US and Swiss Collection Societies Partner to Face a Globally Shifting Industry

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The music industry continues to reorient itself around a global marketplace rapidly changing underfoot.

The world of performance rights organizations like ASCAP and BMI -- which collect money for songwriters when their music is played on radio, in restaurants, or online -- used to be ruled by geography. But since the European Union in 2014 passed a directive allowing its member states’ performance rights organizations to license online music services anywhere in Europe, the business has become a lot more international.

Now SESAC Holdings, the U.S. company that owns the collecting society SESAC and the Harry Fox Agency, is launching a joint venture with SUISA, the Swiss collecting society. Mint Digital Licensing – the first joint venture of its kind between a U.S. and a European collecting society -- will license to digital music services the compositions of both SESAC and SUISA members, as well as offer its services to other music publishers. Since SESAC owns Harry Fox, which handles mechanical licensing in the U.S., Mint will be able to offer online services mechanical as well as public performance rights – a one-stop approach that could simplify one of the most complicated parts of the music business.

This deal is the latest sign that the national borders which once limited performance rights organizations are eroding, turning the business of collecting public performance royalties internationally from a game of Monopoly into something more like Risk. Earlier this year, the Canadian collecting society SOCAN purchased Audiam and MediaNet, two U.S. technology companies that could help it compete internationally. Since most societies operate as nonprofits, and thus have a hard time making acquisitions, many collecting societies are forming joint ventures and other alliances to compete in a global, digital world.

Currently, U.S. songwriters get paid for the international use of their work when foreign performance rights organizations collect money on their behalf and then remit that money to their American counterparts through reciprocal agreements. This deal could generate more money for SESAC members by eliminating the middleman when it comes to digital services. (European performance rights organizations still have monopolies on collecting for the use of songs on radio and in venues.)

“With multi-territory, direct licensing in Europe, you see increases in revenue,” SESAC CEO John Josephson tells Billboard. “There’s better identification of performances, you have someone who has a direct interest in making sure everything is tracked, and you can circumvent the social and cultural deductions” -- the money that some European societies hold back to support certain kinds of musicians.

Mint will give SUISA the leverage it needs to better compete with its larger Continental counterparts, such as PRS for Music (from the U.K.) and GEMA (Germany). Those two societies and their Swedish counterpart, STIM, run ICE, which also offers online licensing across Europe. Since Switzerland isn’t in the European Union, Mint will presumably operate from a country that is.

“Our goal is not to be the biggest but to be the best at doing the work,” says SUISA CEO Andreas Wegelin. Decades ago, SUISA developed the Interested Party Information system, a database which societies represent what songs, which is now used by collecting societies worldwide.

Mint will be run by Alexander Wolf, a respected veteran of GEMA who early this year joined SESAC to run its international operations. “Because SESAC owns Harry Fox, the U.S. publishers now have a company on the ground to take care of them,” he says. Currently, various collecting societies administer mechanical rights in Europe for U.S. publishers.

SESAC, which bought Harry Fox last year, is trying to grow its business, both in the U.S. and internationally, since it’s one of the few performance rights organizations that operates as a for-profit company. “This is all done with the goal of creating more scale and efficiency and I think it’s where the industry needs to go,” Josephson says. “We have a long-term goal of defragmenting the global market.” 


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