The Drain in Spain: Why Late-Night Spanish TV Is Costing Global Music Publishers Tens of Millions A Year

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SGAE’s headquarters in Madrid.

On June 21, members of Spain's royalty collection group, the General Society of Authors and Editors (SGAE), assembled in Madrid and voted against proposals that the music industry had feared could propel a long-running scheme that has involved astrologers, inaudible music and songs with copyrights registered to Spaniards' pets.

The vote gave hope to the world's biggest music publishers that there may be an end in sight to a system known as La Rueda, or "the wheel," in which some Spanish TV broadcasters and music-publisher affiliates have played more of the songs they own themselves on the air and collected the royalties, leaving tens of millions of dollars less each year for everyone else whose music is played on Spanish TV.

(In Spain, some music publishers are owned by TV stations, which pay a set annual fee to SGAE to license music from its catalogue.)

To pull it off, those involved in the scam have inserted their music into little-watched late-night programming. In recent years, the overnight time slot has accounted for up to 70 percent of royalties collected for music on TV in Spain, even though those hours claim only about 1 percent of the total TV audience, multiple sources tell Billboard.

The music itself, meanwhile, has become known locally as "witches' music," partly due to its play during "the witching hour" and partly due to use in astrologers' shows and other new-age programming, as well as on overnight low-cost live-music shows that last for hours. According to police documents, it includes classical public-domain compositions by Mozart, Vivaldi and other composers that have been registered as copyrighted arrangements by participants in the scheme — not only in their own names but in the names of their mothers, children and even their dogs — to downplay the volume of their output. (Both classical music and live performances qualify for bonuses under SGAE's rules.) The tunes are broadcast as background music, or are sometimes completely inaudible. In some cases the music has been logged as playing for more minutes than the TV programming aired.

"If tomorrow someone asked me to play a keyboard standing behind a psychic I probably would," said rock musician Juan Márquez in an interview with El Pais newspaper in 2013, after the practice first came to light.

SGAE, which distributed a total of 248 million euros in royalties total in 2017, nearly a 4% increase over 2016, has collected between 400 million and 600 million euros to date for those claiming the late-night music, estimates peermusic Spain managing director Rafael Aguilar, and was blasted this year by the head of the International Confederation of Music Publishers for behavior "detrimental to the vast majority of Spanish authors and to all foreign ones."

But a range of recent domestic and international efforts to break the cycle have faced roadblocks. Last summer, SGAE's posh headquarters were raided by federal police in an investigation into the alleged fraud, and 18 people were arrested, but no one has been tried. Warner/Chappell Spain's president Santiago Menendez-Pidal told Billboard recently that SGAE's actions were "corrupt," but Warner/Chappell, Peer Music and EMI Songs now have limited power because they were all ejected from SGAE's board late last year for surpassing term limits. (In May, a Madrid court rejected an appeal of that ejection by the three multinational publishers, ruling they not return to the board ever because they "could not be clients and businesses at the same time.")

SGAE also avoided an arbitration ruling earlier this year by the World Intellectual Property Organization that it should reduce the percentage of royalties paid on overnight music to no more than 20% and ideally 15%: a Spanish judge ruling the WIPO result invalid because SGAE statutes do not permit outside arbitration.

SGAE president José Miguel Fernández Sastrón said before the vote that he did not plan to resign, but measures that would have extended the length of his reign -- as well as the terms of other board members - were defeated. According to one composer who attended the closed June 21 meeting, when that vote was tallied, Sastrón walked off the stage without a word and quickly left the building as some members in the audience - which included Pau Donés of rock group Jarabe de Palo and pop star Dani Martín - yelled out for his resignation. (His contract is up in 2019.) While denying wrongdoing, Sastrón is a composer himself who Spanish media reports has authored late-night TV music. He warned in an editorial for El País recently that 99 percent of Spain's radio programming consists of repertoire owned by the three big international record companies, and that 80 percent of it is "Anglo-Saxon," a culture he associates with "fast food."

"To let a culturally dispersed Europe fall into the trap of multinational lobbies is deplorable," Sastrón wrote in El País. In a recent interview with Spanish newspaper El Mundo, he likened the drama embroiling his organization to HBO's Game of Thrones.

An SGAE vice president, Javier Losada, says SGAE no longer has contact with the fraudsters who were involved in La Rueda in the past, and that it has "tried to lower [the share of royalties paid to late-night music owners] to 40 percent." But he adds that late-night TV play is important for thousands of Spanish songwriters because it helps them compete with international acts that rule Spanish radio. (Like most foreign societies, SGAE pays much more to rights holders in foreign countries than it takes in, and Spanish law does not require radio stations to play a minimum amount of national music, as is the case in France.)

The International Confederation of Societies of Authors and Composers (CISAC), the global representative group for collecting entities, says it is working with SGAE on the issue, which industry sources estimate has cost major publishers as much as $20 million a year. CISAC revealed "serious concerns" about SGAE's conflicts of interest, "distorted and inequitable distribution of royalties" and "lack of regard for the common good" in its 65-page May 21 report, but CISAC's ultimate recourse would be banning the Spanish society membership from its 240-group membership; it can't prosecute SGAE in court. "Our goal is to solve the problem, not just to punish them"  CISAC director general Gadi Oron told Billboard in June.

"If there is not a strong intervention on the part of the state there is a very remote possibility of resolving the problems in the SGAE," insists David Garcia Aristegui, a representative of the CNT Graphic Artists, Communication and Entertainment Union and co-author of a book called SGAE: Monopoly in Decline. "I don't know what else has to happen for the ministry of culture to take the reigns in this situation."

A new leader certainly doesn't guarantee "the wheel" will stop turning: La Rueda has outlasted several presidents, including Teddy Bautista, who was arrested after a 2011 police raid on SGAE's headquarters. He and others were charged with an unrelated misappropriation of 21 million euros, but he left SGAE with a more-than-20,000-euro-a-month pension for the rest of his life and has not been tried. Still, SGAE could lose its grip on the market, thanks to an EU directive requiring SGAE's statutes be updated by July 15 to allow for authors to freely choose their collective rights-management organizations within Europe. The first private collective rights management entity in the Spanish market, Unison, debuted in January 2018.

Says peermusic's Aguilar: "Enough is enough."

- Additional reporting by Robert Levine

This article originally appeared in the June 30 issue of Billboard.


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