Sony/ATV Music Publishing sent a letter to its songwriters in the last day, updating them on where the company stands with regards to performance rights, re-iterating Martin Bandier's intention to withdraw from the two U.S. major performing rights organizations and also reveals the news that the company is appealing both the ASCAP and BMI Pandora rate court rulings.
The major music publishers have long complained that they don't get market-share royalty rates from digital music services and, as a way to change that, began withdrawing digital rights from ASCAP and BMI. But the judges in both the ASCAP and BMI rate-setting lawsuits ruled that publishers must be either all-in or all-out.
In other words, if they want to do direct licensing for digital services, they have to do it for everyone. The judges said that the consent decrees which the two PROs operate under does not allow partial withdrawals.
After those rulings, the publishers and PROs reached out to the Dept. of Justice, asking them to review the consent decrees with the goal of having them amended to allow partial withdrawals.
Most publishers would rather not withdraw from the PROs because replicating general licensing for the hundreds of thousands (if not millions) of businesses that use music in their stores, bars, planes, hotels and clubs, would be extremely costly.
Nevertheless, Sony/ATV chairman and CEO Bandier says that, if it turns out that his appeal asking the rate courts to allow partial withdrawal or if the U.S. Dept. of Justice doesn't revise the consent decrees, then the company is "exploring other options, including the potential complete withdrawal of all rights from ASCAP and BMI."
In the letter to Sony/ATV's songwriters, Bandier wrote: "It is our hope that the DOJ and appeals process will recognize the benefits and fairness produced by partial withdrawals of performance rights."
If that occurs, then they could use ASCAP and BMI for collective licensing, where it makes sense.
"That being said, because the DOJ and legal process is not fully within our control, we may have no alternative but to take all of our rights out of ASCAP and BMI," the letter continues. "We recognize that full withdrawal is a significant step and we are carefully looking at all of the issues associated with this, including speaking with potential partners to assist us."
In an interview, Bandier said he is optimistic that the DOJ review will result in the consent decree being amended so Sony/ATV won't have to withdraw from the PROs to attain higher rates.
He pointed out that Rihanna's song "Diamonds" had 52 million streams, but the four songwriters were only paid $78,000 ($0.0015 per stream). That payment amount "doesn't make sense," he said.
With mechanical rates on the decline, and with digital streaming -- both passive and on-demand -- growing that performance rights become even more important, Bandier argued. "Sadly, the rates that are paid in that area are not equitable or adequate," Bandier said. "Its like writers' 401k's are being wiped out."