While the publishing industry waits for the Department of Justice to make a decision on whether the consent decree should be amended to allow publishers to withdraw their digital rights from the performance rights organizations’ blanket licenses, one of the very issues at stake in that decision is already coming to play.
According to sources, the Universal Music Publishing Group and Canadian publishing company Ole are in the process of pulling their production music catalogs from ASCAP. So far, UMPG has moved its catalog to SESAC, which means ASCAP writers on works in that catalog will receive performance royalty payments administered by SESAC. UMPG appears to be leaving its catalog in place at BMI, which means BMI will continue to administer payments to those writers.
Ole did not respond to multiple requests for comment from Billboard, but in a statement to Canada’s FYI Music News, Ole CEO Robert Ott acknowledged that the company has moved some repertoire, but noted that “what [titles] we did move did not single out ASCAP.” He did not specify which organization will administer those titles going forward.
The reason for the change, Ott said in the statement, is because “the ability of most PROs to negotiate for clean data, accurately allocate these monies and process the sheer data involved has not kept pace. The result is that monies that rightfully belong to composers go into the general pool for ‘market-share’ distribution to others. Especially those with longstanding copyrights and existing market share.”
The move has enraged several songwriters groups, which have aligned under the banner MusicAnswers to protest the moves, claiming that writers alone should have the right to decide their PRO affiliation, and that publishers do not have the right to change it unilaterally. The writer groups include the Songwriters Guild of America (SGA), the Council of Music Creators (CMC) and the Songwriters of North America.
The move begins today (April 1), according to sources. Licensing deals for the catalogs already in place will continue to be administered by ASCAP until the deals expire, sources say, at which point SESAC will take over.
“We’re proud that this agreement provides greater value to our songwriters and pleased to expand our relationship with SESAC,” said Universal Publishing Production Music Worldwide President Gary Gross. “Today’s announcement reflects our commitment to maximize writers’ revenues and bring them as many creative opportunities as we can. We will continue to work on our writers’ behalf, and note that our relationship with ASCAP remains close.”
In a statement to Billboard, ASCAP CEO Beth Matthews said, “We want our songwriters to rest assured that they remain members of ASCAP, and ASCAP will continue to vigorously advocate for their rights, support their careers, and most importantly, maximize their performance royalties for all other works they have written which remain in the ASCAP repertory.”
It was unclear at press time whether SESAC will do licensing as part of the administration deals, or if the publishers will negotiates and issue licenses for those rights.
This issue is significant for a number of reasons. If the Dept. of Justice allows publishers to withdraw from blanket licenses for digital, publishers not only hope to achieve higher royalty rates but also likely will negotiate lower administration rates from the PROs, as some have already done in direct deals with Pandora. But so far those publishers — Sony/ATV, Universal and BMG — have let each PRO administer Pandora’s royalties for the songwriters affiliated with each organization.
The issue becomes even murkier with international songwriters who choose a PRO overseas. In those situations, the U.S. PRO has to pay its overseas counterpart, which then pays the songwriters.
Sources in the music publishing camp claim that the moves being implemented by UMPG and Ole are unrelated to the issue of whether the DOJ should allow publishers to withdraw digital rights. They also say that the music being moved away from ASCAP is different from more conventional songs, in that for a large portion of the catalogs involved, the songwriters were employed under work-for-hire contracts to create music for films, TV shows and commercials. Consequently, the publishers own the entire copyright interest and have sole control of the music.
A source in the songwriting/composing camp argues that some of the music involved was created by writers who are exclusively affiliated with PRS (UK), GEMA (Germany) and SACEM (France), and, in all likelihood, other non-North American PROs. While work-for-hire laws in the U.S. give creative work ownership to the employer, in Europe the work-for-hire laws are more complicated.
“The fundamental legal question at stake is whether a publisher can resign from a PRO, thereby removing a catalog or catalogs without the permission of a writer whose work is a part of that catalog or catalogs,” says the source in the writer camp.
“There may be good reasons why a publisher would recommend to a writer that he or she change their PRO,” CMC president Phil Galdston said in a statement. “If there’s a good reason, then all they have to do is make that recommendation. But in our view, no publisher has the right to unilaterally move a writer from his or her chosen PRO to another PRO where the publisher has made a deal. It’s all about permission.”
Songwriters are concerned that in making such a choice, publishers — in addition to usurping the writer’s right to choose a PRO — also are removing a level of transparency from the payment process. If a direct deal is negotiated and the payment is made directly to the publisher who then turns it over to the PRO of its choice, songwriters argue there is no guarantee that they will receive their due share. This brings the industry term “breakage” into play, whereby artists and songwriters suspect that the major labels and publishers negotiate deals that provide for certain rates to be paid to songwriters and other pools of money to be set aside for the publisher and/or label — whether it be a digital distribution fee held back from artists or un-recouped advances that are not shared with the songwriters and artists.
For their part, publishers argue that they are getting higher royalty payments and lower administration fees if they choose to negotiate with a single PRO, savings that the songwriters share.
Still, some songwriters fear that eventually a publisher will follow through on the threat to pull their catalogs if the PRO doesn’t agree to reduce servicing fees, as Sony/ATV once did with one of the PROs in its Pandora deal, until the PRO capitulated on price.
Typically, PROs claim about a 13 percent servicing fee before paying out performance royalties, while the publishers have been negotiating administering fees for its direct Pandora deals that sources say is under 10 percent of revenues. The writers share equally with the publishers in the rewards of the higher royalty rates that direct deals bring in, as well as the incremental income found due to the reduced administration fees.
“We can’t move writers away from the PRO of their choice, but we can move works we control,” says a source in the music publishing camp. “If SESAC offers a better deal, the songwriters share equally in that. None of their worst fears are coming true: there is no hiding the ball or side money involved.”
However, songwriter organizations are not swayed. “This is the first time in the more than 100-year history of performance rights in America that any music publisher has attempted to unilaterally interfere with a music creator’s relationship with the performing rights organization of their choice,” SGA president Rick Carnes said in a statement. “The financial and artistic impact on the careers of music creators could be significant, and the utter lack of transparency make this development profoundly troubling.”
In order to heighten awareness among songwriters, MusicAnswers created a video on the issue.
“We intend, as always, to take all necessary and prudent steps to assist songwriters and composers in protecting their vital, individual rights and interests, and the integrity of their relationship with their chosen PRO,” Carnes added.
Sources in the publishers’ camp argue that songwriter advocates seem to value choice over higher payments.
“The decision of who handles your performance money is one music creators have always made for themselves, based on personal experience and personal preference,” Songwriters of North America executive director Michelle Lewis said in a statement. “A writer’s relationship with his or her PRO almost always pre-dates any with a publisher. If we want to change our affiliation, that’s up to us.”
NOTE: This article was updated on April 5, 2016, to include and reflect Ole’s statement.