alike. Throughout BMI’s nearly 75 years of representing writers and publishers, we have seen many challenges and opportunities to secure reliable and fair compensation for the creators of music. We have navigated through changing markets and the development of new outlets for the performance of music and created solutions which add value to the marketplace.
Recent articles in the trade and consumer press have covered the withdrawal of catalogs from performing rights organizations by music publishers for certain digital uses. These issues are complex, and I wanted to take a minute to clarify the positions and policies BMI has formulated to address this development.
Some BMI publishers have stated in the press that the main driver in their desire to withdraw their works for specific digital uses is to set their own pricing. Publishers have always had the right to directly license. In the case of withdrawal, they believe they may obtain higher royalty rates from this market if they negotiate their own agreements outside of BMI’s regulatory framework. By withdrawing works from BMI, publishers become the only entities that can license those works and therefore can deny permission to perform their works if they do not come to agreement on rates and terms. By contrast, BMI, under its Consent Decree, is required to automatically issue a license upon a request from a licensee, and if the parties are not able to negotiate a fee after a period of time, either party can initiate a rate-setting proceeding. The press has recently quoted sources stating that, by working outside of the major PROs’ regulatory framework, Sony ATV was able to increase their fees from Pandora by 25% versus the current rates of U.S. Performing Rights Organizations.
In 2011 we agreed to modify our contract with EMI Music Publishing and last year we agreed to similar modifications with Sony/ATV. As a result, as of January 1, 2013 the Sony/ATV and EMI catalogs have been withdrawn from the BMI repertoire only for limited digital uses. You can find a definition of these uses at http://www.bmi.com/drw. The withdrawal only impacts the shares of compositions actually owned or controlled by Sony/ATV and EMI. The withdrawal does not cover all digital uses and BMI will continue to license the Sony/ATV and EMI repertoires across most digital platforms and services. As a result, in some cases the same licensee will have to secure both a blanket license for shares of songs represented by BMI and a separate license from Sony/ATV and EMI for their respective shares of publicly-performed musical works. BMI will continue to license on behalf of our other major and independent publishers for all shares of all works in our repertoire for all digital uses.
Publishers who wish to follow similar withdrawal terms will be allowed to modify their existing agreements at the end of their contract or, if they have multiple contracts, at the weighted average term date of all those agreements. In the event that additional publishers withdraw, we will post the names of these publishers in the New Media section of bmi.com at http://www.bmi.com/drw. Preexisting licenses (“licenses in effect”) will include all repertoire until BMI’s agreement with the licensee expires. BMI will maintain its right to continue to enter into going-forward licenses for all digital uses until the works are actually withdrawn for such uses from BMI’s repertoire.
In conjunction with our modified publishing agreements, we entered into a new business relationship under which BMI will provide royalty processing and distribution services to Sony ATV and EMI. Under the administrative agreement, BMI will distribute royalties to songwriters and publishers resulting from Sony/ATV and EMI’s negotiations. These agreements are BMI’s first entry into offering these types of administrative services and we believe this is one of many opportunities for our organization to provide additional value to our affiliates in today’s dynamic market.
While certainly complex, we see these recent developments as a clear marketplace signal of the enhanced value music brings to the digital world and beyond. We are working diligently to make that value a reality not just for large multinational music companies, but for ALL songwriters, ALL composers and ALL music publishers. We have already cited these marketplace agreements in our negotiations with our licensees and we will encourage our Rate Court to consider them as a new indicator of market value. We are also working in Washington to seek a change to current law to allow us to bring the rates set by the Copyright Royalty Judges for public performances in sound recordings under Section 114 of the U.S copyright law into evidence in BMI rate proceedings for consideration as rate benchmarks.
While recent developments may have added complexity to an already complex rights landscape, we see opportunity. We see an opportunity to level the digital playing field and to allow the courts to consider all precedents across the digital spectrum. We see an opportunity to value performances of musical works fairly when compared to performances of sound recordings. We see opportunities for BMI to provide additional administrative services and add value to the markets we serve. All the while we remain dedicated to serving our constituents: songwriters, composers, music publishers and our licensees. -- Del