During the past few weeks, there has been a great deal of chatter about Sony/ATV and EMI Music Publishing’s decision to withdraw certain digital rights from ASCAP and BMI. Since some of the facts have been distorted by nonauthoritative sources, I wanted to set the record straight about exactly what we’ve done, why we’ve taken action and, most important, what this means for our songwriters.
First and foremost, we want — in fact, we need — digital music services to succeed. In the ever-evolving media landscape, digital services are the present and future of our industry. They provide consumers with easier and better listening experiences than ever before, and we believe they have the potential to generate significant revenue for songwriters. Withdrawing our digital rights gives music services certainty of rates without litigation, as well as the benefit of negotiating multiple types of licenses (e.g., performance and mechanical) simultaneously. At the same time, it is our responsibility as stewards of more than 2 million songs to provide value for our songwriters. Direct licensing allows us to reduce costs and engage in free market negotiations for the fair value of those songs.
EMI Music Publishing, which was recently acquired by Sony and a group of investors, withdrew certain digital rights from ASCAP about a year ago. Similarly, with effect on Jan. 1, 2013, Sony/ATV will withdraw the same digital rights of its catalog from ASCAP, and both Sony/ATV and EMI will withdraw similar digital rights from BMI on that date as well.
Many in the industry have wondered why we would want to take on the tremendous task of entering direct performance licenses with digital service providers. There are several reasons.
With mechanical revenue flat at best and subject to compulsory licensing and statutory rates in the United States, we see the public performance income associated with digital music services as a source of potential growth. As the number of users of on-demand streaming and Internet radio services grows at impressive rates, we feel we would be doing a disservice to our writers by continuing with the status quo licensing system as it relates to digital performance income. By having the right to negotiate direct deals at fair market rates, together with granting ASCAP and BMI the right to continue to administer these rights as they do today, we are confident that this will lead to a more equitable share of digital performance revenue for songwriters, without affecting the growth of digital music services.
We want to secure the best possible terms for our songwriters. While ASCAP and BMI have important roles in our industry, they are currently required to grant any digital music service (such as Pandora or Spotify) a public performance license upon request, even if a rate is not established. If a rate has to be determined through litigation, it can be years before a songwriter is paid. We believe that by withdrawing these limited categories of digital performance rights, Sony/ATV and EMI will be able to engage in free market negotiations with prospective licensees that take into account the true value of the songs.
To be clear, we are withdrawing this limited category of digital rights because we believe that the current licensing system places ASCAP and BMI in an unfavorable negotiating position through no fault of their own. These performance rights societies carry out an incredible service for songwriters and publishers, and our songwriters should be aware that, while arrangements are not yet finalized, we intend to grant ASCAP and BMI the right to continue to administer our withdrawn digital rights. As a result, our songwriters will not only benefit from the associated cost savings, but, perhaps more importantly, they will continue to be accounted to directly by ASCAP and BMI for their writers’ share of digital performance income without regard to any advances they might have taken from us.
I believe this is a defining moment for our industry. Digital music services are here to stay, and our actions with respect to digital performing rights are meant to show how seriously we take our responsibility to our songwriters. For far too long, songwriters’ rights have been undervalued. It is our mission to protect their songs and to continue to obtain fair value for them in the marketplace.
Martin Bandier is chairman/CEO of Sony/ATV Music Publishing.