National Music Publishers Assn. (NMPA) president/CEO David Israelite called for the U.S. Congress to fix section 115 of the U.S. Copyright Act so the industry can construct a more efficient mechanical licensing system during the organization's annual meeting, held Wednesday at the Marriott Hotel in New York.
Israelite also called for reforming consent decrees that regulate how ASCAP and BMI operate, and said the industry must put an end to the practice of not paying music publishers for music used in artist videos. When music videos were first introduced, record labels were able to use the music without paying for the licensing because they were made for promotional purposes, he said.
"Today you have VEVO talking about reaching $150 million in revenue and wanting to grow to $1 billion, and a large amount of the music videos being played are not getting licensed and publishers are not being paid," Israelite said. "NMPA is going to put an end to that."
At the beginning of his address to the NMPA membership, Israelite displayed a chart showing that music publishers derive their revenue 36% from mechanical royalties; 30% from performance royalties; 28% from synchronization licensing and 6% from other. He said that music publishers that have to meet quarterly and annual projections must focus on what's bringing dollars in the door today, but that the NMPA has the luxury of looking long-term. So while royalties from licensing interactive music streaming only brings in about 1.4% of revenue, that stream will grow, which is why the NMPA is focusing on that area.
Why isn't that area growing faster? he asked. It's because most of publishers are not making much money from that area. So while DSPs can license music from the majors and go to the Harry Fox Agency for the publisher's they represent, the rest of the music publishers have to hire someone to go out and paper the rest of publishing with NOI's or notice of intent to compulsory license the songs of those publishers.
"We need to empower" digital service providers engaged in music streaming, Israelite said. If music publishers make it easier to license music that revenue stream will grow faster. "We need to fix section 115 so that we can empower these new companies," he added.
While music publishers do get paid for terrestrial broadcasting and digital transmissions, music publishers are not getting their fair share of revenue from the latter component of the radio sector. In one period, Pandora paid about $14 to the record labels for every $1 they paid to publishers.
Moreover, he said the performance rights organizations of BMI and ASCAP are overly burdened by the consent decrees that they signed with the U.S. Dept. of Justice. "Now radio operators can walk in and get a license and then fight for years over what to pay," he said. "That can't continue."
Earlier in the day, Israelite presented Congressman Mel Watt with the organization's "President's Award." In accepting his award, he noted that "unlike real or personal property, intellectual property emanates from the very essence of the individual -- it comes from the soul. And we must do our best to protect, reward and inspire American creativity and ingenuity in music."
On the other hand, Israelite noted that "the world is shrinking and the Internet and mobile technology have brought us closer together." These are positive developments, he said.
"But the reality is that in the area of copyright, mass copyright infringement has migrated online where anonymity emboldens shoe who seek high profit at low risk," he added. "And theft of music and other digital IP is rampant and it must stop."